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Get ready for the pain
Intensifying macro headwinds in the Indian economy is clearly moderating
the performance of corporate India. The same is expected to get reflected
in Q3FY12E results season, where we expect our coverage universe (ex-
BFSI and Oil & Gas) to post a YoY revenue growth of 15.5%. Including Oil &
Gas, revenue growth will stand at 18% YoY (High crude prices and
depreciating currency). On the margins front, pain would be further
aggravated as 11.1% QoQ depreciation in Rupee will keep the operating
costs higher(specifically high imported raw material costs), albeit flattish
input prices. We expect EBITDA margins (Ex BFSI) to be at 15.4% for
Q3FY12E, implying a decline of 230 bps YoY. On the PAT front, we built in
a decline of 11.4% YoY for Q3Y12E. The dismal PAT expectations is
explained by the higher interest costs that corporates will shell in Q3FY12E
and depreciating currency which will lead to MTM losses getting passed
through the P&L’s ( Upside risk to this would be amortization of MTM
losses via the balance sheet route). Heightened uncertainty at this point in
time has certainly increased the risk of downgrades to FY13E earnings
cycle even though most of the downgrades for FY12E are in place. Hence,
Q3FY12E results season will witness huge bouts of volatility in individual
names if individual results throw up slightest of negative/positive
surprises.
Sectoral leaders and sectoral laggards
We expect few sectors to perform well across all parameters in
Q3FY12E. This would include sectors like Cement (Growth in
realizations and volume to aid margin expansion coupled with a
favourable base effect), IT (Reasonable volume growth and 11.1% QoQ
depreciation in currency) and FMCG (Price hikes to help achieve double
digit growth). Oil & Gas, too would exhibit robust revenue growth but
subsidy accounting will create PAT volatility. On the negative side, we
expect Capex linked sectors like Capital goods/ Infrastructure/Power to
report subdued results (Weak execution, High raw material costs and
high borrowing costs & stretched working capital cycles).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Get ready for the pain
Intensifying macro headwinds in the Indian economy is clearly moderating
the performance of corporate India. The same is expected to get reflected
in Q3FY12E results season, where we expect our coverage universe (ex-
BFSI and Oil & Gas) to post a YoY revenue growth of 15.5%. Including Oil &
Gas, revenue growth will stand at 18% YoY (High crude prices and
depreciating currency). On the margins front, pain would be further
aggravated as 11.1% QoQ depreciation in Rupee will keep the operating
costs higher(specifically high imported raw material costs), albeit flattish
input prices. We expect EBITDA margins (Ex BFSI) to be at 15.4% for
Q3FY12E, implying a decline of 230 bps YoY. On the PAT front, we built in
a decline of 11.4% YoY for Q3Y12E. The dismal PAT expectations is
explained by the higher interest costs that corporates will shell in Q3FY12E
and depreciating currency which will lead to MTM losses getting passed
through the P&L’s ( Upside risk to this would be amortization of MTM
losses via the balance sheet route). Heightened uncertainty at this point in
time has certainly increased the risk of downgrades to FY13E earnings
cycle even though most of the downgrades for FY12E are in place. Hence,
Q3FY12E results season will witness huge bouts of volatility in individual
names if individual results throw up slightest of negative/positive
surprises.
Sectoral leaders and sectoral laggards
We expect few sectors to perform well across all parameters in
Q3FY12E. This would include sectors like Cement (Growth in
realizations and volume to aid margin expansion coupled with a
favourable base effect), IT (Reasonable volume growth and 11.1% QoQ
depreciation in currency) and FMCG (Price hikes to help achieve double
digit growth). Oil & Gas, too would exhibit robust revenue growth but
subsidy accounting will create PAT volatility. On the negative side, we
expect Capex linked sectors like Capital goods/ Infrastructure/Power to
report subdued results (Weak execution, High raw material costs and
high borrowing costs & stretched working capital cycles).
Can I buy now ICICI.?
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