This is how India Inc's second quarter performance may shape up

India Inc is likely to report a better second quarter, analysts believe.

Prasad Koparkar, Senior Director, CRISIL Research said," The second quarter, we expect sectors focused on urban and rural consumption such as automobiles and retail, along with pharmaceuticals and IT services, to record double-digit revenue growth.”

While Binaifer Jehani, Director, CRISIL Research said, “During the second quarter, automobiles, steel products, telecom services and FMCG companies are expected to improve their Ebidta margins.”

Following are the sectors expected to be in limelight as per CRISIL Research.

Automobiles:

Koparkar said, “We see automobiles reporting 13% growth riding on new launches and healthy rural demand following a good monsoon. ”
 
Under automobile – segments like cars and two-wheelers are expected to grow 16-18% and 13-15% on-year, respectively, due to new model launches and improved demand, supported by better monsoon that will impact rural demand as well. While the commercial vehicles segment is expected to witness de-growth of 9-11% on account of lower volumes and a fall in the average realization.
  
EBITDA margin for companies in the automobile sector is expected to increase 125 basis points.

Pharmaceuticals:

As per Koparkar, pharma may report 13% growth in revenue owing to new product launches in the US amid supply disruptions from few facilities under regulatory scrutiny.

Growth in the domestic market is also estimated to be strong, on the back of high volumes and good monsoon. For mid-sized and small firms, domestic market growth of 10-12% is expected.

For large formulation players, CRISIL expects EBITDA margin growth to remain flat on-year and that for mid-sized and small formulation players, operating margins are expected to fall 200-300 bps on-year.

IT services: 

Revenue growth of 10% is expected on account of an increase in volume and benefits from rupee depreciation (the rupee is likely to stay at 67.0/$ during Q2FY17, compared with 64.9/$ during Q2FY16).

EBITDA margin outlook for companies in IT services is forecast to contract 65 bps on-year.
 
Telecom services: 

Gross revenue of the telecom services sector is expected to increase 7%, as operating metrics (particularly data traffic and data average revenue per user) improve. The launch of 4G services by Bharti, Vodafone and Idea across the country will continue to aid data volume growth.
 
Telecom companies’ EBITDA margin is estimated to improve only 40 bps. 
 
FMCG:

Revenue of FMCG sector is expected to rise by 6-7% y-o-y. While realisation is expected to remain stable, a rise in volume will drive revenue. While decline in the cost of raw material, such as Brent crude and copra, are considered to boost margins of this sector by 80 bps.

Steel products: Gross revenue of companies in this sector is expected to increase 6%, owing to higher sales volume and an increase in product prices. While domestic steel demand is expected to rise a muted 1-3%, as exports are forecast to increase significantly.
 
Jehani said, “For steel products makers, it is seen up 150 bps riding on a 2-4% increase in prices.”
 
Power: 

Revenue of this sector is estimated to grow marginally on 2-3% growth in power generation coupled with low plant load factor. CRISIL expects power transmission companies to witness revenue growth by 24% and that for power distribution companies to increase marginally 1-3% on-year.