Wednesday, January 9, 2013

Investor's Eye: Q3FY2013 earnings preview

 
Investor's Eye
[January 09, 2013] 
Summary of Contents

 

 

SHAREKHAN SPECIAL

Q3FY2013 earnings preview 
Revenue growth momentum eases further but so does pressure on margins 

Key points

  • Revenue growth to slip further: For Q3FY2013, the Sensex companies are expected to show an aggregate revenue growth of 10.4% year on year (YoY; 11% YoY ex oil companies), which is the slowest growth in 12 quarters. The growth in aggregate revenues would be led by the pharmaceutical (pharma; up 20.5%), automobile (auto; up 16 %) and fast moving consumer goods (FMCG, up 13.3%) sectors. However, the slowdown in revenue traction continues in the capital goods and energy sectors as well as in some biggies like Reliance Industries Ltd (RIL). 

  • Margin pressure easing off: Amid a slowing revenue growth, the stablisation of the operating profit margin (OPM; EBITDA margin) is emerging as a comforting factor. On an aggregate basis, the OPM of the Sensex companies is expected to be 18.2 % (vs 18% in Q2FY2013), which is slightly higher on a sequential basis. This could be attributed to a higher OPM driven by a better volume offtake in the festive season. Thus, the festive demand-driven sectors like FMCG and auto would see some margin improvement sequentially. 

  • Subdued earnings growth; consensus expectation indicates pick-up in earnings growth on the back of cyclical recovery in economy: On an aggregate basis, the Sensex companies' earnings are expected to grow by 8% YoY in Q3FY2013. However, excluding the oil companies the earnings growth is likely to be around 8.6%. Moreover, the breadth of the earnings is expected to improve as around 21 companies (out of 30-company index) are expected to post a growth in the earnings YoY. 

    After a long period of downgrades in the consensus earnings estimates, there hasn't been any downgrade in the aggregate earnings of the Sensex companies over the past few months. This is seen as an early sign of a potential reversal of the trend. The trend reversal could be backed by a revival in corporate earnings growth on the back of a cyclical upturn in the economy. The consensus estimates are factoring an earnings growth of 14% for FY2014 (much above 7-8% for this fiscal).


Click here to read report: Investor's Eye

 

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.

 

 


       

       

Regards,
The Sharekhan Research Team
myaccount@sharekhan.com

Manage your newsletter subscriptions

 
This e-mail message may contain information, which is confidential, proprietary, legally privileged or subject to copyright. It is intended for use only by the individual or entity to which it is addressed. If you are not the intended recipient or it appears that this mail has been forwarded to you without proper authority, you are not authorized to access, read, disclose, copy, use or otherwise deal with it and any such actions are prohibited and may be unlawful. The recipient acknowledges that Sharekhan Limited or its subsidiaries, (collectively "Sharekhan "), are unable to exercise control or ensure or guarantee the integrity of/over the contents of the information contained in e-mail transmissions and further acknowledges that any views expressed in this message are those of the individual sender and no binding nature of the message shall be implied or assumed unless the sender does so expressly with due authority of Sharekhan . Sharekhan does not accept liability for any errors, omissions, viruses or computer problems experienced as a result of this email. Before opening any attachments please check them for viruses and defects. If you have received this e-mail in error, please notify us immediately at mail to: mailadmin@sharekhan.com and delete this mail from your records. This e-mail message may contain information, which is confidential, proprietary, legally privileged or subject to copyright. It is intended for use only by the individual or entity to which it is addressed. If you are not the intended recipient or it appears that this mail has been forwarded to you without proper authority, you are not authorized to access, read, disclose, copy, use or otherwise deal with it and any such actions are prohibited and may be unlawful. The recipient acknowledges that Sharekhan Limited or its subsidiaries, (collectively "Sharekhan "), are unable to exercise control or ensure or guarantee the integrity of/over the contents of the information contained in e-mail transmissions and further acknowledges that any views expressed in this message are those of the individual sender and no binding nature of the message shall be implied or assumed unless the sender does so expressly with due authority of Sharekhan . Sharekhan does not accept liability for any errors, omissions, viruses or computer problems experienced as a result of this email. Before opening any attachments please check them for viruses and defects. If you have received this e-mail in error, please notify us immediately at mail to: mailadmin@sharekhan.com and delete this mail from your records.

No comments:

Post a Comment

Post a Comment