Yesterday we analyzed earnings trend for constituent companies of the S&P CNX Nifty. On year-on-year basis (Q4 2015 to Q4 2016) corporate earnings showed a growth of 14.7%. In comparison, average stock prices went down by 1.9% during the same period*.
* Based on stock prices as on 31st March for each year. ** Based on 26 of the 50 companies comprising the S&P CNX Nifty that have declared results as of the date of this article.
Current PE Valuation of the Nifty = 21.30
Key Points about Corporate Earnings for Q4:
- The analysis is based on the results of 26 out of 50 Nifty companies which have declared earnings so far.
- Note – from April 1, 2016, Nifty has excluded Cairn, Vedanta, and PNB and included Aurobindo Pharma, Bharti Infratel, and Eicher Motors
- Earnings are improving while stock prices are showing a declining trend.
- On year-on-year basis there is an average growth of 14.7% in profitability. The benchmark Nifty went down 9 % in the same period.
- On a trailing basis markets remain expensive and are trading at valuations of 21.30 (PE).
- Most sectors have shown considerable improvement in profitability.
- Fundamentally (besides valuations) things are looking good at macro level.
- Pharma, Metals, Construction, Oil and Gas , Power companies are yet to announce their earnings for Q4 of FY 2016.
WE WILL BE UPDATING THIS ARTICLE ONCE REST OF THE COMPANIES DECLARE THEIR RESULTS OVER THE NEXT 1 MONTH.
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