See 100 bps growth in cos' Q4 margin, 15% growth in FY17: CLSA

Mahesh Nandurkar of CLSA says Q4 is likely to mark the return of revenue growth for India coverage universe at 7 percent YoY. However, earnings growth will continue to be weak at 1 percent YoY as a clean-up of bad assets depresses earnings of the financials sector, he adds.

According to him, margins of domestic companies should rise by 100 basis points YoY, the sixth consecutive quarter of improvement.

Nandurkar feels an earnings decline of 2 percent YoY in FY16 is likely to improve to 15 percent growth in FY17, helped by a low base. Earnings growth pick-up should be visible from the September 2016 quarter onwards, he says.

Rakesh Arora of Macquarie says Q4FY16 results are likely to be subdued by commodities and banks, adding FY16 is likely to end with negative 1 percent YoY net profit growth for coverage of 125 stocks.

However, adjusted for commodities and banks, the growth recovers to a more respectable 7 percent, he feels.

"Similarly, headline profit estimates for Q4 indicate a 10 percent decline in profit, but excluding commodities and banks it is a positive 10 percent growth. The domestic economy is strengthening, and should be reflected in a low base effect that will kick in for FY17 and 15 percent plus growth looks very much possible, says Arora.