This sharp rise in revenues and profit would be due to a low base, supportive demand environment and strong cost reductions since the pandemic started a year ago, analysts said.
According to a report by Crisil Research, India Inc is expected to report a jump of 15-17% in Q4FY21 revenues. The strong corporate numbers are expected to be reported mainly by the larger players, which displayed more resilience than mid and smaller corporates in dealing with the impact of the pandemic. However, this analysis of 300 top companies does not include those from banking, BFSI and oil companies.
“There has been a recovery across sectors led by higher volumes and commodity prices, although consumer discretionary services, such as airline services and media, continue to tread water. Sequentially, revenue is up 6-7% on-quarter,” the Crisil report noted.
“However, overall revenue growth for India Inc was constrained by a fall in consumer discretionary products and services revenue. The pandemic posed a severe blow to players in this segment as revenue fell 10-12% on-year in fiscal 2021 due to a shift in consumer spending patterns, with consumers increasingly cautious about spending money,” the report said.
A report by Edelweiss also noted that larger companies would lead this recovery. For the Nifty 50 companies, low base and strong earnings momentum are likely to propel earnings growth to a record 100%-plus rate on a yearly basis, analysts at Edelweiss wrote in the note.
“On a reported basis, profit growth is likely to be very strong in cyclicals — commodities, banks, industrials and consumer discretionary (except auto). However, some softening of earnings momentum is likely in FMCG, cement and domestic auto owing to rising input price pressures,” the analysts said.
In the software sector, a supportive demand environment and large deal wins would result in strong growth in Q4FY21, despite cost pressures. According to analysts at Motilal Oswal Securities, tier-1 software companies are expected to report growth of between 2.5% and 3.4% on a quarterly basis — their strongest Q4 performance in the last five years.
In the BFSI segment, the annual growth in Q4 profits would be about 20%, mainly on the back of an uptick in credit growth, stable net interest margins (NIMs), and seasonally strong fee income during the quarter. This data does not include numbers by Yes Bank, a report by ICICI Securities said.
The fourth quarter of the financial year is seasonally strong, both on sourcing as well as collections. However, trend would be divergent across product categories: Home loans to lead, CV, cab aggregators, wholesale real estate to drag, the I-Secs report said.