Mumbai: Corporate India's net profits are expected to grow by a robust 24.5 percent in FY 13 due to softening of commodity prices and steady interest rates, an economic think-tank said here.
"We expect net profits of corporate India to grow by a robust 24.5 percent in FY 13, after falling by 0.6 percent in FY 12. The net profit margin of corporate India too is expected to inch up to 7.2 percent from 6.8 percent in FY 12," Centre for Monitoring Indian Economy (CMIE) said in its monthly review here.
The factors that are expected to moderate the topline growth -- softening of commodity prices and steady interest rates, will provide a boost to its bottomline. A slower growth in other expenses compared to FY 12 is also expected to help.
The companies are also unlikely to incur similar forex losses in FY 13. The rupee had depreciated by around nine percent in each of the two quarters ended September 2011 and December 2011. Compared to that, the rupee depreciated steeply in only the first quarter of the current year. "We expect the rupee to remain stable in the second quarter and start appreciating thereafter," CMIE said.
Sales growth is however expected to slump to 13.2 percent in FY 13 from over 20 percent in the preceding two years. The growth is expected to decelerate sharply to 15.9 percent in the first half of FY 13 and to 11.4 percent in the second.
"The corporate sales growth is expected to decelerate only on account of a major slump in the sales growth of the petroleum products and the banking industry, which together account for 43 percent of corporate sales," CMIE said.
The sales growth of the petroleum products industry has been volatile and subject to major price fluctuations and government regulations. The sales growth of banking industry is a function of interest rate changes and credit demand.
"We expect net sales of the petroleum products industry to grow by 9.6 percent in FY 13, compared to a much higher growth of 33 percent in FY12. A slower rise in prices of administered as well as non administered petroleum products is expected to pull down the growth of the industry in the current year. We expected average unit realisation of the industry to rise by only six percent in FY 13 as compared to 25 percent in FY 12," CMIE said.
The growth in the income of the banking industry too is expected to slow down to 16.4 percent in FY 13 from 33.7 percent in FY 12. This will be mainly because of stable interest rates. Interest rates had risen rapidly last year and had pushed up the income growth.
CMIE expects rest of the corporate India to see only a mild deceleration in sales growth to 14.3 percent in FY 13 from 16.1 percent in FY 12. This slight moderation in sales growth will be mainly a reflection of lower inflation. "We expect inflation in manufactured products to come down to 6.6 percent in FY 13 from 7.2 percent in FY 12," it said.