Corporate India is expected to see a 9.4 per cent rise in net profit in the March 2012 quarter, after suffering a steep fall for two consecutive quarters, the Centre for Monitoring Indian Economy (CMIE) said in its monthly review here.
Indian corporates incurred huge forex losses in the September and the December 2011 quarters because of steep depreciation of the Indian rupee. However, we expect rupee to appreciate in the March 2012 quarter, CMIE said.
Absence of forex losses and a moderation in input price inflation are expected to push up corporate profits in the March 2012 quarter.
The main driver of profit growth is expected to be the banking industry, which is likely to see a robust 42.1 per cent rise in net profit due to lower provisions and low base, it said.
However, despite improvement in the Q4 FY12 quarter, net profit of corporate India for the financial year 2012 as a whole will remain 9.5 per cent lower than the year ago level.
The net profit margin too will drop to a decadal low of 6 per cent, it said.
“We expect the sales growth of corporate India for the FY 12 to average at 22.2 per cent. This growth will come on top of an equally strong growth of 20.2 per cent in FY 11. The growth will be mainly driven by high unit realisation,” the CMIE report said.
High inflation in imported commodities such as crude oil, LNG, natural rubber and gold prompted the user industries to hike prices of their offerings in the first half of FY 12. The benefits of the same are expected to accrue in the second half of the year too.
The RBI’s attempt to combat inflation through interest rate hikes provided a boost to the income growth of the banking industry in the first half. We expect the trend to continue in the second half, as interest rates remain firm, the report said.
During the December quarter of 2011, corporate India reported robust growth in sales but witnessed fall in profits.
CMIE expects the growth in corporate sales to decelerate to 12.5 per cent in FY 13 from 22.2 per cent in FY 12. Unlike this year, the sales growth in the next year will be mainly volume driven, it said.