Companies & Sectors
Q4FY11 preview: IDFC expects strong performance from manufacturing industries

Automobile growth should sustain, FMCG and pharma could see higher growth, while pipe manufacturers may be impacted by higher crude prices amid tensions in the Middle East, according to IDFC Securities  

Agri-related companies should perform well in the fourth quarter, following a good rabi season, according to IDFC Securities research. It expects revenues for United Phosphorus, one of the prominent companies in the sector, to grow by 8% y-o-y to Rs16.3 billion and EBITDA margins should improve by 200 basis points (bps) on an annual basis in the quarter. However, higher interest expenses will put pressure on net profit. Advanta India's earnings are likely to grow 12% and profit after tax (PAT) by 5%, it says in an earnings preview report published this week.

Jain Irrigation Systems appears upbeat on the fourth quarter, after a subdued performance in the previous two quarters. Revenue growth is expected to be over 30%, spurred by a 35%-plus growth in its micro irrigation systems business and over 20% growth in the pipes division. EBITDA margins are expected at 22%, translating into an expansion of 163 bps y-o-y.

The March quarter is pegged to be the strongest for the alcohol manufacturing industry. United Spirits is expected to post a 16% growth in revenues on the back of a 13%-14% volume growth, price increases and improved product mix. While extra neutral alcohol prices have remained stable in the fourth quarter, gross margins will be pressurised by higher glass prices. EBITDA margins of 15.6% are indicated for the period under review.

United Breweries is another outperformer with a 35% revenue growth and underlying volume growth of above 20%. Radico Khaitan is expected to see a volume growth of 13% leading to a revenue growth of 18%. EBITDA margins are expected to remain flat while lower interest cost is likely to support an 84% plus net profit growth in the three-month period ending March 2011.

The buoyancy in demand in the automobile sector is expected to remain bullish in Q4FY11. Passenger car and two-wheeler manufacturers are expected to sustain the 20% growth momentum, but the commercial vehicles segment may see a marginal slowdown on account of the high base effect.

Higher commodity costs are likely to cut margins of companies like Bajaj Auto, Tata Motors and Mahindra & Mahindra. Truck maker Ashok Leyland could gain the most on the back of its operating leverage, with a 61% q-o-q growth in volumes.
The domestic business of Tata Motors will face some pressure on margins while that of its niche segment-JLR-is expected to remain strong at over 16%. M&M is expected to witness a sequential decline in margins on account of higher contribution from the auto business and inclusion of Logan in standalone from January 2011.
Margins for auto ancillary units will remain steady as higher commodity prices offset operating leverage benefits. Bharat Forge and Bosch are expected to see strong revenue growth led by higher growth in the commercial vehicles segment and a bounce back in export volumes. Among tyre companies, Apollo Tyres will witness a 5% q-o-q growth in revenues on a higher domestic market share and price increases. Balkrishna Tyres will see a margin improvement on 4% sequential increase in volumes and price increases of 6% q-o-q.
The fast moving consumer goods (FMCG) industry is expected to witness a 19.5% growth in the fourth quarter of the just-concluded fiscal. While companies across the industry have resorted to price hikes to manage raw material costs, the price increases would not necessarily improve gross margins, according to IDFC Securities.

It rates Hindustan Unilever as an outperformer, with the company expected to post double-digit growth in volumes for a fifth consecutive quarter. But EBITDA margins could be at the lowest at 10.3%.

Cigarettes are expected to boost the growth of ITC since there has been no increase in excise duty in the recent Union Budget. Revenues are seen growing at 15% in the quarter. The ongoing conflict in the Middle East and North Africa is expected to have a marginal impact on revenue growth of Dabur and Marico. They are expected to report a revenue growth of 30% and 22%, respectively.

Most pharmaceutical companies are expected to see a growth of 12%-20% in the quarter under review. Recovery in domestic sales and formulations exports will benefit Cipla with a 14% y-o-y growth in revenues. Dr Reddy's revenues are expected to grow by 15% y-o-y on the back of Allegra d-24, Omeprazole and Tacrolimus sales and incremental contribution from Lansoprazole. Lupin's revenues are expected to grow 15% y-o-y on growth across all geographies and profit growth is estimated at 8%. Sun Pharma is expected to report 45% revenue growth on the back of sales contribution from Taro.

Glenmark will be boosted by contribution from new launches and growth in the US. Biocon's revenues are expected to grow 6% y-o-y on expansion of the biopharma segment and higher licencing income. Ranbaxy is expected to see a 15% decline in revenues on the back of a high base (exclusivity sales of Valacyclovir, even as Aricept sales for the quarter have been factored in). EBITDA margins of Ranbaxy are pegged at 14.1% for the quarter.

Rising crude prices and increasing rig count indicate that higher exploration and development capital expenditure could impact future revenue prospects of pipe manufacturers. EBITDA margins are expected to remain flat, but volume growth could rise marginally on a sequential basis. Also, the order book position of companies in this segment continues to rise sequentially, which is expected to see earnings grow in the next few quarters.

IDFC rates power equipment major Crompton Greaves as an outperformer, BHEL at neutral and ABB as an underperformer. Power equipment companies (except BHEL) are likely to report a 9% growth in revenues while operating margins are likely to fall by 100 bps. Earnings growth is expected to fall by 13%, y-o-y. BHEL's provisional performance is pegged at 32% to Rs25.2 billion-below expectations. EMCO is likely to witness a subdued performance on sluggish off-take by clients, while ABB's earnings will be pressurised by lower margins.
Power transmission companies are expected to post a 15% y-o-y growth in revenues on execution of order backlogs. However, higher interest costs will dent earnings growth to 10%.


Kingfisher allots 5.68% stake to SBI for Rs180 crore

Stake sale part of debt restructuring plan approved in November, to reduce interest burden, stem losses

Mumbai: Vijay Mallya's Kingfisher Airlines today announced that it has allotted 5.68% shares, valued at about Rs180 crore, to the State Bank of India (SBI) on a preferential basis under a debt recast plan.

"Yes, it is true, we have issued 5.68% new equity shares to SBI, which is our largest lender, under the master debt recast plan which we accepted late last year," the airlines' chief financial officer Ravi Nedungadi told PTI.

SBI chief financial offer Hemant Contractor could not be reached for comments.

On 25th November last year, the Kingfisher board had approved a debt recast plan under which the airline operator would convert some of its debt into equity in its efforts to reduce the interest burden and stem losses. Kingfisher Airlines, controlled by United Breweries Holdings, had agreed to convert Rs1,355 crore worth loans into shares.

In addition, it was to convert the founders' debt of up to Rs648 crore into share capital. The airline had mandated SBI Caps for the debt restructuring.

Following the ripple effect of the September 2008 financial meltdown, the domestic aviation industry which was flying high hit an air-pocket, as domestic economic growth slowed down and crude prices went sky high. The Reserve Bank of India  had cleared a debt restructuring proposal for the sector in September 2010.

The company's shares settled at Rs48.05 a piece, up 4.57% from its previous close on the Bombay Stock Exchange.




6 years ago

Candle is a registered ngo would like to receive funds from king fisher . Please send grant application format. Thankyou very much for your co operation.


6 years ago

news about stake alllotment to SBI cannot help/ will not be useful to the reader/investor unless it is known at what price is alloted?
with regrds

Information commissioners declare assets on CIC website

Chief information commissioner says nothing to hide, just implementing the decision that was taken some days ago

New Delhi: Leading by example, the head of the Central Information Commission (CIC), Satyananda Mishra, and five information commissioners today made their assets public. The information commissioners reached a consensus to declare their assets voluntarily on the CIC website at a meeting last month, where they also agreed to update the information on an annual basis.

"We took a decision in the last week of March to voluntarily declare our assets on the website. We thought when there is nothing to hide, why not place them in public domain," Mr Mishra, the chief information commissioner, told PTI.

The declaration which came after initial reluctance by the CIC, shows that only two information commissioners, ML Sharma and Shailesh Gandhi, own a car. Mr Sharma said he owns a Maruti 800 which he bought in 1993 for Rs2 lakh. He has also declared other assets which include agricultural land and a house in Jaipur that he built in 1989-90 with a loan from HDFC.

Information commissioner Annapurna Dixit declared two houses that she owns in Delhi and Nainital that have a combined value of about Rs50 lakh. Information commissioner Sushma Singh has one house in Ranchi that she purchased in 2004 and another in Indirapuram, Ghaziabad, that was purchased in 2008.
Mr Mishra has given exhaustive details of property owned by him that includes ancestral property in his native place in Orissa, a house in Bhubaneswar and one in Bhopal which he owns together with his wife. He has also given details about the property owned by his wife, who is a professor at a post-graduate college in Bhopal. "I had used the same format which I used to give when I was working as a civil servant," Mr Mishra said.

Information commissioner Deepak Sandhu gave details of five properties, which include agriculture land worth Rs 1,000, two plots in Kilokari in Delhi valued at Rs40,000, a house in Barog, in Himachal Pradesh, worth Rs50 lakh and one in Chandigarh worth Rs5 crore. Some of this is jointly owned with her husband and some of it she inherited from her mother.

Information commissioner Shailesh Gandhi also declared property details of his family. The former entrepreneur has listed a house worth Rs80,000, a car worth Rs5 lakh, jewellery (self-estimated value) of Rs31 lakh, bank deposits and such instruments of about Rs71 lakh and cash of about Rs11 lakh. His income from salary and interest is about Rs31 lakh, while expenses were about Rs16 lakh during the year.

The step taken by the Commission is a complete turnaround from its position during the tenure of chief information commissioner Wajahat Habibullah, whose five-year term ended in September last year, when some information commissioners were against posting the details of their assets on the website.
Mr Habibullah had said that although the commissioners were ready to declare their assets, they were against the idea of putting the information in the public domain, on the website of the CIC.

Mr Gandhi was opposed to that view and he went ahead and declared his property details on his website. Mr Habibullah then directed the officials to understand the practice followed by other commissions. But no concrete step was taken.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)