Fairval

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Dismal H1 results

Posted by fairval on December 1, 2011

The result season got over a while ago, this is a delayed post. The chart shows how poor H1 results have been. It is likely listed companies will see earnings decline in FY12. This does happen too often in India. The last time this may have happened was in FY02, when markets used to trade at 11-13x forward.

Could we see a repeat of that? So far, markets are holding at around 17x FY12 expected EPS. But this could well be the upper limit of trading values for the next 6 months. Right now, no one has a clue on FY13 numbers. Typically, at this time, people will budget a 15-20% growth in earnings in FY13.

So it really depends which way expectations go by around April’12. If by that time market things FY13 will also see degrowth, or less than 10% earnings growth, then we could see valuations correcting to lower end of the Sensex trading range.

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