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Bloomberg
As the outlook for Indian corporate profits grows increasingly murky under the influence of the coronavirus pandemic, analysts are hunkering down for a protracted series of forecast cuts.
Asia’s third largest economy is set for a near-complete disruption of economic activity for at least 40 days after Prime Minister Narendra Modi extended a nationwide lockdown to prevent the spread of the virus. This has further clouded the prospects for a recovery in company earnings.
The NSE Nifty 50 Index is still down 24% for the year despite recovering since late March. The average analyst estimate for 12-month forward earnings per share on the gauge has continued to fall, and is down about 10% in the past six weeks.
“Estimating earnings in such a fluid global and local environment is fraught with risks, and to that extent, we are expected to undergo more revisions as we move forward†in the fiscal year to March 2021, Gautam Duggad, an analyst with Motilal Oswal Financial Services Ltd, said in a report.
Among firms that have already reported for the fiscal fourth quarter, Infosys joined fellow information technology giant Wipro in not projecting revenue for the current year. HDFC Bank reported higher provisioning for bad loans to cushion the negative impact on its large portfolio of retail loans.
Motilal Oswal expects sales for Nifty companies declined 10% year-on-year in the January-March period, with profits sliding 20%. As the dust settles on the latest quarter, expectations for future results are likely to come down as well.