Indian Equity Research and Investment Strategy
In a somewhat bold report written by Citigroup Economists, they are of the view that the Indian Party Sp’OIL’ed for Sure, But It’s Not Over [Reason OIL].
The 40% rise in oil prices since Jan 2008 is key to the direction change seen across all macro variables in India. The pressure could ease a bit from FY10 as new hydrocarbon discoveries come onstream. (more…)
Emami has launched Emami Fair And Handsome – a fairness cream for men in a new sachet format for Rs5. Fair And Handsome is a market leader in the men’s fairness cream market.
Nestle India has launched Polo Xtra Strong, an innovation on its existing brand, Polo, with added menthol crystals. This is available in singles format priced at 50 paise.
Avesta Good Earth Foods, a subsidiary of Avesthagen, launched Good Earth Whole Wheat Crackers, enriched with Teestar, a proprietary ingredient that reduces blood glucose levels. Priced at Rs32 for a 100g pack.
Punjab National Bank’s total business grew by 21% to Rs2860 bn on the back of 19% growth in deposits and 24% growth in advances, sequentially deposits grew by 9.1% and advances grew by 18%.
PNB’s reported NIM reduced by 41 basis points to 3.66% from 4.07% in 4QFY07 mainly due to deposits cost pressure, though the bank managed to hold the reduction in NIM by increasing credit-deposit ratio by 272 bps and increasing exposure to SME and retail sectors. Core operating performance was much better with other income and reduced operating expenses [33% (Y-o-Y) drop in employees’ expenses] led to 2.3 times jump in bottomline.
In percentage terms, GNPA and NNPA decreased to 2.7% and 0.6% from 3.4% and 0.8% respectively. EPS for FY08 was at Rs 65. The bank is expected to take significant hit on bottomline the current year due to NPAs, Agricultural Loans and Inflationary pressure.
Wire & Wireless India (WWIL) recorded revenues of Rs755 mn during Q4FY08, representing a top line growth of 7.4% QoQ and 13.8% YoY. The growth was primarily led by 30% QoQ increase in carriage revenue from Rs264 mn in Q3FY08 to Rs355 mn in Q4FY08.
Digital subscription revenue also grew significantly by 66.2% QoQ from Rs45 mn to Rs75 mn. Digital revenue growth was attributed to ARPU expansion which grew to Rs95 per month during quarter (~36% YoY growth).
The company’s OPM improved by 108 bps during the quarter, led by a sharp 490 bps improvement in cost of goods and services. OPM stood at -3.4% during Q4FY08, compared to -24.9% in Q4FY07. The company reported a net loss of Rs 75.4 crore. We personally think that the management of Wire & Wireless India is extremely weak with constant exodus of folks at the top management.
Investors can consider Holding or Adding Emco and Crompton Greaves to transform their portfolio.
Emco:
Emco has posted a healthy net sales growth of 36% YoY to Rs 3.4bn for Q4FY08 and 44% to Rs 9.4bn for the full fiscal. Project division revenues have picked up pace during H2FY08, contributing 30% of net sales for the fiscal. The management expects an even higher revenue share from this division in FY09, at 45%. Emco’s order book stands at Rs 11bn, which is 1.2x FY08 sales. The healthy order backlog and bright outlook for the project division indicate good revenue flows over the next two years. (more…)
We are presenting the Month Over Month IIP – Index of Industrial Production, the barometer for the health of the Indian economy. The bar chart below shows IIP from May-07 to April-08.
The following graph shows the contribution of each of the sectors to IIP – Manufacturing, Mining and Electricity between May-07 and April-08.