Auto, Metals save India Inc
Mumbai, Feb. 2: Metals, oil & gas and automobile sectors ha-ve been responsible for In-dia Inc’s showing in the thi-rd quarter. However, broke-rs expect growth to be more broadbased going forward.
For the quarter ended December 2009, the BSE Sensex companies have seen total sales increase 29 per cent compared to the year before. Net profits for these companies are up 18 per cent versus the year before. However, an analysis by brokerage house Motilal Oswal suggests that just three sectors — auto, metals and oil & gas – have accounted for the bulk of the contribution in both the cases. Amongst the hundred plus companies tracked by the broker, these three sectors have accounted for almost 80 per cent of the growth in sales and net profit.
For the Sensex companies, the boost in sales is partly because of higher volumes. For instance, the automobile companies sold many more vehicles in Q3 FY10 compared to the Q3 FY09. Similarly, Reliance Industries commissioned a new 29 million tonne refinery, almost doubling the production capacity in is core business. Apart from these factors however, rising prices have also played a role. "We believe that the earnings cycle has turned and broad market earnings will likely continue to outpace the narrow market in terms of growth," says brokerage house Morgan Stanley in its report on Q3 numbers.
"Going forward, we believe revenue growth should sustain in synch with the forecast recovery in the economy, particularly industrial production," says JP Morgan, another brokerage, in its review of third quarter numbers. The house feels that companies led by investment demand will do better than those benefitting from higher consumer demand. It also expects private sector banks to outperform public sector banks.
AGE Correspondent
Post new comment