Stocks
Q3 results: India Inc exhibits strong growth

Revenues and operating profit of 582 companies have witnessed 21% growth in their recent quarterly performance

The Indian equity markets have been on a shaky ground of late and only a substantial improvement in the earnings growth of India Inc would cause a shift in the sentiment of investors.

As of yesterday, 582 companies have reported their financials for the December quarter. The numbers so far are decent, but why is that not cheering investors?

The reason may be that they are not sure that the party would continue. With steady overall revenue and operating growth of 21% each (of the above universe), India Inc has managed to keep the ship afloat. Here are the some of the notable performers:

Edelweiss Capital has recorded phenomenal growth over the year. While revenues have surged 196% to Rs159 crore, operating profit has zoomed 497% to Rs26 crore over the corresponding quarter last year. DTH service provider DishTV witnessed a 34% rise in revenues to Rs373 crore while operating profit soared 398% to Rs67 crore from the year-ago period. Having stayed in the red for a while now, the company looks set to break even soon. Pharmaceuticals company Wyeth also turned in a phenomenal set of figures for the December quarter. Its revenues surged 97% to Rs119 crore over the corresponding quarter last year and operating profit zoomed 414% to Rs39 crore.

Among the banking companies, Dhanlaxmi Bank stands out in the recent quarterly results with an 80% jump in revenues to Rs283 crore and 334% surge in operating profit to Rs18 crore.

H B Stockholdings is another company that has turned in a stupendous performance. Its revenues and operating profit have soared 175% and 356% respectively over the year-ago period. Also among the top performers are Garware Polyester, Jindal Poly Films, Lakshmi Mills, Bhansali Engineering, Oudh Sugar Mills and SRF.

Several companies have turned in a sour performance during the quarter.

GVK Power & Infrastructure was among the worst performers as its revenues slid 27% while operating profit tanked 122% over the corresponding quarter last year. Sugar manufacturer EID-Parry also exhibited similar performance, with revenues and profit declining 28% and 122% respectively. Meanwhile, GIC Housing Finance's revenues grew 10%but operating profit plummeted by a whopping 194%.

IT solutions and services provider Mastek fared poorly as its revenues declined by 22% while profit tanked by 166% over the year ago period. Also in the list of poor performers were Zee News, Mangalam Cement, Welspun Projects, Agro Tech Foods, Nagarjuna Agrichem, Sterlite Industries and NHPC.

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Flat-to-positive opening likely: Thursday’s Market Preview

Markets in the US closed mostly lower as investors took a breather to study the impact of the political crisis in Egypt with clashes turning violent on Wednesday

The domestic market is likely to witness a flat-to-positive opening on mixed global cues. Wall Street closed mostly lower overnight on as investors took a breather to study the impact of the clashes in Egypt, which turned violent on Wednesday. In Asia, the Nikkei 225 was in the red in early trade on Thursday. The SGX Nifty was flat at 5,432, similar to its close on Wednesday.

The market opened on a strong note on Wednesday, tracking firm global markets. The Asian pack traded in the green, but with low volumes, as some markets in the region were closed for the Lunar New Year. The key benchmarks touched their intra-day highs in mid-morning trade on buying in select heavy-weights. Investors were quick to book profits at higher levels, resulting in the indices paring some of the early gains and remaining range-bound in post-noon trade. However, they plunged to the day's low in the last hour as news of the arrest of former telecom minister A Raja and two others in the ministry came in; then settled in the green, snapping the five-day decline. The Sensex closed 68 points higher at 18,091 and the Nifty up 15 points at 5,432.

We have been expecting a bounce back for sometime, but the recovery from the morning lows of Monday has been so weak that we now expect another sharp decline. If this happens, the market will break 5,400 on the Nifty and 18,000 on the Sensex. However, that would mean a third round of decline since January. It could be the last round of decline before a bounce-back starts.

Markets in the US closed mostly lower as investors took a breather to study the impact of the political crisis in Egypt with clashes turning violent on Wednesday. The private sector added 187,000 jobs in January, notching the 12th consecutive month of employment growth in the private sector. The encouraging data comes ahead of initial jobless claims data on Thursday and the closely-watched official monthly jobs number on Friday.

Among corporates, Broadcom declined 5.6% after the chips maker of chips for television set-top boxes reported margins that missed analysts’ estimates. Aflac, the world’s largest seller of supplemental health insurance, fell 2.4% as operating income trailed forecasts. Electronic Arts Inc, the second-biggest US video-game maker, vaulted 16% and Time Warner gained 8.6% after profits beat projections.

The Dow added 1.81 points (0.02%) at 12,041.97. The S&P 500 fell 3.56 points (0.27%) at 1,304.03 and the Nasdaq shed 1.63 points (0.06%) to close at 2,749.56.

In Asia, the Nikkei 225, was lower amid sluggish trade as investors were wary that the clashed in Egypt would spread to other nations in the region. Protesters want president Hosni Mubarak to step down immediately, and not after his term expires later this year. Most stock exchanges in Asia are closed for the Lunar New Year holiday. The Nikkei 225 was down 0.24% in early trade on Thursday. 

Back home, a survey sponsored by the Reserve Bank of India (RBI) has revised the country’s economic growth projections for the current fiscal to 8.7%, from 8.5% earlier.

Clarifying that the survey does not represent the views of the RBI, the central bank said the forecasters have pegged inflation at 6%-6.9% by the end of this fiscal, as against its own projection of 7%.
 

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Will Sensex now break 18,000 and Nifty 5,400? Wednesday Closing Report

A fresh sharp decline may be on the cards. The silver lining is that it could be the last in the current phase of decline that started on 4th January

The market opened on a strong note, tracking firm global markets. The Asian pack traded in the green, but with low volumes, as some markets in the region were closed for the Lunar New Year. Oil & gas, realty and banking sectors were in demand in morning trade. The key benchmarks touched their intra-day highs in mid-morning trade on buying in select heavy-weights.

Investors were quick to book profits at higher levels, resulting in the indices paring some of the early gains and remaining range-bound in post-noon trade. However, they plunged to the day's low in the last hour as news of the arrest of former telecom minister A Raja and two others in the ministry came in; then settled in the green, snapping the five-day decline.

We have been expecting a bounce back for sometime, but the recovery from the morning lows of Monday has been so weak that we now expect another sharp decline. If this happens, the market will break 5,400 on the Nifty and 18,000 on the Sensex. However, that would mean a third round of decline since January. It could be the last round of decline before a bounce-back starts.

The market breadth on the key indices, which was positive for most part of the day, tilted in favour of the losers towards the end of trade. The Sensex closed with 17 losers and 13 gainers, while 27 stocks declined on the Nifty against 23 advances.

BSE Realty (up 2.40%), BSE Oil & Gas (up 1.85%), BSE TECk (up 1.09%) BSE IT (up 0.90%) and BSE Metal (up 0.86%) were the top sectoral gainers. On the other hand, BSE Power (down 1.34%), BSE Capital Goods (down 0.96%) and BSE Consumer Goods (down 0.32%) ended as the major losers.

The top gainers on the Sensex were Tata Motors (up 3.93%), Reliance Industries (up 2.88%), DLF (up 2.85%), Bharti Airtel (up 2.75%) and TCS (up 2.48%). Hero Honda (down 5.27%), BHEL (down 2.89%), NTPC (down 2.65%), Bajaj Auto (down 2.30%) and HDFC (down 2.22%) settled at the bottom.

Concerned over a spike in crude oil prices in international markets due to the turmoil in the Middle East, finance minister Pranab Mukherjee today said the government is monitoring the situation and will manage it. He added that the finance ministry is in constant touch with its counterparts in the petroleum ministry on the unfolding situation.

He pointed out that India had managed the situation even when crude prices touched a record $147 per barrel in July 2008.

Markets in Asia settled in the green on good earnings reports and optimism arising from strong manufacturing data. The development sent signals of improvement in the global economy. Stock markets in South Korea, China, Taiwan and Vietnam were closed for the Lunar New Year holidays this week, while the Hong Kong market was open for a half-day.

The Hang Seng jumped 1.81%, the Jakarta Composite surged 1.11%, the KLSE Composite rose 0.78%, the Nikkei 225 was up 1.78% and the Straits Times gained 0.83% today.

Back home, seven banks including Bank of Baroda (BoB) and HDFC raised deposit and lending rates by up to 50 basis points on Tuesday, after the Reserve Bank of India tightened monetary policy last week.

BoB and Oriental Bank of Commerce (OBC) raised deposit rates, while HDFC, Indian Bank, Indian Overseas Bank (IOB), Bank of India (BoI) and Dena Bank hiked lending rates.

Higher deposit rates will give depositors better returns, but the increased lending rates will impact EMIs for auto and home-loan borrowers. Corporate loans would also become more expensive.

Foreign institutional investors were net sellers of stocks worth Rs1,036.80 crore on Tuesday. Domestic institutional investors were net buyers of equities worth Rs630.40 crore.

The country's largest passenger carmaker Maruti Suzuki India (down 2.02%) today launched its luxury sedan Kizashi, with an introductory price of Rs17.5 lakh.

The car is powered by a 2.4 litre petrol engine that will be imported from the parent Suzuki's Japan facility. The car would be available in two variants, manual transmission priced at Rs16.5 lakh and automatic transmission at Rs17.5 lakh.

GVK Power and Infrastructure (up 1%) is reported to have been shortlisted as the highest bidder for IDFC Projects' 1,050MW power project, proposed to be built at Korba in Chhattisgarh. An announcement is expected next month. The other companies which were in the race for the bid were Lanco Infratech, AES India, GMR Group and CESC.

Hyderabad-based KNR Construction (down 0.22%) has bagged a contract worth Rs333 crore from Oriental Structural Engineering for its Nagpur-Saoner-Betul project. The work includes four-laning of the Nagpur-Saoner-Betul section of NH-69 in Madhya Pradesh. The project is to be completed within 23 months from the date of appointment.

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