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Fundamentals February 21, 2013


Nik's Diary
The Indian market opened on a negative note tracking SGX Nifty and major Asian markets which are trading lower, after minutes of the Federal Reserve meeting showed that US policy makers are divided over further stimulus measures. The US market ended on a negative note on Wednesday partly due to profit booking. A negative reaction to the minutes of the latest Federal Reserve meeting also generated selling pressure. In addition, a larger-than-expected decline in US housing starts, which fell 8.5% to a seasonally adjusted annual rate of 890,000 in January 2013 from the revised December 2012 estimate of 973,000, impacted the market. The European markets ended Wednesday's trading session with mixed results, following yesterday's strong rally mainly due to the negative housing start data released in the US. Back home in India, the shares rose marginally on Wednesday, with the Reliance Industries stock rallying after company expressed plans to invest over US$5bn in the next three to five years jointly with British Petroleum to increase output from the KG-D6 block. Going ahead, market participants would keep an eye on the proceedings in the Budget session which commences today. On the economic front, reports on US weekly jobless claims, US consumer price inflation and US existing home sales would also be keenly watched. 

Budget Session of Parliament commences
Ahead of the session, Prime Minister Manmohan Singh called for "a productive and constructive debate", although in previous years opposition MPs have resorted to tactics including shouting and shoving to halt proceedings. Finance Minister P. Chidambaram is due to unveil the budget next week for the coming fiscal year starting in April that is expected to feature the most belt-tightening in years despite general elections looming in 2014. Other key bills to be presented in the session which is due to run to May 10 include measures to hike foreign investment in insurance, open the pension sector to overseas investors and guarantee subsidized grain to India's legions of poor. India, the world's most populous democracy, is striving to avert a ratings agency downgrade of its sovereign debt to junk status due to its deteriorating finances and sliding economic growth. The government has announced reforms to draw more foreign investment, which come as it faces a sharply slowing economy, a gaping fiscal deficit and high inflation which has built pressure on the left-leaning ruling alliance. But Singh's minority government, already scarred by previous corruption rows, anticipates its reform agenda could be hijacked by opposition anger over bribery allegations involving the $748-million purchase of a dozen helicopters from AgustaWestland. The Anglo-Italian company is a unit of Italian defence giant Finmeccanica whose chief executive Giuseppe Orsi was arrested last week in Milan. The Italian company has denied any wrongdoing. Legislation to toughen anti-rape laws following the brutal gang-rape and murder of a 23-year-old medical student in December is expected to win quick approval from lawmakers in light of widespread public anger. Source: Haveeruonline


Nestle - RU3QFY2013
For 4QCY2012 Nestle posted a 10.1% yoy growth in top-line to  `2,153cr. Domestic sales increased by 9.6% yoy to `2,041cr on account of better realizations and superior product mix. Exports rose by 20.6% yoy aided by higher exports to third parties, which rose by 47.2% on a yoy basis. OPM stood at 22.3%, up 122bp on a yoy basis. Bottom-line rose by 20.8% yoy to `279cr. Source: Angel Broking

Abbott India - RU3QFY2013
For 4QCY2012, Abbott India (AIL) reported a better than expected performance. Its top-line grew by 12.3% yoy from  `399cr in 4QCY2011 to  `448cr in 4QCY2012, 5.6% higher than our estimate of `424cr. For the full year CY2012, AIL witnessed a 14.3% yoy revenue growth to `1,653cr. EBITDA margin expanded by 241bp yoy to 16.3% in 4QFY2012 from 13.8% in 4QCY2011 due to decrease in employee cost and other expenses during the quarter. This led to a net profit growth of 35% yoy to `50cr in 4QCY2012 from `37cr in 4QCY2011. Fall in other expenses during CY2012 led to EBITDA margin expansion during CY2012 by 226bp to 12.2% from 10% in CY2011, thus leading to a 20% yoy growth in net profit for CY2012 to `145cr.  Source: Angel Broking







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