Q2 earnings: What to expect from India Inc

Q2 earnings: What to expect from India Inc: 
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Heading to a cliff?
It's that time of the year again. Q2 numbers are ready to roll.
This time, things have become much more uncertain as Indian companies battle rising costs and falling profitability.
Tight liquidity, deteriorating macros, surging oil, weakening rupee and global trade issues are keeping the pot boiling. Against this backdrop, what do you really expect from India Inc?
IDBI Capital has talked about a few sectoral scenarios as earnings loom. Let's dissect them.
Automobile: 

The report clearly says raw material headwinds will persist but adds a rider that festive season is key to watch. What to look out for in management commentaries? Demand outlook for the festive season, pricing/discounting pressures and outlook on input prices, it states. Increase in commodity prices like steel and aluminum would have an impact on margins, and segment-wise net profit growth will remain robust for CV manufacturers like Ashok Leyland.
Banking and Finance: 
The brokerage favors banks over NBFCs in an increasing rate scenario. The banking sector is expected to report modest earnings growth attributable to moderate credit growth, pressure on NIMs, weak treasury income and higher credit cost. Retail private banks are expected to report a healthy growth.
Housing Finance sector should see marginal improvement in disbursements, according to the IDBI Cap report. However, the increase in rates for market borrowing will have some negative impact, especially for companies with negative ALM in short term.
Stable to benign gold prices augur very well for the growth in the gold finance sector. Expect revival in AUM growth, driven by a pickup in the rural economy and a lower base.


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