India Inc is expected to post a healthy 25.9 per cent growth in profits in the third quarter on softening input prices and lower forex losses, according to economic think-tank Centre for Monitoring Indian Economy.

“We expect corporate profits to grow by a smart 25.9 per cent in the December quarter compared to the year-ago quarter,” CMIE said in its latest report on the domestic economy.

The improvement would be seen across segments, the report said, adding net profit of the manufacturing sector (excluding petroleum products) is likely to grow by a healthy 66.9 per cent and that of the financial and non-financial services sector by 16 per cent and 16.7 per cent, respectively.

The international prices of vegetable oil, natural rubber, cotton, coking coal, iron ore, copper concentrate are lower than their year-ago levels, it said.

“The input cost pressure for the manufacturing companies will ease substantially in the December 2012 quarter. Raw material expenses of the manufacturing sector (excluding petroleum products) are expected to rise by only 7.4 per cent,” it said.

The agency expects corporates to see lower foreign exchange losses during the December quarter.

“The rupee is expected to depreciate by only 2.4 per cent as against 8.1 per cent depreciation witnessed in the year-ago quarter. Consequently, other expenses of corporates, which comprise the forex losses, are expected to rise by only 5.6 per cent during the December quarter. This will be much slower than the 11 per cent growth expected in sales of corporates during the quarter,” CMIE said.

The think-tank said the IT industry is expected to post over 11 per cent growth in net profit, largely aided by a weak rupee.

“Computer software, which is the single largest contributor to the profits of the non—financial services sector, is expected to report an 11.8 per cent growth in net profits in the December quarter. A 5.6 per cent depreciation in the rupee against the dollar is expected to help the industry post a decent growth in profits in spite of a slowdown,” CMIE said.

It expects the growth of the telecom industry to be two-fold during the quarter, on the back of a low base. “The telecom industry had suffered an 82.2 per cent fall in profits in the December 2011 quarter. The low base, coupled with an improvement in sales, a fall in network cost and slower rise in regulatory charges is expected to help the industry report a robust 296.4 per cent rise in profits in the December 2012 quarter,” it added.

For the electricity, crude oil and the real estate industry, it forecast the growth in net profit for the December quarter to be in the range of 52-56 per cent.

(This article was published on December 16, 2012)
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