| Q4FY2009 earnings preview Key points -
The earnings of the Sensex companies are estimated to decline by 9.4% during the fourth quarter, marking the second consecutive quarterly decline and the weakest performance in recent years. The Sensex' earnings (ex-oil companies) are estimated to dip by 13.3% during Q4FY2009. The anticipated dip in the earnings growth during the quarter clearly indicates the broad-based slowdown underway, as a result of the turmoil in the global credit markets and its effect on real economies. -
The expected 13.3% year-on-year (y-o-y) decline in the adjusted earnings of the Sensex companies (ex-oil) is based on continued head winds for real estate (a 79.9% decline year on year [yoy]), pharmaceuticals (down 74.3% yoy), auto (down 53.8% yoy) and metals (down 52.7% yoy) sectors. The de-growth in these sectors is anticipated to outweigh the relatively better performance in the oil & gas sector (up 33.2% yoy) and fast moving consumer goods (FMCG) sector (up 17.6% yoy). -
The sales growth for the Sensex companies (ex-oil and banks) is anticipated to slow down to a mere 0.9% yoy during the quarter owing to weaker corporate and individual demand. Further, the cost pressures, though eased to an extent, are expected to lead to ~240-basis-point contraction in the earnings before interest, tax, depreciation and amortisation (EBITDA) margins culminating into a 9.7% y-o-y decline in the EBITDA. Consequently, the bottom line of the Sensex companies (ex-oil and banks) are estimated to report a de-growth of 15.9% yoy during the quarter. However, it should be noted that the above-mentioned estimates do not factor in the possible write-backs resulting from the dilution in the AS 11 accounting standard.
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Click here to read report: Sharekhan Special
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