As Infosys kicks of the results season today, leading brokerage Sharekhan has this to say about the June earnings of India Inc:
“Given the macro headwinds, such as rising input cost, higher interest burden and moderating demand, the aggregate Sensex earnings are estimated to grow at a slower pace of 9.5 per cent during the first quarter of FY2012. But the earnings growth is expected to be much better at 13.7 per cent on excluding State Bank of India (SBI).
The growth in the earnings of the Sensex companies would mainly be achieved on the back of a relatively better performance of certain sectors such as metals (an earnings growth of 18.1 per cent), oil & gas (an earnings growth of 15.6 per cent due to increased realisation) and capital goods (an earnings growth of 15.2 per cent year on year (YoY) due to a pick-up in order execution and a favourable base effect).
Meanwhile, the real estate, telecommunications (telecom) and cement sectors are likely to act as a drag on the Sensex earnings.
Within sectors, the stocks that will comprehensively outperform their peers in Q1 FY2012 are ICICI Bank, Bajaj Auto, HCL Technologies and ITC among the large-caps and Federal Bank, Godrej Consumer Products Ltd, India Cements and V-Guard Industries in the mid-cap space.
On the other hand, some of the companies that will show relatively weak Q1 results are SBI, Maruti Suzuki, Ashok Leyland, Bharti Airtel, DLF, Jaiprakash Associates, Infosys, Wipro and Punj Lloyd.
The revenue of the Sensex companies (ex oil companies and banks) is expected to grow by 22 per cent YoY during the first quarter. The earnings growth is likely to lag due to margin pressure and higher interest cost. We expect an earnings growth of 11.5 per cent in the Sensex companies (ex oil companies and banks) compared to that in Q1 FY2011.’’