Centre for Monitoring Indian Economy (CMIE) has revised its forecast for net profit of the manufacturing sector in the September quarter downwards, primarily due to the poor show of petroleum products industry.
“We now expect net profit to fall by 5.7 per cent, against our earlier expectations of a 34.2 per cent rise. This is on account of a downward revision in the profit forecast of the petroleum products industry,” it said in its monthly review.
However, CMIE expects the manufacturing sector to maintain its growth momentum by reporting a 20.7 per cent rise in net sales in the September quarter.
A steep fall in profit of the petroleum products industry and huge losses to be incurred by the aviation industry are expected to restrict the growth in corporate profit in the second quarter, the agency said.
The report points out that removal of 5 per cent import duty on crude in June was expected to have a positive impact on the profits of petroleum products industry in the current quarter. However, “a sharp rise in crude prices in July prompted us to revise our forecast for crude prices upwards for the September quarter and for the full fiscal,” it says.
“We expect the rise in crude prices to offset the impact of duty removal. The industry is now expected to report a steep 56.7 per cent fall in net profit in the second quarter as against 33.1 per cent fall expected earlier,” CMIE says.
The agency forecasts net profit growth of manufacturing sector (excluding petroleum products) in the quarter almost unchanged at 32.5 per cent.