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India Inc expects the economy to grow between 5 to 6 per cent and the rupee to appreciate against the US dollar during the current fiscal year, according to a corporate survey initiated by ING Vysya Bank.
Eighty one per cent of the respondents expect GDP to grow between 5 and 6 per cent this year, while 77 per cent felt that the rupee was going to appreciate further.
Over 300 corporate finance executives representing a range of industries from both the manufacturing and services sectors indicated a sustained momentum in growth.
Of these, 24 per cent respondents represented companies with a turnover of more than Rs 1,500 crore, while 39 per cent of them were from companies with turnover between Rs 200 and Rs 1,500 crore. Another 37 per cent represented companies with less than Rs 200-crore turnover.
The survey revealed that over 32 per cent respondents expected their net sales to be in the range of 15-25 per cent, while over half of them saw their net sales to be in the range of 0-15 per cent. Only 1.5 per cent of the respondents expected negative sales growth.
Also 55 per cent of those polled expected their operating margins to improve.
Given corporate India’s view on moderation in inflation, around 82 per cent of the respondents expect an at least 25 basis points reduction in the RBI Repo rate, with 43 per cent and 39 per cent of the participants expecting a cut by 25 bps and 50 bps respectively.
The rupee, after weakening almost 25 per cent till August last year, has witnessed a turnaround, aided by a stronger-than-expected election outcome and policy measures. The same sentiment seems to have echoed in the expectations of corporate India, according to the survey.
The expectations are evenly balanced for importers and exporters. About half the importers who participated in the survey are looking at spot levels of 57 or below for further hedging. Additionally, 41 per cent of the exporters have a stop-loss strategy to hedge with spot below 57.
The decision on hedging levels is largely agnostic of the sector in which the company is operating, with the target levels across the spectrum for both importers and exporters.
An interesting finding was the optimism among respondents to explore possibilities for investment. About 60 per cent of respondents had stated that their investment plans were either affected or shelved because of the unstable environment, with the construction sector being the worst hit.
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