Earnings Preview

Figures posted till now give a healthy feel

The benchmark index Sensex has moved up by 18 per cent in September 2009-ended quarter (Q2FY10) indicating that market participants are expecting a favourable monetary and fiscal policy, adopted in earlier quarters, to show a positive impact on Q2 FY10 results. Here we look at Q2FY10 results of few companies that declared their results and what the broader market is expecting from other companies. Information technology. Infosys Technologies, as always, was the first index company to announce its result. Although its year-on-year (y-o-y) income and profit growth in Q2FY10 was low at 3.1 per cent and 7.5 per cent, respectively, the positive factor was that the sequential revenue growth was positive, unlike, in the previous quarter. Other tech companies are also expected to post decent results. Says a research note by Angel Broking: “The recent recovery in global economy is expected to lead to resumption to higher growth path, particularly FY2011 onwards.” Banking. HDFC Bank has reported 30.21 per cent y-o-y growth in net profit in Q2FY10. The bank has shown 30-plus per cent growth in net profit for 26 consecutive quarters. For the overall banking sector “margins would start improving from Q2 FY10 as banks retire their high-cost deposit. Provisioning towards investment depreciation will be minimal as bond yields have increased by mere basis points during the quarter”, says a report by brokerage firm IndiaInfoline. Fast-moving consumer goods. Delayed monsoon was expected to impact the FMCG sales in rural areas. However, other favourable factors would have helped FMCG companies to post healthy figures. Says IndiaInfoline in a report: “The government’s increased focus on rural development is expected to drive robust demand growth in rural areas.” Automobiles. The sales figures of auto companies in the last few months are indicating an uptrend for this sector. A report by Morgan Stanley Asia Pacific Research says that among all sectors auto is expected to register one of the strongest earnings growth.