Going through the Nifty stocks as results poured in, and some startling facts:
Of the 50, 24 have contracted EPS. Meaning earning per share is less than the year earlier.
Current Nifty P/E is 20. Of the 50 stocks, a total of 39 stocks have grown EPS < 20% y-o-y.
With the new calculations of Nifty weights (based on free float) the EPS drops nearly Rs. 4 for Nifty as a whole. So Nifty EPS today is 215 versus around 220 as calculated before the nifty weight.
Last year at this time the Nifty EPS was 234. So as an index the Nifty has dropped 8% on EPS in a year.
There are some more stock issuances, QIPs, dilution like CCPS in Tata Steel, and so on. This is going to hurt EPS even more.
Bank EPS still seems to be strong in terms of growth.
Bank EPS will only move down if banks will recognise losses as they happen – some of the default story is yet to come.
I’ve used consolidated EPS where I could get info, and standalone where I couldn’t. In that, this calcuation differs from NSE (which takes only standalone into consideration for Nifty P/E and EPS calculations)
Will be an interesting budget tomorrow. Let’s see how that goes.