Sensex Q4 PAT seen growing 15%, ex-SBI growth just 7%

A detailed study conducted ahead of the fourth quarter results season of FY12 has reckoned that the overall growth of profit after tax of the 30 Sensex companies will be at 15 percent, year-on-year, for the quarter.

The Sensex companies are seen clocking sales growth of 21 percent and EBITDA (earnings before interest, tax, depreciation and amortization) growth of 11 percent on a year-on-year basis.

The study, conducted by broking firm Motilal Oswal Securities, however, points out that the figure would be dramatically lower - at just 7 percent - if you take State Bank of India (SBI) out of the equation. This is because the low base effect of SBI in the fourth quarter of FY11, where it reported a very small profit.

The estimates reckon a degrowth of 24 percent for Reliance Industries and a muted growth of just 5 percent for Coal India, both Sensex heavyweights which offset the estimates for SBI, Tata Motors and ONGC and pulled the overall estimates down.

The study reckons that SBI (owing to very high growth because of its near zero base), Tata Motors (+63 percent), ONGC (+39 percent) HDFC Bank (+31 percent), and Sun Pharma (+29 percent) to be the top five Sensex companies by PAT growth.

Motilal Oswal reckons that the bottom five Sensex companies by PAT growth would be Hindalco (-36 percent YoY), Maruti Suzuki (-28 percent), Reliance Industries (-24 percent), Sterlite (-22 percent) and GAIL (-20 percent).

Overall, among the key sectors, capital goods sector (9 companies in the study) is expected to report stagnant earnings of 0.2 percent YoY, led by slowdown in

topline growth to 14 percent coupled with contraction in EBITDA margins.

Outlook for the sector remains muted with just 10 percent earnings growth expected in FY13.

Cement (7 companies in the study) is expected to report 7 percent growth in earnings, largely given 30 percent earnings de-growth for Grasim. Excluding that, cement earnings growth is expected at 16 percent YoY. Improving demand and capacity utilization will lead to higher realizations in FY13 and drive earnings growth of about 19 percent in FY13, says the study.

The consumer sector (sample of 12) will continue to report consistent growth rates with topline growth of 20 percent, EBITDA growth of 21 percent and PAT growth of 17 percent. The sector is expected to continue to report steady earnings growth going forward as well.

Financials (sample of 25) are expected to report a robust earnings growth of 36 percent, driven by the base effect in State Bank. Excluding SBI, earnings growth stands at 10.2 percent. The composition stands as: Private Banks up 22 percent YoY, PSU Banks (Excluding SBI) down 1.4 percent YoY and NBFCs up 14 percent YoY. Several PSU banks will report contraction in earnings due to higher credit costs.

Utilities (sample of 11) are expected to report a 3 percent earnings growth, and excluding Coal India, earnings growth is expected to be flat at 1 percent.

The study says infrastructure (sample of 6) continues to face multiple headwinds of declining order intake, execution challenges, cost pressures, increasing working capital intensity and rising interest rates. As a result, while we expect EBITDA to increase by 9 percent, PAT is expected to decline 50 percent. This is the only sector where all companies are expected to either report sharp decline in earnings or net losses, according to the estimates.