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India Equity Research Reports, IPO and Stock News
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● We are midway through the 1Q earnings season and 45% of CS
coverage universe and 50% of Nifty companies have reported.
● Results have largely been disappointing, with profits surprising
positively only in metals (HZL, JSW) and staples (ITC). Most
sectors missed (Fig 1), mainly financials (BOI, Union Bank),
utilities (NTPC) and capital goods (Crompton Greaves, BHEL). IT
and pharma as sectors were in-line.
● Margin compression so clearly visible in 4Q11 is obvious in 1Q12
as well, with sales growth outpacing EBITDA growth across
sectors excluding staples (Fig 2). Operating profit growth has
been sub-20% for almost all sectors except metals.
● The outlook seems to be decisively worse across sectors. All saw
earnings downgrades (Fig 3). The slight upgrade for Reliance has
been largely due to non-operating gains on cash from BP. The
revisions also imply lower margins going forward; the magnitude
of sales downgrades (Fig 4) is far smaller than earnings cuts.
● So far, CS FY12 Sensex EPS integer has fallen 1.25% in July to
1188 (up 16% YoY, and down 5.2% from peak). We continue to
believe multiples are much more volatile than earnings
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● We are midway through the 1Q earnings season and 45% of CS
coverage universe and 50% of Nifty companies have reported.
● Results have largely been disappointing, with profits surprising
positively only in metals (HZL, JSW) and staples (ITC). Most
sectors missed (Fig 1), mainly financials (BOI, Union Bank),
utilities (NTPC) and capital goods (Crompton Greaves, BHEL). IT
and pharma as sectors were in-line.
● Margin compression so clearly visible in 4Q11 is obvious in 1Q12
as well, with sales growth outpacing EBITDA growth across
sectors excluding staples (Fig 2). Operating profit growth has
been sub-20% for almost all sectors except metals.
● The outlook seems to be decisively worse across sectors. All saw
earnings downgrades (Fig 3). The slight upgrade for Reliance has
been largely due to non-operating gains on cash from BP. The
revisions also imply lower margins going forward; the magnitude
of sales downgrades (Fig 4) is far smaller than earnings cuts.
● So far, CS FY12 Sensex EPS integer has fallen 1.25% in July to
1188 (up 16% YoY, and down 5.2% from peak). We continue to
believe multiples are much more volatile than earnings
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