Companies' results in the September quarter will be encouraging

- Pressure will be seen on the operating margins of companies other than financial and oil companies

The September quarter results season has begun. Brokerage firms believe that this quarter could prove to be a good one for India's leading listed companies. The consolidated net profit of Nifty 50 companies is expected to grow by 7.5 per cent in the second quarter of the current financial year as compared to the same period last year. Metals and mining companies (206 per cent), banks and financial companies (4 per cent) and oil and gas companies (12 per cent) expect significant growth in their earnings.

However, the combined net profit of listed companies and other manufacturers in the non-cyclic sector could fall by 0.4 per cent to 2. Analysts say the steady rise in commodity and fuel prices is a sign of pressure on the margins of producers and consumer goods companies as companies are unable to pass on increased costs to consumers due to weak demand.

Thus, we expect strong earnings growth in the September quarter but margins may be under pressure. Brokerage companies expect the Nifty 20 companies to post a consolidated net profit of Rs. 1.5 lakh crore. Which in the same period last financial year was Rs. 1.08 lakh crore to 2.7 per cent and about 10 per cent more than Rs 1.7 lakh crore in the first quarter of the current financial year. The company's profit in the second quarter will be marginally lower than the record Rs 1.5 lakh crore in the fourth quarter of last fiscal.

The consolidated net sales and net interest income of the companies included in the index are expected to grow by 4.5 per cent year-on-year to Rs 10.8 lakh crore in the second quarter, from Rs 4.5 lakh crore in the same quarter a year ago. Oil companies' sales are expected to grow strongly in the second quarter due to rising fuel prices. Overall, the contribution of the three cyclical sectors to the Nifty 20 companies' earnings growth is likely to be around 9 per cent.

Earnings of companies other than financial and public sector oil companies will decline as rising costs could put pressure on their operating margins. Nine out of 20 Nifty companies could see their profits rise by almost 100 per cent in the second quarter. In the second quarter, the metals sector will account for 40 per cent of the companies' gross profit. With this, metals and mining companies can surpass IT companies in terms of profitability.

Net profit of five major IT companies rose to Rs. 6,800 crore in the same quarter last year. 17.50 crore to Rs. Profits of banks, insurance and non-banking financial companies may also remain good in the second quarter. The consolidated net profit of companies in the sector is expected to grow by 5 per cent to Rs 2,500 crore.