Indian firms lower growth projections for this fiscal

By SiliconIndia   |   Thursday, 28 May 2009, 03:26 Hrs   |    1 Comments
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Indian firms lower growth projections for this fiscal
Bangalore: Having taken the brunt of the recession in FY09, companies have cut down on their expectations about the growth in the next fiscal. The earnings guidance for FY10 provided by many India's corporate indicates that they are trying to cope with the after-effects of the global economic slowdown.

In the case of IT sector, the outlook from key markets such as the U.S. and Europe remains bleak, forcing the companies to lower their growth guidance for this year.

India's second-largest software exporter Infosys Technologies expects its annual revenue to grow 1.7-5.7 percent during FY10, much lower than 19-20 percent average revenue guidance it is used to forecasting. Meanwhile, Wipro Technologies expects dollar-denominated IT revenues for the June 2009 quarter to decline compared with the year-ago period.

Drug major Ranbaxy, whose fiscal is same as calendar year, has also rationalized its earnings guidance for 2009. Expecting sales to drop by 3 percent, it says that the estimates are based on the assumptions that the rupee-dollar exchange rate holds stable at Rs 50 and there will no adverse impact because of rulings by the U.S. drug regulator.

Munesh Khanna, MD & CEO (investment banking) of Centrum Capital, says that price points, demand and off-take were considerably higher last year and the trickle-down effect of the economic slowdown is now becoming visible, as people reducing consumption across the board. "This is now reflected in companies making a downward revision of their future earnings guidance," he said.

In telecom sector, Reliance Communications, with a capex of around Rs 19,000 crore during 2008-09, has lowered its capex guidance to Rs 10,000 crore for the current fiscal. Even Bharti Airtel, the largest player in the sector, expects its capex for the current fiscal to be around $2.5 billion, a decline from FY09.

Bucking the trend, companies like Dabur and Cipla are set to maintain their current growth levels for earnings and revenues. These companies have been able to log a robust performance in FY09 compared with their peers.

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