Battery maker Exide Industries Ltd registered a net profit of Rs212.9 crore for the quarter ended 30 September 2010 compared to Rs149.7 crore for the same quarter last year.
During the September 2010 quarter, its total revenues increased to Rs1,146.3 crore from Rs951.8 crore, the company said in a statement.
On Tuesday, Exide Industries shares fell 3.4% to Rs172 on the Bombay Stock Exchange, while the benchmark Sensex closed 0.7% down at 20,203 points.
IndusInd Bank Ltd said its net profit jumped 71% to Rs133.2 crore for the quarter ended 30 September 2010 compared to Rs77.8 crore in the corresponding period last year.
The net interest revenues of the Bank for the second quarter rose 58% to Rs329.7 crore from Rs208.6 crore while its operating profit grew 69% to Rs261.7 crore from Rs155.3 crore in the year ago period.
IndusInd Bank said its gross non-performing assets (NPA) declined to 1.2% from 1.5% while net NPA has diminished to 0.4% from 1%. The current and saving accounts (CASA) ratio has also improved to 25.4% from the 21.2% during the same period, the lender said in a regulatory filing.
On Tuesday, IndusInd Bank shares fell 1.6% to Rs270 on the Bombay Stock Exchange, while the benchmark Sensex closed 0.7% down at 20,203 points.
The quarter ending September has been full of exciting developments for both the economy as well as corporate India. The BSE Sensex has crossed 20,000 and the markets are eagerly waiting to see the Q2 numbers before taking fresh direction. Here is what analysts are expecting in the power, real estate, retail and telecom sectors
The second quarter of FY11 has turned out to be one of the best quarters for Indian markets with the Bombay Stock Exchange (BSE) Sensex breaking away from a tight range and reaching new highs. Between 1st July and 30th September, the Sensex rose 15% to 20,069 points.
However, during the quarter, markets were driven mostly by foreign institutional investors (FIIs) and not by domestic buyers. In Q2, FIIs infused almost $12 billion into equity markets, taking their total inflows to $14 billion for the first half that ended 30th September. At the same time, domestic institutional investors turned sellers. During Q2, domestic investor sales were at around Rs23,800 crore or $5 billion.
According to analysts, metals, financials, petrochemicals, engineering and retail sectors would come out with good numbers. Sectors like cement, telecom and real estate are most likely to be underperformers. Fast moving consumer goods (FMCG), capital goods and information technology (IT) sectors are likely to perform in line with the Sensex growth.
Although India Inc is expected to come out with strong sales figures, the net profit growth would not match top-lines due to decline in operating margins. "For 2QFY, while we have estimated net sales of Sensex companies to increase by about 20% year-on-year (y-o-y), net profit is expected to post 13.5% growth. A part of the same would be because of about 54 basis points (bps) dip in operating margins (OPMs). Overall, OPMs are expected to be around 25.6%, while net profit margins (NPMs) would decline to 14.4% for the quarter," said a brokerage in a note.
With all companies set to announce their second quarter profit & loss numbers, here is a preview of power, real estate, retail and telecom…
For FY11, the Central Electricity Authority (CEA) has set a capacity addition target of 21.5GW and as per its recent review in August 2010, 19% of the target has been realised. This could mean further bunching-up of capacity addition towards the latter half of the year.
Good monsoon season and higher hydropower generation has improved the availability of steam turbine (ST) power as reflected in higher sales bids against purchase bids, leading to significant decline in spot prices on the Indian Energy Exchange (IEX). The Central Electricity Regulatory Commission (CERC), in its analysis of bilateral rates, pointed out a trend of backwardation for one to three months forward rate, entailing possible impact on Q3FY11 realisations of merchant power projects.
During the first half of FY11, all-India generation was up 4.2% y-o-y to 329.7 billion units (BU). During the quarter to end-September, the Moneylife Energy Index rose 5% to 1014.8 points from 966.5 points as on 1st July. According to the latest report, the forward looking curve in the over-the-counter (OTC) markets for September showed likely price transacted was about Rs5.28 per kilowatt hour (Kwh), much higher than transacted on IEX at Rs2.33 per Kwh. The forward-looking curve for October-November shows the price in the bilateral market at around Rs4.28 per Kwh from Rs3.84 per Kwh on IEX last year.
IDFC Securities Ltd, in a report said, "Power utilities to witness 17% y-o-y growth in revenues. Led by commissioning of new capacities, EBITDA is likely to increase 14%, however pre-exceptional net earnings for companies may remain flat on y-o-y basis. We maintain our overweight stance on the sector with our top picks being Reliance Infrastructure, Lanco, Adani Power and KSK."
Factors to watch out for in the power sector are lower-than-expected load factor and merchant power realisation, increased import of T&D products from China and Korea that could depress realisations and margins as well as lower-than-expected execution of order books and cost overruns may pose downward risk.
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Source: IDFC Securities Ltd
After the strong recovery in the residential vertical during the first half of 2009, there was some cooling off in the sales volume in the first half of 2010 due to the substantial price hike. The muted phase has continued in Q2FY11. Prices in Mumbai and Delhi are 15%-30% above their peak levels in 2008, whereas prices in most other markets are still 10%-15% lower than their last peak levels. This has resulted in the tapering of volumes in cities like Mumbai, where prices have gone up substantially.
During the quarter to end-September, the Moneylife Real Estate Index rose 18% to 4454.2 points from 3767.1 points as on 1st July.
ICICI Securities Ltd in a research note said, "In the residential space, prices in the Mumbai and National Capital Region (NCR) segments are at their peak levels indicating a moderation of demand growth. Revenue booking in Q2FY11 may get impacted for real estate companies due to heavy monsoons, which could slow down construction activity. On the positive side, on the commercial real estate front, lease rentals have seen stability in prices. There has been an improvement in leasing activity."
There were a number of new projects that were launched in the last fiscal but that could not cross the revenue-recognition threshold level during that fiscal. Thus, the revenue growth for Q2FY11 is likely to be driven by revenue recognition from these projects. However, the growth will be limited by the impact of an extended monsoon on construction activities.
"During Q2FY11, we expect our real estate universe to post revenue growth of about 29% y-o-y, EBITDA growth of around 8% y-o-y and net profit to remain flat y-o-y," said Motilal Oswal Securities.
Factors to watch for in the real estate sector include total area booked during the second quarter, pricing trends from metros, Tier-I and Tier-II cities, new launches and price points, funding plans of developers and disbursement of funds raised through qualified institutional placements (QIPs).
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Source: Motilal Oswal Securities Ltd
The quarter ending September 2010 marked monsoon season sale, with all major retailers cashing in on the sustained pick-up in consumption sentiment. Notably, the trend of up-trading was clearly evident, with strong response to premium apparel, high-end consumer durables (including furniture) and home improvement products. Industry players expect the momentum to sustain ahead of the festive season.
Retail sector stocks broadly outperformed the Sensex in Q2FY11. Titan emerged as a clear winner by outperforming the benchmark BSE Sensex by a whopping 26%. Pantaloon Retail India Ltd and Shoppers Stop Ltd outperformed the Sensex by 1% and 4%, respectively. During the quarter to end-September, the Moneylife Retail Index rose 15% to 1368.1 points from 1191.2 points as on 1st July.
Motilal Oswal Securities in a research note said, "We believe that the sales momentum is likely to remain strong for major retailers through FY11 on account of low base, cyclical upturn in consumption sentiment and pent-up demand. We remain positive on the likely same-store sales (SSS) growth for the sector in general and home retailing and lifestyle retailing in particular (discretionary spend)."
"We expect the retail universe to report a 41.1% increase in revenue on the back of healthy same-store sales growth, improved revenue per sq ft and resurgence in consumer demand. We expect Pantaloon Retail to grow faster than the industry. However, lower space (y-o-y) and lower revenue per sq ft will lead to a dip in Kouton's revenues. We expect Pantaloon to face pressure on the operating front on account of the home solutions business," said ICICI Securities in a note.
Factors to watch out in the retail sector include high rentals, especially in metros and Tier-I cities, low asset turns, funding constraints, high wage costs, inflation and increasing overheads due to new expansion.
During the second quarter, major telecom operators have shown pricing discipline. However, new entrants like Uninor, MTS and Videocon have offered significant discounts, causing some disruption in the market.
Industry subscriber additions in July and August 2010 averaged 17.6 million per month against 17.1 million in Q1FY11. The increase was driven by Uninor, BSNL, Idea and Videocon while subscriber additions declined for Bharti, Reliance Communications (RCom) and Vodafone.
IDFC Securities in a research note said, "We expect Q2FY11 to be seasonally weak for telecom companies and minutes growth should moderate to 5%-8% q-o-q from double-digit growth in the past two quarters. Average 6%-8% q-o-q subscriber growth should largely offset 3%-4% q-o-q average revenues per user (ARPU) decline leading to low-single digit sequential growth in wireless revenue."
The second quarter is generally weak for telecom operators resulting in lower minutes of usage (MoU), which is likely to fall 3%-3.5% across operators. However, Tata Teleservices Maharashtra Ltd changed its reporting structure last quarter to active subscribers from total subscribers, resulting in higher key metrics. Other operators may also follow suit in this quarter.
"With lower MoUs and 3G rollout related expense, telecom operators are expected to witness a decline in margins. Rising interest cost because of 3G related debts is expected to weigh on the bottom-line. We expect our telecom universe to post a 23.5% q-o-q decline," said ICICI Securities in a note.
Key factors to watch out for in the telecom sector are MoU growth for Bharti, Idea and RCom and margins at Africa operations for Bharti.
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(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security).