Notes on Indian equities, sectors and economy

How low can earnings go?

Posted by fairval on January 10, 2009

A report by Citi tries to make this interesting point – how low can corporate earnings go in India. The chart shows relation of overall corporate earnings to IIP. In 1997-99 slowdown, corporate earnings growth touch 0% to slightly negative twice. In 2001, corporate earnings will come down to -14%.

While the report does not make any forecasts, (brokers dont like -ve numbers, I guess), the inference is clear. While FY09 may be marginally positive (could be negative too, these two quarters will be a sharply down), sometime by 1H10, the 12 month rolling figure should be negative. Whether FY10 as a whole will be negative, too early to say


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