CLSA sees Sensex cos' Q1 exceptional-adjusted net up 14% on year

Monday, Jul 7       MUMBAI - CLSA Asia Pacific Markets expects 30 companies constituting Bombay Stock Exchange's Sensex to report 14% year-on-year growth in net profit in Apr-Jun after exceptional adjustments.     However, sans these exceptional adjustments, the growth is seen mere 6.1% against 34% a year ago, a CLSA report said today.     The international brokerage house cited high base as a key reason for the fall in earnings growth.       Among sectors, CLSA expects companies in capital goods sector, with 31% rise in net profit, to clock the highest growth in earnings in Apr-Jun.     Other top performers are likely to be real estate, with 26% growth, and telecom, with 24%, the report said.     Banks are likely to report 17% year-on-year growth in earnings this quarter, CLSA said adding they may witness an upside surprise in margins.     This has been attributed to re-pricing of wholesale deposits by banks in March, increase in lending rates, and a rise in bond yields.     CLSA sees growth of most companies, except consumer goods, capital goods, metals, and software, decelerating in Apr-Jun as against Jan-Mar.     Telecom companies' interest costs are seen surging significantly in the quarter.     For CLSA universe (excluding oil and gas), interest expense will rise 71% from a year ago skewed by telecom sector, the report said. Excluding telecom, interest expense will be up 36%.     "While high inflation, surging crude prices are challenges for the macro-environment in the near term, the steep 50-60% fall in many blue-chips suggests that these concerns are largely discounted," CLSA said.     It favours Bharti Airtel, Bharat Heavy Electricals, Cairn India, Reliance Industries, and Tata Power as its top-picks citing strong bottoms-up stories.     The report also added these top-picks are not far from 'stress' value.     With the fall in rupee against the U.S. dollar, the brokerage house sees other income falling 19% from a year ago for CLSA universe (excluding oil and gas), in contrast to the 20-40% growth witnessed over the past three quarters.

---

Best Jokes, Best Friends, Best Food. Get all this and more on Best of Yahoo! Groups.