Avadh Singh
As the first quarter of financial year 2007-08 is near completion, and with the equity indices hovering around their all-time highs, the markets are awaiting India Inc's first quarter numbers for any further cues. The India Street spoke to a section of market experts to get a feel of Street expectations on corporate performance in the present quarter.
While large chunk of analysts were upbeat on engineering and capital goods, there are some who are apprehensive on the numbers of automobile and information technology companies.
Talking about automobile, higher input costs and stiff competition in the lower and mid-segments has of late seen margins of automobile companies, especially those of two-wheelers, take a hit.
On the other hand, despite the higher cost of funds and requirement in cash reserves, banks are expected to clock higher net interest margins. Not so long ago, RBI had hiked the repo rate by 25 basis points and the CRR by 50 basis points in order to
fight a higher rate of inflation. Plenty of banks followed suit by increasing their lending rates to remain unaffected by the increased cost of funds.
"The rupee appreciation is bound to dent the profit margins of companies in the information technology business by 3-4 per cent," pointed out Shailesh Kajriwal of Sunrise Infotech. Though, the extent of damage because of currency appreciation would solely depend on the onshore-offshore business composition of these companies and their respective hedging strategies.
If one takes into account the recent report on the Indian steel industry, there is a distinct possibility that the shortfall in supply of steel is likely to continue till financial year 2009. Furthermore, with demand continuing to rule firm despite the higher prices for steel, companies in the sector are expected to carry forward the momentum to the current quarter also. 
Companies in the oil and gas sector have of late been enjoying higher operating margins. In addition, a stronger rupee has helped them reduce payouts. There is no doubt that refining margins continue to be good for companies in the sector. And that is where companies into exploration and production of oil are expected to generate good profits in the current quarter.
Companies in engineering and capital goods sector had ended 2006-07 with bulky order books. In my view, the trend is ongoing, therefore helping them notch up good numbers in the current quarter. According to experts, Engineering and capital goods companies, because of their strong order book positions, are expected to do well in the current quarter. The speed of execution of contracts has also improved in the recent past.
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