Miniature Green Shoots, These IPOs Are Different (But Still Overhyped), and More... - Views on News from Equitymaster

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The Equitymaster Research Digest

Miniature Green Shoots, These IPOs Are Different (But Still Overhyped), and More...
Oct 27, 2015

The earnings season in India typically starts with the results of Infosys. The performance of the software behemoth sets the pace of investor sentiment for the rest of the season. Investors scrutinize every underperformance or outperformance versus management's guidance, and their conclusions are a sign of what's to come for earnings of India Inc.

But our subscribers know that's not how we operate here at Equitymaster. We don't bother with next quarter estimates, and our projections have little connection to a company's latest EPS. Rather, we look for signals that will offer earnings surprises eight or even ten quarters down the line.

Now, it is rather unlikely that companies from sectors such as IT, pharma, or FMCG will foretell drastic changes in corporate earnings in 2-3 years. But you will agree that companies from the banking, engineering, and (at times) commodity sectors can offer hidden signs of boom or bust. That's why we keep a closer watch on them.

We do not aspire to get our EPS estimate precisely accurate to the second decimal. But we consider it our obligation to alert you to signs of earnings surprises long before most investors have a clue.

For instance, newspapers are currently warning investors that the sales growth of top listed companies for the September quarter was the lowest since 2009.

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