Q1FY2007 earnings review: Sharekhan Special dated August 07, 2006

[Sunil]

 

Sharekhan Special [August 07, 2006] Please see the attachment for details Share khan www.sharekhan.com

Summary of Contents SHAREKHAN SPECIAL Q1FY2007 earnings review The earnings of the Sensex companies for Q1FY2007 grew by 22.8% year on year (yoy) and 6.6% quarter on quarter (qoq) compared with the consensus expectations of 19.1% and 3.7% growth respectively. While the sales of the non-banking companies in the Sensex grew by 33.4% yoy, their operating profit grew by a slower 31.3% as their operating profit margin (OPM) contracted by 42 basis points yoy to 26.2%. Automobile, capital goods, cement, and information and technology (IT) companies led the growth in the Sensex' earnings. The earnings of the Mid-cap 200 Index grew by 40% yoy. While the sales of the non-banking companies grew by 20% yoy, their operating profit grew by a faster 29% as their OPM expanded by 103 basis points. Cement companies like Shree Cement and India Cements led the expansion in the OPM. The earnings of the Sensex companies are slated to grow by 21% for FY2007, implying an earnings growth of 20% yoy for M9FY2007. At the current level of 10,811, the Sensex is trading at 14.4x its one-year forward earnings.

Regards, The Sharekhan Research Team myac...@sharekhan.com