(Bloomberg) — For Indian equity investors looking for an uptick in earnings growth, the wait has got longer.

A slowdown in domestic growth and the lingering shadow banking crisis mean the September-quarter results season that kicks off Thursday will be similar to one seen over several quarters in recent years — tepid and patchy.

Analysts expect to see a contraction in profits across most industries, with Edelweiss Securities Ltd. forecasting sales growth for the stocks it tracks to be the lowest in a decade. The spate of measures taken by the government to revive growth, including the $20 billion tax break to companies, are too recent to be reflected in company report cards, although analysts have since raised their estimates for 12-month forward earnings.

“Overall, we expect a soft quarter and earnings revival could still take some time,” Edelweiss Securities Ltd. analysts Prateek Parekh and Padmavati Udecha wrote in a note on Oct. 7. The brokerage’s forecast for sales growth excludes banks and commodities-related companies.

NSE Nifty 50 Index earnings for the year to March will shrink by about 4% from a year earlier, according to Edelweiss and Motilal Oswal Securities Ltd. While commodities-related companies and corporate banks’ deferred tax assets will drive the contraction, the “earnings momentum is still soft and upgrades are likely to be modest“ even if they are excluded, Parekh and Udecha wrote.

Information technology and industrial companies’ earnings growth probably fell below 5%, they analysts said, while they expect retail banks, oil marketing companies and consumer discretionary firms to post profit expansion topping 25%.

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Earnings risks continue to be tilted to the downside because of the slowing economy, uneven asset quality patterns seen in financial-services companies and depressed commodity prices, according to Motilal Oswal.

“At this point, tax rate cuts will largely limit the downgrades rather than driving big upgrades on the earnings front,” the brokerage said in a recent note.

The Leaders

While Nifty index’s pre-tax earnings are seen declining, banks led by Axis Bank Ltd., ICICI Bank Ltd. and State Bank of India Ltd. should post 34% growth, Kotak analysts led by Sanjeev Prasad wrote in Oct. 7 note.

Pharmaceutical companies are a top pick for the analysts, who estimate the domestic drug business could see 10-12% growth from a year earlier.

Weaker Commodities

Poor consumer demand and narrower margins for commodities-related companies will weigh on overall Nifty profits, according to Antique Stock Broking Ltd. The brokerage said it will its 13,100 year-end target for the index once the reporting season ends. The measure closed Monday at 11,126.

Margins for steel companies are expected to narrow sequentially due to weak domestic demand, while upstream oil players’ profitability will be eroded by lower oil prices, the analysts wrote.

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