Sensex companies to see 9.1% growth in profits in Q4 FY'17: Deutsche

Mumbai: Driven by spike in global commodity prices, benchmark Sensex-30 companies are likely to post 9.1 percent jump in profits, for the fourth quarter of the fiscal gone by, says a report.

According to global banking and financial services major Deutsche Bank, the spurt in January-March quarter profits after tax (PAT) will take the overall growth for fiscal 2016-17 to 6.7 percent.

Excluding banks, Sensex companies PAT growth is likely to come in at 5.4 percent for the fourth quarter.

"Sensex is expected to post PAT growth of 9.1 percent year-on-year in the fourth quarter of 2016-17, which will take overall fiscal 2016-17 Sensex PAT growth to 6.7 percent," Deutsche Bank said.

"This growth should be driven by a spike in global commodity prices and low base effects (particularly for banks which experienced elevated credit costs in fourth quarter of 2015-16)," it added.

Sensex revenue growth is expected at 8 percent, for period under review, driven largely by oil and gas companies.

Within Sensex, double-digit growth is likely to be recorded in metals sector with Tata Steel expected to see a turnaround in losses due to a spike in commodity prices and better volumes, the report said.

Besides, banks may post PAT growth of 28.6 percent in the fourth quarter compared to same period year-ago.

The double-digit growth among banks could be attributed to benefits to SBI and ICICI Bank "from a lower base due to high credit costs last year", the report said.

"HDFC Bank is expected to be steady at 16 percent growth year-on-year, while Axis Bank will likely see elevated credit costs, leading to a PAT drop by 33 percent," it added.

As per the report, automobile sector is expected to be the biggest drag on Sensex growth. The sector is likely to register decline of 19 percent in PAT for the fourth quarter on account of ban on BS-III vehicles.

"Tata Motors, although it is not impacted much by BS-III ban, is expected to post (-) 36 percent year-on-year PAT growth due to weakness in operations at JLR," the report said.

IT Services and Pharmaceuticals are also expected to witness low growth in PAT.