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Apr-Jun 2013 Earnings Preview
NIFTY: Earnings growth and valuations
Nifty EPS at Rs356.6, Rs391.4 and Rs457.0
to grow at 1.4%, 9.7% and 16.8%
respectively for FY13, FY14 & FY15
NIFTY is currently trading at 16.3x FY13,
14.8xFY14 and 12.7x FY15 estimated
free‐float earnings
Nifty trading at 1.0% discount to its tenyear
average of one‐year forward multiple
We estimate the free-float EPS for NIFTY companies in FY13, FY14 and FY15 at
Rs356.6, Rs391.4 and Rs457.0, respectively, representing a YoY growth of 1.4%, 9.7%
and 16.8%, respectively. Technology (18.2% YoY growth), FMCG (14.0% YoY growth)
and Auto (13.4% YoY growth) are likely to lead the charge in net profit growth in
FY14, while Cement (5.2% YoY growth), Metals (5.6% YoY growth) and BFSI (6.5%
YoY growth) are expected to be the laggards.
NIFTY is currently trading at 16.3x FY13, 14.8x FY14 and 12.7x FY15 estimated freefloat
earnings. As the chart below indicates, the last ten-year average for NIFTY’s
one-year forward PE is 14.4x. Thus, Nifty is currently trading at 14.3x i.e. at 1.0%
discount to its ten-year average of one-year forward multiple.
Nifty 1‐yr forward PE
30.0
25.0
20.0
15.0
Average
14.4
10.0
5.0
Jun-03
Oct-03
Feb-04
Jun-04
Oct-04
Feb-05
Jun-05
Oct-05
Feb-06
Jun-06
Oct-06
Feb-07
Jun-07
Oct-07
Feb-08
Jun-08
Oct-08
Feb-09
Jun-09
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
Oct-12
Feb-13
Jun-13
Source: Bloomberg, PL Research
MSCI India trading at 23% premium to
MSCI Asia (Ex‐Japan), last ten‐year average
premium is 22%
MSCI India Premium to MSCI Asia (Ex‐Japan)
60%
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
10 year Avg.
22%
Jun-03
Oct-03
Feb-04
Jun-04
Oct-04
Feb-05
Jun-05
Oct-05
Feb-06
Jun-06
Oct-06
Feb-07
Jun-07
Oct-07
Feb-08
Jun-08
Oct-08
Feb-09
Jun-09
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
Oct-12
Feb-13
Jun-13
Source: Bloomberg, PL Research
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