CAN INDIA INC PLAY THOSE NUMBERS AGAIN?

Vyas Mohan
Hindustan Times (Delhi edition)

The past looks good. The future is a bit tense, though.

India Inc has once again managed to wade through unclear waters of a sluggish, struggling global economy to notch up healthy numbers for the last quarter and the financial year that closed in March. Though there has been some slowdown in profit growth, it has not been to the extent analysts and investors have been worrying about.

Acknowledging the feat, the 30-share benchmark index of the Bombay Stock Exchange has gained about 10 percent since April 1, when the results season kicked off and revisited the psychological threshold of 17,000 in the process.

"There have not been any massive negatives in fourth quarter corporate results as was widely expected. And that is a positive," said Andrew Holland, managing director of Merrill Lynch for India.

With the sub-prime loan crisis that broke out in the US in May 2007 has hit profits and outlooks all around, a substantial blip was also expected in the profits of Indian companies. Consequently, a clutch of brokerages had downgraded the result expectations of mostly export-dependent companies, especially those in the information technology and pharmaceutical sectors.

"Technology, telecommunications and pharmaceutical companies have beaten Street expectations, which is a good sign," said Holland.

With US financial giants trimming down operations following huge sub-prime losses resulting in a negative outlook for IT and IT-enabled service companies that derive more than 70 percent of their revenues from the US, an already huge subscriber base was expected to caused a shrinkage in telecom companies' revenue growth as well.

With Infosys posting a 20.4 percent growth in revenues year-on-year and the country's largest cellular operator, Bharti Airtel, recording an impressive 45 percent growth in revenues for the fourth quarter ended March 2008, the fears proved to be unfounded.

Markets cheered the results with shares of Infosys gaining 6.2 percent on the day it announced results, while the Sensex gained 2.1 percent or 346 points the same day

However, some market experts feel that it is too early to rule out a slowdown in Indian corporate profits.