Summary of Contents
SHAREKHAN SPECIAL
Q4FY2007 earnings preview
Key points
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The Sensex
earnings are expected to grow by 37% year on year (yoy) for
Q4FY2007. However, excluding oil the earnings are expected to grow
by 34% driven by the earnings in the software, cement and banking
sectors. These three sectors are expected to contribute 42% of the
Q4FY2007 Sensex earnings excluding oil. On a quarter-on-quarter
(q-o-q) basis the expected growth is only 1.2%, which indicates
expectations of some slowdown in the earnings momentum.
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Strong
earnings growth is expected in the pharma sector mainly due to a
very low base. On the other hand information technology (IT)
earnings will be affected due to the sharp appreciation in the
rupee. Auto numbers are not expected to be great due to margin
pressure and a slowdown in the volumes.
-
Strong
year-on-year (y-o-y) earnings growth is expected from Reliance
Communications, Bharti Tele, Ranbaxy, Dr Reddy's Laboratories,
Grasim and Tata Steel.
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Two-wheeler
majors Hero Honda and Bajaj Auto are expected to report a y-o-y
decline in the profits.
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Some of the
non-Sensex companies where high growth is expected are Dabur
Pharma, Syndicate Bank, Polaris and India Cements.
-
In the absence
of any major surprises, the fourth quarter results of the Indian
companies may not be a trigger for the market, but the market will
keenly await the guidance on the FY2008 prospects of the corporate
sectors, especially automobiles, banks and the other interest rate
sensitive
sectors. |