Electricity tariffs to chew into bottom lines of most listed firms:Analysts
View(s):The bottom line of most companies, following the increase in power tariffs, are likely to be hampered due to requiring time to pass on the higher cost to the end consumer, a Softlogic Equity Research report says.
“As a result the June quarter and the early part of the September quarter are likely to be affected. However as the earnings base in the comparative year (Jun. 2012 and Sept. 2012 quarters) are of a lower base due to slower economic growth, the effect on the bottom line growth of the companies may not be visible in relation to market earnings,” the report added. Market earnings encountered marginal growth reflecting a dip in key sector earnings amidst this year’s first quarter GDP growth which stood at 6 per cent year on year in comparison to 8 per cent year on year during last year’s first quarter. The report said that earnings dipped on a quarter on quarter basis with the December quarter being a peak period for majority of companies. Banking and Finance sector earnings dipped 12 per cent year on year reasoned by the comparative quarter entailing significant exchange gains. The report added that diversified sector earnings remained broadly flat with 76 per cent of its contribution stemming from large players. Manufacturing, Hotels and Telecommunication sector performance underscored earnings growth for the quarter with market earnings growing 3 per cent year on year while it dipped 19 per cent quarter on quarter analysing 277 companies that have released results.
“Manufacturing sector spearheaded market earnings with 27 per cent year on year growth backed by industry GDP growth which registered 10.7 per cent during the first quarter of this year against 10.8 per cent in during the first quarter 2012,” the report added. Hotel sector earnings grew 62 per cent year on year reflecting impressive earnings growth in city hotels coupled with year to date tourist arrivals growth recording 13 per cent year on year. The Telecommunication sector earnings grew as a result of notable exchange losses incurred in the comparative quarter which occurred as a result of the 16 per cent year on year depreciation of the rupee in March 2012 to Rs 128 against the 5 per cent year on year depreciation for the first quarter of this year.
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