* Earnings slow-down is finally here!- Expect earnings to slow to a 5-year low with net profit growth for Sensex cos at only10.8% (EPS growth forecast lower at ~7%) for Q ended June, 2008.
- While sales g is strong at near 25%, margins under pressure (100bps drop) - Slowingearnings and likely earnings downgrades is likely to continue to pressure the market.* Earnings partly clouded by forex losses, MTM hits ...- Earnings partly clouded by MTM losses on forex loans or MTM losses of State Bank on its investment books.
- These won't be repeated if currency/bond yield remain stable.* ...but earnings downgrades likely to our FY09 EPS estimates.
- While earnings may surprise on the upside again and even factoring an exaggerated slow-down in Q1 earnings, our full year FY09 EPS growth of 18% looks set to be downgraded (led by engineering & banks).* Energy, software, telecom drive growth; auto,cement lag.
- Autos and cement companies are likely to report drop in profits led by slowing salesand margin pressure.
- Energy (Reliance & ONGC) lead profit growth followed by software and telecom.* Key Result Out-performer: Bharti, Reliance Comm, United Spirits, Satyam.
* Key Result Under-performer: ITC, Tata Motors, Ambuja, Hindalco, Sterlite
Source; aiii
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