According to a recent note by Morgan Stanley, India is among the top three emerging markets that have beaten consensus earnings expectations in magnitude and breadth at the end of the first month of the current earnings season. Forty-two companies from the MSCI India universe, which account for more than 30% of the total market-cap and announced their results in July 2012, posted a 2% earnings surprise.
Indonesia and Taiwan were other two countries that reported better-than-expected positive earnings surprises of the order of 9% and 3%, respectively. On the other hand, Korea, Mexico and Thailand had the greatest earnings misses, having failed the expectations by about 12%.
For India, 58% of the MSCI India companies reported their results as of July 30 and they represented 74% of the market capitalisation. While 48% of these 42 companies reported June quarter numbers in line with market expectations, an equal quantum of 26% of companies posted results that were higher or lower by 5% of the market expectations. However, on ex-financial basis, India’s performance was in line with estimates. Indian companies, GAIL and Hindustan Unilever, are part of the top 30 companies with highest earnings beats, having a market cap of more than $2 billion. Both these bluechips managed 32% and 12.7% positive earnings surprise for the June quarter, even as their revenues were 0.5% and 0.9% below market expectations, in that order.
On the other end, Jindal Steel & Power and Dr Reddy’s Lab feature in the list of 30 companies with the highest earnings misses for the first quarter of 2012-13.
JSPL witnessed negative earnings and revenues surprises of the order of 24% and 10%, respectively. Dr Reddy’s failed to meet its earnings expectations by 11.5% even as its June quarter sales were 2% below consensus estimates.
On a profit weighted basis, against a reported earnings surprise of 3.4% and -0.8% by S&P 500 and MSCI Europe constituents, MSCI Asia and MSCI ApxJ (Asia Pacific ex-Japan) reported a negative earnings surprise of 5.2% and 3.9%.
Interestingly, on a market-cap basis, only for S&P 500, the companies that reported their quarterly results accounted for a substantial chunk of the total market cap (71%).
For rest of the regional indices, companies that announced results constituted about 30% of the market cap. However, revenues for both APxJ and EM universe have been exactly in line with consensus.
