Stocks
Expect muted fourth quarter results
Will the market look beyond the poor fourth quarter results and keep rallying?
 
The stock market is on a bullish mode since it made a low on the budget day. Nifty and Sensex are up by 12.36% and 11.41%, respectively with more gains expected due to prospects of a good monsoon, improving industrial production, low inflation and low interest rates. However, earnings growth is still elusive. Indeed, Motilal Oswal Securities Ltd expects revenues of the companies under its coverage (excluding oil marketing companies) in Q4FY15-16 to grow at just 3% on a year-on-year (y-o-y) basis, while profit after tax (PAT) to decline by 5%. PAT margins are expected to decline by around 80 basis points to 11.1%. However, the brokerage says it expects earnings before interest, tax, depreciation and amortisation (EBITDA) margins to improve 80 basis points to around 25.3%. 
 
“FY15-16 has been a tough year due to challenging macro environment consisting of low commodity prices, high non-performing assets (NPA) provisioning and poor monsoons. Though earnings have been muted in FY15-16, they may look up in FY16-17, especially on the back of low base effect of the last year. Normal monsoons, recovery of commodity prices, clean-up of NPAs and transmission of interest rate cuts could act as key triggers for good corporate results in FY16-17. Market will look at these positives and ignore the poor March quarter results,” the report says.
 
Sales of Nifty companies (excluding Bharat Petroleum Corp Ltd -BPCL)) are expected to grow 3%, while PAT will rise by 3%. The report says, “If we were to exclude metals and oil, sales growth would be 7% and PAT at 5%. Though the growth in PAT of Nifty companies is muted, it is a small positive considering that it will grow after five consecutive quarters of decline. The low PAT growth is due to the influence of cyclicals. Auto and healthcare sectors are expected to lead the growth in PAT”. 
 
The share of defensives in PAT under MOSL coverage universe stands at a huge 39% based on its estimated numbers for Q4FY15-16. Defensives include sectors with relatively stable revenues, profits and cash flows such as fast moving consumer goods (FMCG), software and healthcare. Motilal Oswal expects domestic cyclicals to increase their share in PAT to 38% from 32% in the previous quarter (Q3FY-15). Sectors like banking, auto, capital goods, cement are among the sectors to be included in domestic cyclicals. 
 
Coming to different sectors, public sector banks (PSB's) and metals sector are expected to report losses. These losses would bring the aggregates down. 
 
In the auto industry, passenger vehicle sales have shown a decline in Q4FY15-16. However, commercial vehicles and two-wheelers have witnessed a good growth. It is expected to report robust growth in bottom line with PAT rising by an extraordinary 47%. 
 
In the capital goods sector, order intake will be flat or declining. Cement sector has benefited from demand recovery. In the FMCG space, volume pressure will be seen in some segments from Baba Ramdev promoted Patanjali products. 
 
Majority of the private banks are expected to show robust loan growth of more than 20%. PSBs will show high provisions and low growth in loans. Healthcare sector is expected to report a good quarter with more than 15% sales growth and a whopping 46% PAT growth. 
 
Motilal Oswal expects SKS Microfinance, Inox Wind, Alembic Pharma, Eicher Motors and Siti Cable to show more than 50% growth in revenue. Reliance Communication, Alembic Pharma and Torrent Pharma are among the companies to deliver high net profit growth. 
 
The benchmark index has done badly in FY15-16, declining by around 9% in the last fiscal year. The Sensex has delivered four consecutive quarters of negative returns. In US dollar terms, the performance of the benchmark index has been much worse at 15%, adding to foreign institutional investors' (FIIs) woes. The mid-cap index has marginally outperformed the large-cap index, falling by 2%. Media and cement sectors are the only two sectors to have delivered positive returns. However, they were up only marginally by 3%. Real estate, capital goods and PSB's have been the worst performing sectors, falling significantly by 26%. 

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COMMENTS

shadi katyal

8 months ago

why should it come as a surpirse exvept speeches and green grass on the near future we have not see nay development on any front but we keep showing our GDP at 7.5 5 the highest in the world but where are the true facts. This will not bring FDI so such twisting of figure will harm India.
Jaiotley promised many things but budget is a dud.
Almost 2 years of promiosed and yet no development.
This party is not interested in econmioc development but copntrolling the Parliement so it can wriote new constitution according to RSS agenda

uttamkumar dubey

8 months ago

Why motilal oswal is been shown as the reliable fund manager?
They all are crooks,and black listed against ppl please dont include them with you.

Make the Government Work for You: Use Act 21 of 2006
Disappointed by the inaction and apathy of government agencies? Shailesh Gandhi, the former central information commissioner, says the Act 21 of 2006 shows us a way out. Please join us in getting the government to act on it
 
That our government does not function for the benefit of the people always is a common refrain; it is a topic of discussion at every dinner table. But now citizens have a means. According to Shailesh Gandhi, a former central information commissioner, citizens have a great tool in hand, known as the Act 21 of 2006 to compel the unresponsive government to act. Its power is much more than that of the Right to Information (RTI) Act. Mr Gandhi says, “India belongs to each individual citizen. Thus, we ourselves are responsible to make our government work for us.” To do this, he speaks about an important tool designed for the common man, namely, The Maharashtra Government Servants Regulation of Transfers and Prevention of Delay in Discharge of Official Duties Act, or the Act 21 of 2006. This tongue twister of a statute is commonly known as the ‘Transfers and Delays Act of 2006’.
 
"Act 21 of 2006 has even more potential than RTI for getting better services, governance and accountability for citizens. Though an enforceable law, it has not served its purpose because of ignorance of the law and apathy by citizens and government servants," he says. 
 
If you find ourselves stymied not only by inaction but also the apathy of government agencies when our complaints fall on deaf ears, this Act shows us a way. It mandates that no action can be kept pending for more than three months, and if left unattended beyond that, a simple application with the complaint can be sent to the secretary of the concerned department; or when the relevant authority is a municipality, the municipal commissioner. Citizens don’t know this and neither do government officials. Those who have tried have been disappointed.
 
Moneylife Foundation has now decided to record the outcome of the trying to get better services under this Act. If citizens face non-compliance by government officials, we would like to record it in a systematic way. With a methodically documented data, we would then persuade the government to begin implementing the Act 21 of 2006. Here are the steps you need to follow to make your voice heard:
1. Read attached 'Note on Act 21 of 2006'.
2. Also read attached ‘Rules of Act 21 of 2006’
3. There are two stages of this process, first you filing an application, representation or complaint about your issue. After waiting for 90 days, you need to go to the second stage. In the first stage, you need to provide, date of filing, department and whether you have received any response. If and record on the website when you send one of the letters in the note. Mention the department and upload the actual word file. You will get a number. If you get a response within 60 days, please upload it. If you do not get any response, please report it against your number.
4. In the second stage you need to file a complaint using Act 21 of 2006 to the Secretary of the Department, where you have first filed your application. We have provided the format in which you can file the complaint on the response link below. In this stage, after waiting for 60 days, you need to come back and register your comment whether you received any response or not.
 
This is simple and you can the improvement in government accountability, which you desire. 
 
Here is the link to send your responses: http://goo.gl/forms/49j9QSw6HM 
 
 
 
The Act governs the transfers of government officials in Maharashtra. The Act specifies that the tenure of government servants will be three years and transfers will normally be made only in April and May of each year. It provides for reasons to be recorded if transfers happen otherwise. Mr Gandhi pointed out that under the Act, in case of any discrepancy, anyone can file an application against the action with the information commission.
 
Mr Gandhi also explained how the government’s resources are insufficient to govern a gigantic country like India. He emphasised that simple tools like the ‘Transfer and Delays Act’, if utilised, have a potential to change the system. An important first step is to exert pressure. He concluded by saying, “You can make this Act work. If you want your government to work, you will have to act.”

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COMMENTS

arvind.arya.in

3 days ago

Mr. Gandhi, Is it applicable beyond Maharashtra.?

manoharlalsharma

8 months ago

Information about Act-21 is seems very useful and with full knowledge of the act, we r thank ful to the organisation.

A Visit to Patanjali Ayurved
A team from Religare met the management led by Acharya Balkrishna. Some key points from the meeting
 
Having emerged as a key player fast-moving consumer goods space (FMCG) space, Patanjali Ayurved is all set to continue aggressive expansion with ambitious targets. Patanjali Ayurved's 'natural' positioning has gone down well with the Indian consumers and has emerged as a key strength for the brand. A team from Religare recently met Acharya Balkrishna, Managing Director of Patanjali Ayurved. Here are a few key takeaways from the meeting and quick snapshot of the organisation that is giving sleepless nights to established FMCG majors:
 
  1. Revenues: Patanjali generated extraordinary revenues of Rs4,500-5,000 crore in FY15-16. Its revenues were around Rs2,000 crore in the FY14-15, implying that its revenues more than doubled in the last year.
  2. Revenue Distribution: Ghee, toothpastes and herbal cosmetics are have clocked good revenues. Revenues from ghee stand at Rs700 crore, while toothpastes contribute to Rs300 crore. Herbal cosmetics contribute to Rs250 crore of its revenues. 
  3. Future Targets: It has an ambitious target to grow at 100%-125% on an annual basis with diversifying into international markets if growth in domestic markets is saturated. In order to carry out expansion and modernisation of its facilities, it requires investment of Rs1,000 crore. This amount will be raised largely through debt. 
  4. Future Product Plans: It plans to launch dairy products, baby care products, premium herbal cosmetics and gauva drinks. The management believes that India's personal care market has a higher potential to grow vis-a-vis the food market.
  5. Research & Development: It has set up Patanjali Research Institute, a new research and development centre. It has around 250 people on its internal R & D and quality check team.
  6. Pricing Strategy: Its pricing is not driven by competitor's prices. It prices products on a 'Cost + Profit' basis.
  7. Distribution Network: Patanjali products are distributed through 80 super stockists, 2000-300 distributors, 1200 chitikslayas and 7000 Arogya and Swadeshi kendras. The company now plans to enhance its presence through modern retail format and e-commerce.
  8. Manufacturing: 90% of its products are manufactured in-house. It has a manufacturing facility in Haridwar. It intends to maintain this in-house manufacturing proportion to ensure product quality
  9. Key Challenges: Patanjali Ayurved believes raw material availability could fall short in the medium term due shortage in cultivation of herbal ingredients.
 
The impact of its aggressive expansion on FMCG sector revenues would be keenly tracked by analysts in the Q4FY15-16. The strategies that would be adopted by FMCG majors to protect their market share would be interesting to track. These could be increasing their advertising spends or launching more natural variants in the future. With other spiritual gurus like Sri Sri Ravi Shankar also planning expansion, competition for FMCG majors will continue to rise.

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COMMENTS

PPM

8 months ago

Can someone visit the factory to find out what exactly they manufacturer?

Ramesh Poapt

8 months ago

its next Indian 'Amul'-but not in co-operative mode but goodwill play! interesting test-match with MNCs!

Param

8 months ago

would not be surprised if religare manages the IPO next!!!

most of the fmcg items (which have fuelled growth) are not from its own factory in hardiwar.

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