Mumbai: Corporate India is expected to see a 9.4 percent rise in net profits in the three months period ending March, after suffering a steep fall for two consecutive quarters, 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, Centre for Monitoring Indian Economy (CMIE) said.
Absence of forex losses and a moderation in input price inflation are expected to push up corporate profits.
The main driver of growth is expected to be the banking industry, which is likely to see a robust 42.1 percent rise in net profits due to lower provisions and low base, it said.
Despite improvement in the March quarter, net profit of corporate India for the financial year 2012 as a whole will remain 9.5 percent lower than the year ago level. The net profit margin too will drop to a decade low of six percent, it said.
"We expect the sales growth of corporate India for the FY 12 to average at 22.2 percent. This growth will come on top of an equally strong growth of 20.2 percent in FY'11. The growth will be mainly driven by high unit realisation," CMIE report said.
High inflation in imported commodities like 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 Reserve Bank's attempt to combat inflation through interest rates 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 percent in FY 13 from 22.2 percent in FY 12. Unlike this year, the sales growth in the next year will be mainly volume driven, it said.