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See earnings upgrades in FY10: Religare Securities

Published on Mon, Jun 01, 2009 at 09:27 | Source : CNBC-TV18

Updated at Mon, Jun 01, 2009 at 12:22

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Sangeeta Purushottam, President-Global Equities, Religare Securities

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Sangeeta Purushottam, President-Global Equities, Religare Securities is of the view that earnings estimates of companies for FY10 need to be upped. She said the upgrades should be because of the positive surprises seen in Q4 primarily because companies have shown better margins at the back of commodity prices.

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Here is a verbatim transcript of the exclusive interview with Sangeeta Purushottam on CNBC-TV18. Also watch the accompanying video.

Q: We have come a long way. Have you started upping your earnings estimates for FY10 to keep pace with where valuations have reached after the rally?

A: The earnings estimates do need to be upped but that's primarily because of the positive surprises that we have seen in Q4 where a trend has emerged--companies have shown better margins largely on the back of lower commodity prices. While this was not completely unexpected, I think post the results you do have more accurate information to up the number. So, I think that's the key driver for the upgrades that we would be making.

Q: You spoke about earnings upgrades, which specific sectors and stocks would you upgrade FY10 earnings?

A: Autos will see upgrades, some capital goods companies will be seeing upgrade, selectively some companies in the construction sector could see upgrade. So it's going to be fairly broad based because most companies have benefited from lower commodity prices. So users of commodities see better margins.

Q: Markets almost pushing 15,000 even on the basis of earnings upgrades would you be able to work out a range or levels far higher than the current ones?

A: If you look at pure fundamentals then a lot of the valuations are looking fair or even expensive. But what currently happening is we are seeing huge wave of liquidity coming back into equities across the globe and in India we are part of the same phenomenon helped by the fact that we had a positive election results. So it's little hard to argue with that flow of liquidity as long as it lasts and it's possible that one could see valuations stretched further. But that's what basically driving the market. If you ask me on pure fundamentals, I think we are at fair values or even a little higher and just based on valuations there is little argument to keep buying at these levels particularly the frontline stocks.

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