IDFC pegs Q2 net profit growth of Sensex firms at 6.4%

This is due to assumption of zero subsidy from government in Q2 FY13 leading to lower earnings for ONGC

Stock brokerage firm IDFC expects the net profit of Sensex companies, at 6.4% in the second quarter of FY 2013 on a year on year basis against 14.5% growth in the first quarter of FY 2013. This is due to assumption of zero subsidy from government in the Q2 of FY 2013 leading to lower earnings for ONGC.

However, excluding oil and gas, the brokerage expects the growth at 15% y-o-y in Q2 of FY 2013 as compared to 19% in Q1 of FY 2013.

IDFC expects that non commodities are expected to clock strong bottom-line growth of 18% yoy, earnings of commodities are likely to contract by 15% yoy, pharmaceuticals (29% yoy), IT services (31% yoy), financials (26.5% yoy) are expected to report strong bottom-line growth.

Top-line growth of Sensex companies is expected at 13.4% year-on-year, lower than 17% in the previous quarter, the brokerage said. "Top-line growth ex commodities remains robust at 18 % versus 24% in Q1 of FY 2013," said IDFC in the report.

Sectors like pharmaceuticals (25.7% yoy), IT services (24.8% yoy) and financials (19% yoy) are expected to report strong top-line growth.

Contraction in Sensex companies margins is expected to come in at 110 basis points yoy as against 166 bps y-o-y contraction seen in Q1 FY 13.

Margins of commodities stocks are expected to see compression of 280 bps y-o-y while non commodities are expected to report no margin change.