Fairval

Notes on Indian equities, sectors and economy

1Q08 Results not that good

Posted by fairval on August 17, 2007

The markets missed the point on 1Q08 results of Indian companies. This post is a little late in the day on those numbers, but the numbers here clearly show some worring signs.

While most commentators said results for the Jun’07 quarter were good, there are 2 key points to note. Other income shot up in this quarter, and was a key reason for 31% or so of PBT growth. Take that out, and PBT growth was only 20% or so.

Also, interest cost grew faster than PBDIT for only the second time in the last 20 or quarters. Interest cost grew 24%. In the coming quarters, this may persist. So far, depreciation is still growing less than PBDIT. Both these costs will exert increasing pressure on PBT growth in future.

FY08 aggregate PBT growth could still end up over 20% since corporates are sitting on a lot of cash, so other income growth will be strong this year. But FY09 should clearly decelerate below 20%

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