India Strategyt: QE Sep-10 Earnings Season Thus Far: Morgan Stanley

Visit http://indiaer.blogspot.com/ for complete details �� ��


•
As expected, so far the broad market earnings (all companies and MS coverage) growth is ahead of the narrow market (BSE Sensex).
•
All eight MS-covered companies that reported last week have missed earnings estimates versus MS estimates. Thus, in aggregate, 56% of the companies covered by MS that have reported (i.e., 49 out of 88 companies) have beaten analyst expectations. Profit growth for companies under MS coverage is 13% so far.


•
So far, Healthcare and Staples have produced the biggest positive and negative surprises, respectively (see slide 3 for the depth and breadth tracker at sector and aggregate levels).
•
Margin contraction in seven out of 10 sectors. Exceptions are Industrials, Energy and Healthcare.
•
Sensex companies’ earnings have risen 9% YoY (21 companies have reported, thus far), lagging MS analyst expectations by 2%. Biggest positive surprise from Sterlite, M&M and L&T; largest negative surprise from ACC, JSPL, Jaiprakash and NTPC.
•
F11 earnings revisions were positive for six out of 10 sectors over the past week, with Healthcare and Industrials leading the pack, whereas Materials saw the highest negative earnings revisions.
•
In the broad market, 1,831 companies (accounting for 77% of India’s market cap) have reported revenue and earnings growth of 21% and 17% YoY, respectively.