BENGALURU: India’s top 10 companies by market value are expected to post a median 23 per cent jump in profit for the last quarter of 2019, driven by a rebound in the financial sector and a smaller tax bill.
This compares with a 14 per cent rise in earnings in the year-ago quarter, and reflects billions in tax breaks given to corporates in 2019 as the government sought to revive the economy from a six-year low.
The top 10 companies list includes oil-to-telecoms firm Reliance Industries and IT services provider Infosys, but is dominated by as many as five banks and financial services companies.
The median profit at these financial companies, which include loan provider HDFC Corp and HDFC and ICICI banks, is expected to have nearly doubled in the October-December period, compared with a 13 per cent growth a year ago.
“The (banking and financial services) sector is likely to continue with healthy performances driven by the resolution of large stressed assets,” said Pankaj Pandey, head of research at ICICI Securities Ltd.
“Reduction in corporate tax rate is also expected to improve profitability,” he said.
Reliance is expected to have earned 20 per cent more in the quarter ended Dec. 31, compared with the year-ago period, according to Refinitiv data, its fastest growth in four years.
India last week forecast its slowest economic growth in more than a decade, with no improvement in farming and dramatically slowing construction activity. The government is expected to announce consumer tax concessions and increase infrastructure spending.
Given the slowing growth climate, investors have bet on large and mid-sized companies in the past year, pushing their stocks up.
Median profit at companies on the Nifty 50 – the country’s main stock index – is expected to have risen 10.7 per cent in the December quarter. In the year ago period, the growth rate was 11.8 per cent.
Last year, the Nifty gained about 12 per cent, while the Nifty Mid-cap 100 and Nifty Small-cap 100 dropped 4.3 per cent and 9.5 per cent, respectively.
Infosys, is expected to record a 16.6 per cent rise in profit when it reports results Friday afternoon for a quarter plagued by whistleblower complaints about its accounting practices.
This compares with a 29.6 per cent slump in earnings in the year-earlier period when marketing and hiring costs had surged.
In contrast, bigger rival Tata Consultancy Services Ltd , which is more exposed to slowing sectors like retail and has taken a hit from Brexit, is expected to report a slim 0.8 per cent rise in profit. This will be its lowest in two years and down from a 24 per cent jump in the year-ago period.
Source: Economic Times
