The chart shows the steady downgrading of earnings per share (EPS) estimates for the companies that make up the BSE Sensex. Motilal Oswal analysts have cut their FY13 EPS estimates for the Sensex by 0.5%. Taking the Sensex EPS for FY12 at Rs 1,131, the brokerage is estimating EPS growth for the Sensex at 17.7% for FY13. That seems to be optimistic, considering that economists have started revising their targets for GDP growth downwards.
Kotak Mahindra Bank Ltd economists recently revised it down to 6.9% for FY13. Citigroup revised its Sensex earnings growth estimate to 13.2% for FY13, compared with the 15% growth estimate it had going into the earnings season. ‘Bloomberg’ consensus estimates put Sensex earnings growth in FY13 at 14.5%. Citi also points out that earnings revisions are significantly more pronounced for smaller firms. Unless the macro environment improves in the next few months, it is very likely that downward earnings revisions still have some way to go.