Healthy profits but revenue growth lags

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Nifty companies are expected to report another quarter of double-digit growth. Net profit growth at a bit over 11 per cent year-on-year is expected to be led by Bharti Airtel, Tata Motors, State Bank of India and Tata Consultancy Services. The growth will be lower than the June quarter's 16 per cent. The moderation, also seen in the Nifty basket revenue growth as halving to five-seven per cent year-on-year, is largely because export-oriented sectors are not expected to benefit as much on account of a weak rupee for the September quarter. Further, higher growth in the domestic space is limited to automobile, cement and fast-moving consumer goods (FMCG) sectors. Revenue growth is expected to fall to single digit after four quarters of double-digit growth that peaked in the June quarter at 15 per cent. Operationally, though, the performance is estimated to improve. Given lower raw material costs, margins are expected to inch up 70-80 basis points year-on-year to 24 per cent. Analysts expect year-on-year earnings per share for Nifty companies to be Rs 458 for FY15, up 17 per cent, led by banking, auto, FMCG and information technology sectors. The FY15 earnings growth is expected to be led by lower commodity prices, economic recovery and lower inflation. Earnings before interest, taxes, depreciation and amortisation margins are expected to improve 200 basis points over two quarters.