Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Q3FY12 PAT growth for the Sensex (3.5%) and coverage universe (2.2%) was in line with our estimates, with some pockets of surprise. Topline growth continued to remain strong (~22.7% versus 19.7% estimated), but the positive surprise was driven by a handful of companies only. EBITDA margins continued their downward trend and contracted in excess of ~300bps YoY. Sector–wise, pain points persist: weak BTG ordering in cap goods, rising NPLs in PSUs, tepid guidance from IT companies. However, there are some silver linings as well: robust topline growth in the consumer sector, stabilising interest costs in construction and improving realisation for steel companies. Although the consensus earnings trajectory continues to witness downgrades, the pace has decelerated as compared with the previous quarter; also, it has been accompanied by an improvement in earnings breadth.
Earnings in line; topline surprises; margins disappoint
Earnings growth for the Sensex, at 3.5% YoY and at 2.2% for the coverage universe were largely in line with expectations. On an aggregate PAT level, this implies an asking rate of ~ 12.0% (ex SBI: 6.3%) Y-o-Y growth for Sensex in the last quarter to meet the year end PAT target. Overall, earnings growth has remained muted through this fiscal and this marks the fourth consecutive quarter of earnings growth of a sub-par 10.0% or below. Although revenue surprised on the upside both for the Edelweiss coverage (22.7%, est. ~19.7%, YoY) as well as Sensex (24.1%, est. 20.0%), the beat was largely driven by a handful of stocks (RIL, GAIL, and TTMT). EBITDA margins continued to shrink and contracted ~320bps for the coverage universe and ~360bps for the Sensex.
Cap goods, PSU banks still strained; few surprises elsewhere
Pain points observed in the previous quarters persist, especially within the cyclical sectors: Issue of rising NPAs in PSU banks and depressed BTG ordering in capital goods sector while management commentary within IT sector for Q4 was muted(Infosys guiding for a flat Q4 revenue growth). However, there have been some silver linings as well: Robust topline growth in the consumer goods sector, aided by better than/in-line volumes in 12 out of 13 companies, stabilising interest costs for the construction sector and better-than-expected sequential realisation for steel companies (2-5% QoQ).
Earnings downgrades continue, but at a milder pace
During the earnings season, the Street has downgraded FY13 estimates by 1.5%. This is in contrast to the trend observed in the previous quarter when the downgrade was much sharper. Currently, consensus Sensex EPS estimates for FY12 and FY13 stand at INR1, 124 and INR1,287, respectively (Edelweiss: INR1,100 and INR 1,270, respectively). On a positive note, there have been some improvements at the margin: for the first time in almost three quarters, the breadth of earnings revision has improved. This in no way implies that we are out of the woods, but we may be closer to bottoming out of the earnings downcycle.
No comments:
Post a Comment