Infosys remains safest bet in IT sector: Raamdeo Agrawal

123205 Investors following Infosys. Share this News with them.

0

Like this story, share it with millions of investors on M3

Infosys remains safest bet in IT sector: Raamdeo Agrawal

Earnings season is almost here and most brokerages have been betting on a good second quarter. Motilal Oswal Securities has upgraded both earnings growth and Sensex target for FY07-end. Motilal Oswal's Raamdeo Agrawal gives his view on the market and Q2 earnings.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ News and Notices about Infosys See interviews with Infosys Management See what other Experts & Brokerages are saying about Infosys See previous Results of Infosys Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

Earnings season is almost here and most brokerages have been betting on a good second quarter. Motilal Oswal Securities has upgraded both earnings growth and Sensex target for FY07-end. Motilal Oswal's Raamdeo Agrawal gives his view on the market and Q2 earnings.

Agrawal expects Q2 sales to go up 27%, EBITDA and net to go up 39%. FY07 Sensex EPS is seen at Rs 686 and for FY08, it is seen at Rs 780. Margin expansion is likely across the board, he says, adding that cement and telecom sector will see major margin expansion.

Further, Agrawal says that fall in crude prices has eased interest rate worries and that expectation of good Q2 is already factored in the prices.

However, Agrawal says that earnings will need to match expectations. He cautions that markets may not surge even if results exceed expectations. Infosys remains his safest bet in the IT sector.

A: Q2 earnings estimates are out. Based on the 127 companies that we follow, top down sales are going to be up 27%, EBITDA is going to be up 39%, and net profit is also likely to be up 39%.

So clearly not only the topline is expected to be up, but there is also gong to be significant margin expansion, which is terrific news.

Some of the industries which look like they will be very big performers are cement with 157%, wireless cellular companies with about 180%, pharmaceuticals with about 57%, oil and gas 50%, media 60%, retail 49%. So you have a big growth companies coming in on largecap kind of issues

A: In the current year, it will do about Rs 686 for March 07, which will be about 31% growth over March 06. And for '08, we have pegged it at about 14% growth at Rs 780, which at current levels, almost six quarters ahead, it looks to be all right at 14-15%. But Rs 686 is very strong call.

A: As regards the numbers that our analysts have filed, right now we are seeing not only the topline growth of 26-27% but we are also talking about marginal expansion. So if you look at it, corporate profits all over the world are booming big time.

Corporate profits of GDP in the US have gone as high as 12-13%. In India, it is about 5.1% against what it was last year at about 4.8%. If we expect the GDP to grow at more than 8%, I don't think the corporate profits are going to slow down.

Cont's on page 2...