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Q1FY12 Results Preview: 21/14/7: A perfect funnel impact visible
Emkay Universe* is likely to post Sales growth of 20.9%, EBITDA growth of 14.1% and PAT growth of 7% for Q1FY12. Ebitda margins for Emkay Universe are expected to contract by 118 bps to 19.7%. PAT growth excluding the top 3 contributors (viz NTPC, Hind Zinc and TCS) to incremental PAT is just 2.1%. 53 out of 124 companies are likely to show negative PAT growth.
Interestingly it is showing a funnel impact as earlier mentioned in our strategy report ‘Earnings @ Risk’.
Sectors like Power (27.9%), Telecommunications (24.4%), Engineering & Capital Goods (22.5%), Agri Input & Chemicals (20.6 %) and Auto Ancillaries (19.7%) are expected to witness better yoy EBITDA growth while sectors like Print Media (13.3%) and Offshore Oil Field Services (6.7%) are likely to post yoy decline in EBITDA.
PAT growth will be contributed by sectors like Auto Ancillaries (36.9%), Engineering & Capital Goods (23%), IT Services (16.8%), consumers (15.4%) and Agri Input & Chemicals (10.3%). While sectors like Offshore Oil Field Services (51.3%), Paper (22.8%) and Print Media (17.4%) will witness de-growth in PAT.
Earnings momentum to remain subdued in banks owing to ~10% yoy decline in net profit for PSU Banks. Private Banks, on other hand, would deliver healthy 27% yoy growth in net profit
This quarterly season, although a lean one, will be very crucial for the direction of the market (with all due respect to liquidity). We will be keenly monitoring the management commentaries for economy/industry/company outlook.
Emkay Universe is trading at 14x FY12E earnings which is at a discount of 10% to Sensex PE of 15.5x FY12E consensus EPS of Rs 1232.
* Note: ex Banks & FS, FS - Others and Oil & Gas
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