Oct 23, 2012, 03.50 PM IST

Overweight on autos; expect CRR cut on Oct 31: Jaipuria

Jyotivardhan Jaipuria, Head of Research at BofA Merrill Lynch expects aggregate earnings growth at around 10% for this fiscal year.

Bazaar at 08:00 am

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Jyotivardhan Jaipuria, Head of Research, Bank of America Merrill Lynch

Jyotivardhan Jaipuria, Head of Research at BofA Merrill Lynch expects aggregate earnings growth at around 10% for this fiscal year. "When we went into the result season we were looking at weakish growth. That’s what we are going to end up with. So there will be some surprises here and there and there will be some disappointments. But overall we should have earnings for the broad market being in the range of less than 10 percent," he told CNBC-TV18.

On the Sensex earnings front, Jaipuria does not expect an EPS higher than Rs 1,200. "The reason for earnings upgrades are probably coming outside of the earning season. It is the reform, which has got kicked off by the government, if that starts working and we start seeing corporate wanting to spend more, we start seeing infrastructure spend coming through, capex spend coming through. And that's what will lead to a trough in GDP and start to see GDP rebounding. That's what will lead to earnings starting to pickup again," he explained.

Below is the edited transcript of Jaipuria's interview with CNBC-TV18

Q: What have you taken away from earning season so far? Would you say it’s been a bit better than your expectations?

A: It’s been more or less in line with the expectations. Generally the good companies, the companies that have done well, come out with results earlier than the companies that have not done so well.

When we went into the result season, we were looking at growth which was weak. I guess that’s what we are going to end up with. So, there will be some surprises here and there. There will be also be some disappointments, but overall we should have earnings for the broad market in the range of under 10 percent.

Q: Do youthink that some of the earnings that are kicking in slightly higher than expected, like TCS or L&T or ITC , might nudge the Sensex number to a bit more above Rs 1,200 than you are factoring in at this point?

A: Yes, it could be. But along with companies that surprise, there are always some that disappoint and that’s where we start seeing earnings downgrades. We have to remember that big disappointments were expected in the global commodity companies. So, ex-global commodities, ex-metals and in some of these other global commodities, the growth was quite strong, like over 15 percent.

The commodity companies have not yet come out with results. It is on the other pack which is coming out with results that are generally expected to do well. So, there have been a couple of surprises, but there have been a couple of disappointments at the same time. So net-net, I think we are not going to go meaningfully away from the Rs 1,200 level on Sensex Earnings Per Share (EPS).

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