India’s Stocks May Be Worth ‘Another Look,’ Credit Suisse Says

Indian stocks may be worth “another look” after the benchmark index retreated to the lowest in more than three years and slowing earnings downgrades made the market the fourth cheapest in Asia, Credit Suisse Group said. Indian shares are now at a 20 percent discount to the rest of the region, Credit Suisse analysts Sakthi Siva and Kin Nang Chik wrote in a report today. Analysts have lowered their earnings estimates for the nation’s companies by 1.3 percent in March, slowing from average monthly cuts of as much as 10 percent in the previous four months, they added. The Bombay Stock Exchange Sensitive Index or Sensex has dropped 14 percent this year and fell to 8,160.40 on March 9, the lowest since November 2005. The index has dropped 61 percent since climbing to a peak of 20,873.33 on Jan. 8 as the global financial crisis and recession weighed on the outlook for corporate earnings. “Our theme over the last week has been a slowing in the rate of consensus earnings-per-share downgrades,” the analysts said. Indian stocks are now the cheapest after Indonesia, Thailand and Singapore by comparing price-to-book to return-on-equity ratios, the brokerage said. The market had traded at a premium of as much as 45 percent in December 2007, the report showed. Indonesia is the only other market among the four cheapest where analysts have lowered earnings forecasts at a slower pace, Credit Suisse said. “We highlighted Indonesia previously,” the analysts said. “The next question for investors is what about India, particularly with the Sensex at 8,000.”