With country’s stock markets going through a low volume phase, improved corporate earnings during 3Q2013 (Jul’13-Sep’13) failed to lift the investors’ spirits.
“Taking Shajar Universe as a proxy, corporate profitability in 3Q2013 improved by 38%YoY while the quarterly trend reveals a growth of 35%QoQ,” said Shajar analyst Nauman Khan.
On YoY basis, he said, the index heavy weight oil and fertiliser sectors were the major contributors towards overall earnings but broad-based earnings growth was also witnessed through support from the cement, telecom and textile sectors.
On the other hand, the banking and power sectors depicted a decline in earnings.
The equity market is currently trading at the 2014 earnings multiple of 6.6x (Bloomberg estimate) against the last 10 year average PE of 8.2x.
“We believe investors are awaiting clarity on the currency front (rupee depreciated by 9% in 2013YTD) and interest rate with the Nov’13 MPS around the corner,” said Khan.
The analyst expects the market to remain range bond but views the energy, cement and textile sectors favourably.
