Nik's Diary
The Indian market opened flat to positive, mirroring SGX
Nifty which is trading marginally higher in the opening trades. Other Asian
markets had a mixed opening today with markets remaining alert for G-7/G-20
meeting. The US markets ended mostly higher after a lackluster performance
through the day. Reports showing contractions in fourth quarter GDP in Germany,
France, and Japan led to renewed concerns about the global economy. German GDP
fell by 0.6% in the fourth quarter, while French GDP dropped by 0.3; both
decreases were slightly steeper than expected. A separate report showed that
Japanese GDP edged down by 0.1% in the fourth quarter compared to economists’
estimates of a 0.1% growth. However, an upbeat jobs report from the US helped
to offset the negative sentiment, with the Labor Department report showing that
initial jobless claims fell to 341,000, a decrease of 27,000 from the previous
week's revised figure of 368,000. Meanwhile Indian markets fell in yesterday’s
trading session as concerns over high current account deficit and caution ahead
of the upcoming Union Budget overshadowed data showing continued moderation in
inflation (6.62%).
WPI inflation at a three-year low
Wholesale price index
(WPI)-based inflation fell to 6.62 per cent in January, the lowest since
December 2009, even as surging onion prices saw food inflation soaring to 11.88
per cent, according to data released by the Ministry of Commerce and Industry
on Thursday. January was the fourth consecutive month when WPI inflation fell.
In December 2012, it stood at 7.18 per cent, while food inflation was 11.16 per
cent. Onion prices rose 111.52 per cent in January, against 69.24 per cent
in December. As food items have a weight of about 50 per cent in the
consumer price index (CPI), against about 20 per cent in WPI, divergence
between the two indices widened further in January. Analysts said it was
difficult to decide which barometer should be used to ascertain price
pressures. CPI-based inflation had risen from 10.56 per cent in December to
10.79 per cent in January, data provided by the Ministry of Statistics and
Programme Implementation showed. After nearly converging in January 2012
(when WPI inflation was 7.23 per cent and CPI inflation 7.65 per cent), now,
there is a difference of about four percentage points in the
indices. Soumyakanti Ghosh, chief economist, Federation of Indian Chambers
of Commerce and Industry, said the gap between the indices was widening because
of different weights of food items in the two indices. “Food prices were not
that high in January 2012. But prices have gone up significantly in the last
one year,” he said. Last month, WPI-based food inflation was 11.88, while
according to CPI, it stood at 13.36 per cent. In January 2012, WPI-based food
price inflation was 6.55 per cent; according to CPI, it was 4.11 per
cent. Prime Minister’s Economic Advisory Council Chairman, C Rangarajan,
said inflation would decline to 6.5 per cent by March-end. “Retail inflation is
still high. WPI inflation in primary and food articles is still high. Efforts
should be made to release larger stocks of food articles into the market,” he
said. Arun Singh, senior economist at Dun & Bradstreet, said the fall
in WPI inflation was a signal to the Reserve Bank of India (RBI) to cut
interest rates in March. “Food inflation is in double digits in both the
indices. CPI inflation is high, largely because inflation in primary items is
higher. This is basically a structural issue. In manufacturing goods, which
indicate demand-driven price pressures, inflation is lower than five per
cent.” In its January 29 policy review, RBI had cut policy rates, after
WPI inflation declined. RBI’s inflation projection for the current financial
year is 6.8 per cent. As the government raised diesel prices in January, inflation
for the fuel rose to 15.02 per cent, against 14.60 per cent in December. For
fuel and power, which have a weight of 14.91 per cent in the index, inflation
stood at 7.08 per cent, compared with 9.38 per cent in December. Planning
Commission Deputy Chairman Montek Singh Ahluwalia said, “Inflation is still
above the comfort level. It should come down further.” Petrol prices rose
seven per cent, while light diesel oil became seven per cent cheaper. For
manufactured products, which have a weight of 64.97 per cent, inflation fell to
4.81 per cent in January from 5.04 per cent in December, explaining why overall
WPI inflation fell last month. WPI inflation in the April-January period
stood at 5.09 per cent; for the corresponding period of the previous financial
year, it was 6.15 per cent. Planning Commission Deputy Chairman Montek
Singh Ahluwalia said, “Inflation is still above the comfort level. It should
come down further.” Aditi Nayar, senior economist, Icra, said the
moderation in inflation and the weak industrial performance in January would
increase the likelihood of monetary policy easing in the next mid-quarterly
policy review. “The initial data for headline inflation for January 2013 was
lower than our expectations (7.1 per cent), which had factored in a sharper
revision in the sub-index for diesel, reflecting the upward revision in retail
and bulk diesel prices. It is likely inflation for January may subsequently be
revised upwards.” she said. Source:
Business Standard
MM to
increase its stake in SYMC by ~3% to 73%
Auto major Mahindra & Mahindra (M&M) today said it will invest
80 billion Korean Won (about $73.73 million) on its Korean subsidiary Ssangyong
Motor Co (SMC), through subscription of a preferential allotment. The board of SMC at its meeting today approved of a
third party allotment (Preferential Offer) to the company (M&M) of
1,45,45,455 equity shares at an issue price of 5,500 Korean Won per share for
an amount aggregating around 80 billion Korean Won. "The company (M&M) has decided to subscribe
to the aforesaid offer and invest an amount aggregating around 80 billion
Korean Won (equivalent to around $ 73.73 million at the current rate of
exchange)," the company said in a filing to the Bombay Stock Exchange
(BSE). The said preferential offer
would result in an increase in the paid-up capital of SMC by 11.9 per cent and
increase in M&M's stake in SMC to 72.85 per cent from 69.63 per cent. The said issue would facilitate improvement of the
financial structure of SMC and proceeds of the issue would be utilised by SMC
for new product development and strengthen its competitiveness, the company
added. Commenting on the
development, M&M president automotive and farm equipment sectors, Pawan
Goenka, who is also the chairman of SMC board, said: "This paid-in capital
increase reflects Mahindra's strong commitment to support Ssangyong Motor in
its efforts to achieve an early turnaround. "By expanding investment in Ssangyong and creating tangible synergy
in various areas such as sales, product development and sourcing, we will
continue to increase our global competitiveness." Ssangyong CEO, Lee Yoo-il, said the decision on
paid-in capital increase will enable the company to secure necessary investment
funds and at the same time, strengthen its financial position. "Furthermore, as we carry out the investments in
new models, including a small CUV, our product development will also gain
momentum," Mr Yoo-il added. Source:
NDTV
SBI - RU3QFY2013
State Bank of India reported subdued operating performance for 3QFY2013,
as its net interest income (NII) and operating profit declined by 2.7% and 4.2%
yoy, respectively. The bank has been aggressive in cutting its lending rates,
so the decline in NII, was in-line with our expectations. The bank witnessed
continued pressures on the asset quality front, as elevated slippages and
sequentially lower recoveries/ upgrades resulted in 8.6% sequential increase in
gross NPA levels, with net slippages being about `800cr higher than our
estimates. As a result, in spite of slightly higher provisioning expenses than
estimated by us, provisioning coverage ratio declined by about 130bp
sequentially. At the current market price, the stock is trading at 1.4x FY2014E
ABV (adjusting for value of subsidiaries 1.3x FY2014E ABV) vis-Ã -vis its
historic range of 1.3–2.3x and median of 1.6x. Source: Angel Broking
Tata Motors
- RU3QFY2013
For 3QFY2013, Tata Motors
(TTMT) bottom-line performance was significantly lower-than-expected led by
higher depreciation expense (up 29.8% qoq), forex loss of `174cr and
higher tax rate (at 38.7% as against 32% in 2QFY2013). The top-line performance
too was lower-than-expected due to unfavorable product-mix at Jaguar and Land
Rover (JLR) and standalone operations which resulted in a sequential decline in
net average realization. The standalone operations posted a loss (adjusted) of
`450cr, against our expectations of a loss of `25cr, primarily on account of
dismal operating performance (EBITDA margins deteriorated to 1.4% on higher
discounts and marketing spends in the passenger vehicle and medium and heavy
commercial vehicle business and lower utilization levels). The consolidated
top-line registered a modest sequential growth of 6.2% to `46,090cr, which
was below our estimates of `49,094cr on account of lowerthan-expected
top-line in the JLR and standalone operations. The JLR top-line (up 15.7%
qoq) was impacted mainly due to 5.5% qoq decline in net
average realization led by unfavorable product-mix (higher share of
Evoque and Freelander). The standalone top-line (down 14.8% qoq) too
was below our estimates on account of inferior product-mix (higher share
of light commercial vehicles) and higher discounts leading to a 7.9% qoq
decline in net average realization. On a sequential basis,
consolidated EBITDA margins stood flat at 12.3% (lower than our estimates
of 12.8%) which led to a 6.1% growth in operating profit
to `5,657cr. The EBITDA margins at JLR declined 80bp sequentially led by
inferior product-mix and higher marketing costs related to the launch of
the new Range Rover. On the standalone front, EBITDA margins
contracted sharply by 387bp qoq to 1.4% due to adverse volume-mix, lower
utilization levels and higher discounts and marketing spends in the
passenger vehicle and medium and heavy commercial vehicle business.
However, adjusted net profit declined 13.6% qoq (49.5% yoy) to `1,801cr,
lower than our expectations of `2,865cr, on account of higher depreciation
expense (up 29.8% qoq), forex loss of `174cr and higher tax rate (at 38.7%
as against 32% in 2QFY2013). Source:
Angel Broking
GAIL -
RU3QFY2013
GAIL’s 3QFY2013 result was
above our expectations. The company’s top line grew by 10.8% yoy to
`12,474cr (above our estimate of `11,986cr) mainly due to higher
than expected performance from Petrochemicals and Natural gas trading
segment which grew by 26.1% and 10.6% yoy to `1107cr and `10118cr
respectively. The company’s fuel subsidy burden stood at `700cr in
3QFY2013, compared to `536cr in 3QFY2012 and `786cr in 2QFY2013. The petrochemical
and LPG segment EBIT grew by 13.4% and 93.8% yoy to `439cr and
`592cr, respectively. However, natural gas trading and LPG transmission
EBIT decreased 7.5% and 82.9% yoy to `299cr and `13cr, respectively. However
GAIL’s EBITDA improved by 16.4% yoy to `2,049cr in 3QFY2013 and EBITDA margin
improved by 79bp yoy to 16.4% and therefore the company’s net profit increased
by 17.6% yoy to `1,284cr (above our estimate of `1,147cr). Source: Angel Broking
DLF -
RU3QFY2013
For 3QFY2013, DLF reported
disappointing set of numbers both on revenue and profitability front. On the
top-line front, DLF’s revenue decline by 35.8% yoy to `1,310cr in 3QFY2013;
which was below consensus estimate of `2,040cr. EBIDTAM came in at 6.6%
in 3QFY2013 which was significantly below street estimate of 36.6%. However,
owing to surge in other income mainly due to asset sale company reported a PAT
of `285cr for the quarter, indicating a growth of 20.2% yoy. We will come
out with a detailed note a conference call with the management. Source: Angel Broking
DRL -
RU3QFY2013
DRL came out with results
higher than expectations. The company, is expected to post a 23% yoy growth
(adjusted for the base effect) to end the period at `2,870cr, while the net
profit came in Rs364cr, which dipped 39.1% yoy. The sales growth (adjusted)
came in back of global generics of 24% yoy, primarily driven by North America
and Emerging markets. Both the net sales and profit came in higher than
expectations. The OPM came in lower than expected at 19.9% (V/s 20.7% expected). Source: Angel Broking
LIC Housing
- RU3QFY2013
LIC Housing Finance
reported disappointing set of numbers for 3QFY2013, as growth in its net
interest income, came below expectations at 11.3% yoy. Operating profit growth
came in moderate at 8.0% yoy. Provisioning expenses for the bank jumped up to `32cr
during the quarter, which was much higher than ours as well as consensus
estimates and hence earnings declined by 22.7% yoy. At CMP, it
trades at valuations of 1.8x FY 2014E
ABV. We await clarity from the management
about the quarterly performance and the future outlook. Source: Angel Broking
HDIL -
RU3QFY2013
For 3QFY2013, Housing
Development & Infrastructure ltd (HDIL) reported mixed set of numbers with
revenue coming in above street expectations but owing to lower-than-expected
EBITDAM, earnings were below consensus estimates. On the top-line front, HDIL
reported revenue of `423cr in 3QFY2013 indicating a decline of 0.6% yoy but was
ahead of street estimate of `325cr. EBITDAM improved by 1111bp yoy to
49.1% for the quarter, and was below consensus estimate of 74.1%. Interest cost
came at `23cr, indicating a growth of 21% yoy. The company’s PAT declined
by 31.1% yoy to `107cr (against consensus estimate of `154cr) in
3QFY2013. Source: Angel
Broking
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