"Maybe there can be some unpleasant surprises in earnings maybe not to this extent but to some extent in FMCG sector as well as banks," he said.
He explained that consumption has slowed down in FMCG sectors and some product categories may get impacted which may result in companies falling short of analysts and market expectation.
"The expectations of negative surprise would be more in PSU banks, but even in private sector banks one has to be cautious. It may not be as bad as PSU sector but there can be at least some lower than expected result," he said.
After dismal results of Infosys , Jain expects that there can be some contraction in price multiple of the counter. He indicated that the stock can be even downgraded by brokerages. However he stressed that Infosys results does not represents entire IT sector.
"Today, all the IT stocks might have corrected in tandem or in sympathy with Infosys but my sense would be that you will see a mixed performance from IT companies and many other IT companies will deliver good results," Jain said.
He advised there was no need to become too bearish about the market, but be selective and invest with long term perspective.
Below is the verbatim transcript of the interview
Q: What would your approach be towards Infosys after the disaster that we saw today?
A: We had a negative view on Infosys and our negative view is now further corroborated by two things one is this company was highly respected for predictability and not surprising investors as well as analysts. However it happened on the positive side last time and immediately followed by negative one. More importantly if you compare this with peer group or the large IT companies like HCL Technologies, Wipro, TCS, Infosys is growing at a much slower pace, it is growing at an annual basis organically by 5-6 percent as compared to 15 percent plus by other peer group companies. So obviously investors would look for a higher growth as well as they will look for higher predictability and certainty in terms of guidance as well as performance. So whatever fall we are seeing in the market is entirely concentrated on Infosys. The rest of the market has been pretty okay at least till now.
Q: Would you reckon that there is a case for the price earnings multiple to contract a bit more and maybe Q3 was a bit of a fluke and again for the stock to go back and trade at low teens in terms of valuations?
A: The price multiple can contract because historically Infosys has commanded a premium over the sector and was considered as a bellwether stock in the sector. However, if there is a growth slower than the peer group and also the earnings guidance and predictability by analysts as well as by the investing community becomes low; then that will mean down rating. Most investors don't like these kinds of volatile movements that a stock that was highly respected, showcase stock or a poster boy for India's IT sector gives guidance on the positive side last quarter and then suddenly it turns to negative.
So, investors don't like this and that would mean de-rating in terms of multiple as well. As I said that if company is passing through transition phase then it has been a great company for a long time, but we are seeing leadership changes and with that the business and the client mix everything is going undergoing a bit of a transformation. So, in this transition phase there is a possibility of a bit of a de-rating. The multiple can now be at a discount and the discount can widen with the peer or with other IT companies that are performing better.
Anda sedang membaca artikel tentang
Banks, FMCG results may negatively surprise: Nirmal Jain
Dengan url
http://harmonisem.blogspot.com/2013/04/banks-fmcg-results-may-negatively.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
Banks, FMCG results may negatively surprise: Nirmal Jain
namun jangan lupa untuk meletakkan link
Banks, FMCG results may negatively surprise: Nirmal Jain
sebagai sumbernya
0 komentar:
Posting Komentar