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expenses and appreciation of rupee. Hitesh Agrawal of Angel says, “We expect the top-tier IT companies to report 4.1 per cent sequential decline in net profit for the quarter led by the margin pressure at the EBIDTA level.” The quarter saw IT companies sign deals in key geographies indicating a revival in oursourcing business. Metals During the quarter, most Indian metal companies will report strong growth in revenue and profits given the lower base effect of last year and higher volume growth. The rally in international base metal prices will lead to significant growth for non-ferrous companies. Their margins are expected to improve by 400-500 basis points given that input costs have remained flat. Companies like Hindustan Zinc are expected to benefit substantially from higher zinc prices, other income (due to cash in the books) and lower tax. Better performance of Hindustan Zinc and higher metal prices will also help Sterlite Industries. For steel companies, non-integrated players are likely to feel the heat of higher iron ore prices coupled with flat steel prices. Companies like JSW Steel, which reported losses of Rs 127.5 crore in the corresponding quarter last year, could turn to profits, mainly driven by a 66 per cent rise in production. Tata Steel’s performance will be helped by higher volumes and lower input costs. On a consolidated basis, CLSA expects the company to post a model net profit after three consecutive quarters of losses. Miscellaneous Power utilities: The sector witnessed a trend wherein rates for merchant power have been declining. For the quarter however, power utilities will put up a reasonably good show with double-digit growth in profits. Among major companies, Tata Power could report strong growth in net profits driven by fresh contribution of merchant power sales from Haldia and Trombay. Realty: A low base and price increases in select markets in the residential segment will have a positive impact on the revenues of real estate companies. While higher construction and land costs will hamper operating profit margins, a sharp increase in interest cost means that net profits for DLF will dip by about a third. A low base and new projects will help Unitech post robust revenue growth, while increasing proportion of mid-income housing projects will impinge on operating profit margins. Retail: Buoyed by the festive demand and higher same store sales on a low base, retailers such as Pantaloon are likely to post a 25 per cent y-o-y growth in revenues. Higher full price sales and retailing of private label should improve operating profit margins of India’s largest retailer. Oil & Gas Reliance Industries’ (RIL) gross refining margins (GRMs) are expected to average around $5-5.5 per barrel, compared to $10, a year earlier. However, the start of gas production at KG D-6 and the RPL refinery should see RIL’s overall net sales increase by 60 per cent y-o-y for the December 2009 quarter, while net profits are expected to increase by 15 per cent in the same period.The public sector oil marketing companies (OMCs) are expected to report disappointing numbers for the quarter on account of under-recoveries (combined under-recoveries is expected to be Rs 13,000-14,000 crore). Since the government is yet to approve the issue of oil bonds (expected in the current quarter), HPCL and BPCL are expected to report losses, while IOC might manage a meagre profit. However, upstream companies like ONGC and GAIL are expected deliver better performance on account of lower subsidy outgo (for both), higher crude oil prices (ONGC) and increased volumes (GAIL). Pharmaceutical A double digit growth (upwards of 15 per cent) in the domestic segment and a good showing in the US market due to exclusivity-related launches as well recurring (core) business should help the top five pharma companies post 10 per cent plus revenues growth. Exclusivity or limited competition drugs such as Ranbaxy’s Valtrex, Dr Reddy’s Prilosec, Lupin’s Antara and Sun Pharma’s Protonix should boost their sales in the US market. The recovery in Latin America and CIS countries, where pharma sector faced credit problems, should help Ranbaxy, Dr Reddy’s and Glenmark which have significant exposure to these markets. Expect net profit growth for the sector to be in double digits (12-25 per cent) partly aided by volume growth, and forex gains which dragged down earnings in the year ago quarter. However, Dr Reddy’s and Sun Pharma will see a de-acceleration in earnings growth due to higher base and FDA issues, respectively. BASE EFFECT KICKS IN in Rs crore Net sales % chg EBIDTA % chg Net profit % chg AUTO Hero Honda 3,767 30.7 652 57.5 523 74.1 Mahindra & Mahindra 4,507 79.1 735 405.1 505 NA Maruti Suzuki 7,519 61.8 924 189.8 595 178.5 Tata Motors * 8,314 75.2 1,141 1,146 468 NA BANKING HDFC 1,037 17.5 966 21.7 672 22.9 HDFC Bank 3,150 7.9 1,727 18.5 807 29.8 ICICI Bank 3,951 -12.3 2,478 -10.6 1,114 -12.4 PNB 2,888 -0.8 1,780 -1.4 981 -2.4 State Bank of India 9,516 5.9 5,185 15.7 2,542 2.5 CAPITAL GOODS & ENGG. ABB 2,145 -1 268 180 -6.7 BHEL 7,473 24.1 1,383 35.5 1,053 31.7 L&T 10,166 18 1,053 35 743 23.0 Thermax 840 5.6 107 11 75 4.0 CEMENT ACC 2,003 5.0 614 48.4 386 24.9 Ambuja Cement 1,792 10.2 477 21 309 24.2 Grasim * 2,924 9.8 923 80.2 578 75.4 Shree Cements 854 28.3 358 57.7 196 50.7 UltraTech Cement 1,662 1.8 473 9.3 244 2.4 CONSTRUCTION & INFRASTRUCTURE GMR Infra 1,200 25.1 403 40.0 43 5.0 HCC 985 20.2 127 20.1 31 31.9 IVRCL Infra 1,499 26.0 136 26.1 58 23.5 JP Associate 2,168 64.0 512 107 216 30.0 Nagarjuna Const. 1,233 20.1 120 33.5 52 43.5 Punj 338 7.4 270 NA 770 NA FMCG Dabur India 931 19.5 179 38.6 136 25.4 Hindustan Unilever 4,646 6.1 852 11.5 659 8.0 ITC 4,338 12.4 1,702 23.5 1,088 20.4 Nestle India 1,285 17.8 250 17.9 158 30.1 IT SERVICES HCL Tech 3,026 -0.2 633 -5.4 290 -3.3 Infosys 5,575 -0.2 1,826 -5.5 1,499 -2.7 TCS 7,462 0.4 2,084 -2.3 1,659 2.1 Wipro 6,723 -2.5 1,363 5.2 1,152 -0.8 METALS Hindalco Industries 5,318 29.2 737 -5.4 402 -26.3 Hindustan Zinc 2,026 89.5 1,280 319.6 1,090 195.6 JSW Steel 4,325 53.0 1,345 243.6 3,900 NA Nalco 1,357 31.0 483 81.6 313 43.0 SAIL 9,513 6.6 2,094 85.5 1,302 54.5 Sterlite Industries 6,668 50.0 1,509 218 1,073 108.8 Tata Steel * 5,762 20.0 1,877 27.0 904 94.0 OIL & GAS, PETCHEM Bharat Petroleum 29,791 -6.6 -219 -114.4 -291 -136.4 GAIL 6,732 15.8 1,131 325.3 762 200.9 Hindustan Petroleum 27,168 -7.7 -207 -139.1 -369 -12.7 Indian Oil 68,049 -3.3 893 -72.2 78 -97.4 ONGC 15,551 24 8,518 66.9 4,647 87.8 Reliance Industries 50,631 60.4 7,202 34.3 4,023 14.9 PHARMACEUTICALS Cipla 1,478 9.8 385 19.1 284 27.1 Dr Reddy"s 1,735 -7.8 270 -31.8 58 -15.2 Lupin 1,193 21.2 199 29.6 163 40.3 Ranbaxy 2,114 13 342 13.1 202 NA Sun Pharma 1,041 13.5 380 -8.1 377 -7.9 POWER NTPC 12,284 14.2 4,032 35.4 2,357 16.5 Reliance Infra 3,017 11.0 318 2.0 301 20 Tata Power 1,719 -3.3 418 63.3 182 58 REALTY DLF 1,699 24.1 853 10.5 470 -30.1 Unitech 600 22.7 284 16.1 176 28.3 Bharti Airtel 9,576 -0.8 3,722 -5.4 1,912 -11.4 Idea Cellular 2,943 7.9 719 124 -43.7 Reliance Comm 5,742 -0.8 1,904 -11.6 972 -31.8 Figures are average of various analysts" estimates and, for quarter ended December 2009. For Banks: Net sales is net income, EBITDA is operating profit. % chg is year-on-year, except for IT which is quarter-on-quarter. Consolidated figures have been provided wherever applicable, except for companies marked (*), which are standalone Source: Analysts" reports Telecom The price war which erupted in the second quarter of 2009-10 continues to take a severe toll on the sector. Though the subscriber base continues to grow by 50 per cent y-o-y and mobile subscriber base has crossed the half-a-billion mark as of November 2009, this is not helping boost revenues and profitability. The one paisa per second plan and its many avatars will see net profits of telecom companies sink upwards of 25 per cent y-o-y with the numbers of Idea Cellular expected to be the worst compared to more diversified plays such as Bharti Airtel and Reliance Communications. On a sequential basis, expect topline growth for the wireless business to be flat and operating profit margins to be lower by about 200 basis points due to higher network operating costs and interconnect charges. A weak dollar should help Reliance Communications register forex gains, while yen exposure is seen limiting Bharti"s gains on the dollar. With inputs: Ram Prasad Sahu and Sarath ChelluriPages: 1 [2]