UBS - March 2011 Sensex Target 20,000
Thursday, August 27, 2009
The days of putting targets on BSE SENSEX are back. Despite the 100% rally from the bottom in Indian markets, fundamentals and liquidity are likely to support higher valuations. Indian stocks are likely to re-rate further over the medium term as positive data points relating.
The earnings estimates for the Sensex indicates 4% growth in FY10, 22% growth in FY11 and 21% growth in FY12. It is estimated that, strong earnings growth for pharma, cement and petrochem companies in FY10 while real estate and metals companies are likely to post strong earnings growth in FY11.
UBS BSE Sensex EPS estimates are - FY10E 907, FY11E 1110, FY12E 1343. FY2011 will fully capture the economic recovery and corporate earnings, UBS set a March 2011 target of 20,000 based on a P/E multiple of 14.9x FY12 earnings. Sensex is trading at a forward PE of 15.9x and forward P/BV of 2.6x.
However, the BULLS are in a mood to go merry and are likely to touch the March-2011 UBS estimated figure of 20,000 12 months ahead in March-2010 or even earlier, who knows:-) The Mad mad Bull Market is here.
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Published by Webmaster @ 7:20 AM IST.
Changing Estimates of SENSEX Earnings - Trust Research
Tuesday, August 25, 2009
Since the beginning of the Year, BSE Sensex companies earnings [hence forth will be referred to as earnings] estimates has undergone a dramatic change with the SENSEX rising as well.
At the beginning, the consensus was earnings would take a dip in FY 2010. However, the tone of Analysts at various Brokerages and Research house started changing and we shall have a look at it and where it stands currently.
All Numbers below are INR Earnings for BSE 30 SENSEX Companies:
26/3/09 UBS 848 FY10 and 1023 FY11
17/04/09 Consensus 835 FY10
29/04/09 Morgan Stanley - Base Case 736 FY2010 [Extremely bearish View]
Consensus - 837 FY10 and 984 FY11
18/05/2009 - Elections Results are Out - Morgan Stanley Base Case jumps 851 FY10 and 957 FY11. Consensus 845 and 995 for FY10 and FY11
1/06/09 - Consensus 852 and 1005 for FY10 and FY11
10/07/2009 - Morgan Stanly changes its views and tone in the report - A new Bull Market :-)
Deutsche Bank 824 / FY10 and 998 / FY11
15/07/2009 - BoFA Merrill Lynch - Still very conservative in earnings - 838 and 1023
20/07/2009 - Consensus 899 and 1068 for FY10 and FY11
Morgan Stanly a Big Bull and runs ahead of consensus in base case estimates - 904 and 1062 for FY10 and FY11
HSBC - 990 / FY11 [ Conservative Again]
05/08/2009 - Consensus 946 and 1119 for FY10 and FY11
Morgan Stanley - 974 / Fy10 and 1169 / FY11 - Running ahead of consensus even as Government comes openly about Drought.
BNP Pribas - 969 / FY 10
13/08/2009 - Nomura with Extremely Bullish prediction which is impossible to achieve - 1150 / FY10.
Update on 24/09/2009:
Kotak has set EPS estimates at Rs946 for FY2010E and Rs1,153 for FY2011E
Unfortunately, Morgan Stanley SENSEX EPS estimates has the highest variation and why this matters is their are over 1,000 FIIs operating in India and hardly few of them have in-house Research for India. They all rely on Morgan, Goldman etc and hence as Morgan Stanley keeps revising, it becomes a big mover of Indian markets. But you can witness Morgan's Research and we don't have to say anything about it :-)
We have BoFA-Merrill Lynch still very conservative while Nomura extremely Bullish - two views at far end of spectrum. So go with Consensus estimates for arriving at BSE SENSEX Targets. Mean is 16 P/E 12 months forward for SENSEX.
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Published by Webmaster @ 1:47 PM IST.
IIP Growth - V-shape rise in June - Mining star Performer - Will it Sustain ?
Wednesday, August 12, 2009
The Indian Industrial production (IP) growth accelerated to 7.8%YoY in June: This compares with a growth of 2.2%YoY (revised downwards from 2.7% earlier) in May and 1.2%YoY in April 2009. While we were expecting industrial production to remain on the recovery path, the growth in June was much above market expectations and our expectations. Infact, the IP growth in June 2009 is highest since February 2008. While we expect sustained recovery in IP growth, the monthly growth numbers do tend to be volatile at times and there could be some retracement in IP growth over the next 1-2 months. The mining segment growth accelerated to double digit levels of 15.4%YoY in June (vs. 3.3% in the previous month). Growth in the electricity segment picked up to 8%YoY compared to 3.3% in May.
On the use-based classification, the growth in the basic goods segment accelerated to 10.1%YoY in June (vs. 3.8% in May). Capital goods growth also picked up sharply to 11.8%YoY in June after declining 3.4%YoY in the previous month. Growth in the consumer goods segment accelerated to 4%YoY in June after declining 0.4%YoY in May. Within consumer goods, while the durables segment growth accelerated further to 15.5%YoY (vs. 12.5% in May), the growth in the non-durables segment also moved into positive territory to 0.3%YoY (vs. -4.3% in May). Growth in the intermediate goods accelerated to 7.9%YoY in June (vs. 6.4% in May).
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Published by Webmaster @ 7:31 PM IST.
Food prices soar 32% in 60 Days - What is the Government Doing ?
Despite the wholesale prices based inflation being in the negative zone for more than two months, India's food prices continue to remain high. As per the latest figures, annual inflation was -1 .58 for the week ended July 25 [Old Data needs to be revamped, total disconnect with current World]. However, it has had little impact on prices of essential food items that continues to soar.
According to an analysis of 14 essential commodities collated by the ministry of consumer affairs, retail food prices have surged 32% in the country in the months of June-July compared to 18% in the corresponding period in 2008. However, WPI based inflation has been negative through most of this period.
The main reason for the spike in food prices this year is understood to be poor rains as the monsoon remains much weaker than expected. According to the India Meteorological Department (IMD), overall rainfall so far has been about 28% below the long period average (LPA). The IMD on Monday further lowered its monsoon forecast for a second time since June to 87% of the LPA compared with its June 24 forecast of 93%.
The government has been looking to control the soaring prices by improving supply in the market. It has already allowed duty free import of raw sugar and is also planning to import pulses and edible oils through the state run agencies. However, so far the measures have failed to show any convincing results. With the festival season around the corner, if left unchecked, food prices may spike further raising concerns of trigging a runaway inflation in the broader economy as well.
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Published by Webmaster @ 1:23 PM IST.
Monsoon Failure - Negative rural demand + GDP Numbers Backtrack
Friday, August 07, 2009
According to press reports, the rain deficit has worsened from 19% of the Long-Period Average till date last week, to 25% now. Data from the IMD suggests that overall shortfall over the June-September period could rise to 15%-18% from the foretasted 8%.
The monsoon is important for India's agricultural growth given that about 60% of crop land is not irrigated and thus dependent on rainfall. We think that the overall shortfall over the June-September period could rise to 15%-18% from the current 8% shortfall forecast by the IMD.
The worse-than-expected monsoon takes away the recent upside to activity due to the continued easing of financial conditions and improving external conditions.
The critical festival season demand of October-November is sensitive to the outlook for the winter crop, and may suffer as a consequence. This is a significant negative shock for the equity market, with sectors catering to rural demand such as FMCG particularly affected.
As a consequence of Poor Monsoon, consensus forecasts of 6.3% GDP Growth for FY 2010, and the Prime Minister's Economic Advisory Council's forecast of 7% looks a bit rich.
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Published by Webmaster @ 9:58 AM IST.
