1 Sep 2014
At the close of the first quarter earnings season, the overall outcome looks prospective: although revenues improved modestly, EBITDA margins improved by about 1.5% on average. Moving them back up towards their long-term average. With corporate borrowings lower, interest costs also contributed to improved profitability, so that it looks like a cycle of earnings upgrades is upon us. The market has appreciated by 5.8% over the past two months but earnings have outpaced it, at 7.2%. So the market PE multiple has contracted from 16.3 earlier in the year, to 15.5 now. Future earnings are now being forecast to grow at 16% this year and 17% next, giving room for further market appreciation in the near-term. Longer-term, Friday’s announcement of a jump in GDP growth to 5.7% in the first quarter gives reason for optimism for sustained market momentum over a two to three year period.
The half-year report for Himalayan Fund has been posted on the Fund’s website at www.himalayanfund.nl , showing excellent performance in the first half-year; this has been sustained so far in the second half. The outlook for the Indian markets is for continuing improvement in earnings, supporting current valuation levels and offering the prospects of multiple expansion over a sustained period. It is time to buy the Fund, look on the website for instructions on how.