On the back of good results posted by India Inc so far during the September 2012 quarter, noted brokerage CLSA has said that the worse in terms of earnings downgrade cycle maybe behind.
According to CLSA, 71% of companies that have declared their numbers have either performed inline or have bettered market expectations.
“Mid-season review of reporting season so far highlights that the earnings downgrade cycle maybe behind. Our bottom-up FY13 and FY14 Sensex EPS earnings has remained unchanged through the results season,” CLSA today said in a India strategy report titled 'Worst is behind'.
So far about 58 out of 119 companies (representing 70 per cent of net profit and $400 billion of market capitalisation) covered by CLSA have reported their September quarter earnings.
Among these only public sector banks and companies like BHEL, Infosys and Hindustan Lever posted weaker numbers, it said. While, Zee and M&M surprised on the positive side.
CLSA has raised its rating on industrials to neutral, while has cut its rating on the pharma sector due to regulatory risks. It has also asked its clients to add cement and property by reducing utilities and metals.
“ICICI Bank, Axis Bank, Tata Motors, Zee and ITC are our top 5 picks,” it said.
