<div>Growth in earnings of top companies in India is expected to grow by a muted 1.6 per cent in the three months ended Sept 30 compared with the same period a year earlier, according to a study by Crisil Ltd.</div><div> </div><div>This will be the fifth consecutive quarter of single digit growth for companies. Crisil examined a sample of 600 companies, excluding oil and financial companies, which account for 70 percent of the market capitalization.</div><div> </div><div>"Fragile consumption demand, especially in the rural areas, weakness in investment-linked sectors, and the meltdown in global commodity prices will more than offset the healthy top line growth expected in the export-oriented sectors,’’ the rating agency said today. "Ebidta – or earnings before interest, taxes, depreciation, and amortisation – growth is expected to be just 2 per cent.’’ </div><div> </div><div>Yet, Crisil has held out hope. It expects earnings to improve in the second half of the financial year as increased government spending, consumption is expected to improve as also getting the benefit of low base effect. In spite of the improvement, growth in earnings for the full year will remain in single digits, it said.</div><div> </div><div>"Export-linked sectors will be the only bright spot in terms of top-line,’’ said Prasad Koparkar, senior director, Crisil Research. ``Though merchandise exports have been declining for several months now, listed exporters -- mainly in IT services and pharmaceuticals sectors -- are expected to grow at 13 per cent in the September quarter, helped partly by the 7 per cent depreciation in the rupee.’’</div><div> </div><div>Domestic consumption-driven sectors with high dependence on rural consumption will be impacted by poor growth in rural income, below-normal monsoon and poor pricing power, it said.</div><div> </div><div>FMCG companies are likely to post 6-7 per cent revenue growth, down from 12 per cent in the last fiscal. Sectors more focused on urban consumers such as multiplexes, retail, and telecom are projected to post healthy double-digit top-line growth. Aggregate revenues of commodity-linked sectors such as steel, petrochemicals, and manmade fibres are expected to decline by 14 percent.</div><div> </div><div>While public investments have started to gain traction, this is yet to reflect in the performance of investment linked sectors because of overcapacity and weak demand in end-use sectors such as real estate, Crisil said.</div><div> </div><div>Cement and construction companies are projected to post 2-3 percent top-line growth, while capital goods manufacturers are likely to see a decline of about 7 percent. Power off-take, too, remains subdued due to poor financial health of state discoms and weak economic activity, which will curb top-line growth for generation companies.</div><div> </div><div>Companies in the FMCG, automobiles, airline, tyre, and power generation sectors are likely to see an expansion because of lower raw material costs. However, despite support from a weaker rupee, we expect Ebidta margin of IT services and pharmaceutical companies to decline by 70 basis points and 130 basis points, respectively, because pressure on their realisations has intensified.</div><div> </div><div>Yet, a surge in data revenue and control over marketing costs will boost the Ebidta margin of telecom companies by almost 250 basis points, Crisil said.</div><div> </div><div> </div>
