Companies & Sectors
Nestlé India still waiting for volume growth to rebound
While the long-term picture for Nestle India is still intact, near-term growth concerns will weigh the company’s stock down, says Nomura Equity Research
 
Nestlé India's revenues and adjusted net profit growth of less than 10% during the March quarter continue to be underwhelming feels Nomura Equity Research. More important is the fact that volume growth trajectory continues to lag in low single digits, which remains a cause for concern for the company and the shareholders alike, the brokerage said.
 
Nomura said, “We believe these results show that a turnaround in volume growth trajectory is still some way off, which should hold back stock price performance from current levels”.
 
Nomura has also pointed out the favourable aspect in the company’s performance. Exports are up 51%, which have pushed the consolidated net sales up.  However, domestic business reported growth of just 7.7% (primarily lead by price increases), which was 2% below Nomura’s estimates.  Domestic sales were on the lower base of last year where growth was just 13.7%. 
 
The company’s performance is given in the table below:
 
 
“We continue to maintain a Neutral stance and believe that while the long-term picture is still intact, near-term growth concerns will weigh the stock down. The market price of the company's share is likely to fall up to about Rs4,516. Investors are advised to await the volume growth rebound,” Nomura concluded.

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Asset quality pain continues in 4QFY13 for Bank of Baroda

During the quarter there was a tax write-back of Rs4.8 billion which boosted the net profit for Bank of Baroda, points out Nomura Equity Research in its Quick Note

 
Bank of Baroda’s management expects domestic loan delinquency for the next couple of quarters to be at the level seen in 4QFY13, while international loan delinquency should improve starting 1QFY14. This means that the asset quality pain will continue for the bank from recent quarters, according to Nomura Equity Research in its Quick Note. Delinquencies came in higher at Rs20.8 billion compared to Rs20 billion in 3Q. The bank restructured loans of Rs28.4 billion versus Rs15.9 billion in the previous quarter. This takes the total impairment to Rs49.6 billion compared to Rs35.9 billion in the previous quarter. The management has further guided for a restructuring pipeline of Rs53 billion for 1QFY14F. 
 
There is healthy balance sheet growth for the bank in the recent quarter, point out Nomura analysts. Loans grew 14.2% year-on-year compared to Nomura’s estimate of 13.1% year-on-year. Loan growth was supported by 30.3% year-on-year growth in SME segment and 21.8% year-on-year growth in international book. The management has guided for 1-2% higher than industry loan growth for FY14F. The bank is looking to grow the retail and SME books more aggressively than the corporate loan book. The bank is looking at adding 600 plus branches in FY14.
 
NIMs (net interest margins) declined 14bps quarter-on-quarter during the quarter to 2.51% (2.65 in 3Q) as yields on advances declined 32bps quarter-on-quarter. Yield on domestic advances declined 26bps quarter-on-quarter, whereas cost of domestic deposits increased 8bps quarter-on-quarter.
 
During the quarter there was a tax write-back of Rs4.8 billion which boosted the net profits for Bank of Baroda, points out Nomura Equity Research.
 
According to Nomura’s analysts, the key ratios of the bank are as below:
 
 
The analysts have also summarised the asset quality position as follows:
 

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GOACAN seeks extension for public consultation on draft industrial policy

Goa’s consumer rights body has asked the state government to extend the time for public consultation on its draft industrial policy by one month, to give stakeholders sufficient time to submit their opinions

 
Goa Civic and Consumer Action Network (GOACAN), a consumer rights body, has called for more time for public consultation on the state’s new draft industrial and investment policy.
 
In an advertisement published in local newspapers, the Goa government has called for views, comments and suggestions on the policy by 15th May. “GOACAN is of the firm belief that if a public consultation has to meaningful, representative and participatory then sufficient notice and time needs to be provided. In view of the above, GOACAN calls upon the Directorate and the Task Force to extend the last date for submitting views, comments and suggestions to 15th June thereby providing a clear 30 days for this participatory process,” Roland Martins, co-ordinator of the Network said in a release.
 
Goa’s Directorate of Industries, Trade & Commerce and the state government have appointed a task force for preparing the state’s industrial/ investment policy 2013 and are seeking public opinions on the same through an ad published on 8th May.
 
“The month of May is a time for holidays and many citizens may not be able to participate in this very important exercise which is meant to ‘accelerate environmentally conscious industrial development, create sustainable employment for the local youth and ensure competitiveness of existing industry’,” GOACAN said. 
 

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