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Commentary

Nifty EPS growth now 11%

On Feb 11, I’d written that Nifty’s yearly EPS growth was only 13%.

The story gets worse.

As of May 16, EPS growth has been just 11%, from 211.72 last year same time to 235.08. And the current P/E: 22.

But this time there are 15 companies that haven’t announced results yet, some of them being very high EPS growth ones (Unitech, L&T, NPTC, Sunpharma). But there are laggards too (BPCL, ONGC, Tisco, ITC) who are expected to show 10% growth or less. The weightage of all the not-yet-announced result companies is 23% of the index, and if they do well the EPS growth may change substantially.

The picture will get clearer in June, but this is not looking good at all. We are literally at the same Nifty value as of Feb 2008 and the P/E hasn’t changed – means that despite these quarterly results, we have gained ZERO percent quarter on quarter.

Good news, though, on the technical front is that life looks good till May end. There is a lot of put buildup at 5,000 and new institutional buying is being seen in the last week. Things are likely to get better before they get worse. But they are going to get worse, unless we see stellar results in the next two weeks.