We are presenting to you the historical returns in India after a Bear market. This is the First Part of the three part post. Part-II will cover the concerns and how they can be mitigated. Part-III will cover Fundamentals and Outlook. Read Every Word of this Article Carefully. Sensex has corrected by 50% in the last 9 months which augurs well from wealth creation point of view. At current levels it is trading at a historical low on one year forward P/E basis. Investments in equity with long term perspective at current levels will help generate good returns. (more…)
Year: 2008
Idea Cellular – Growth Disconnected
Idea Cellular’s revenue was up 5.8% qoq (47% yoy). EBITDA was down 16% qoq and 20% below estimate. Net income of Rs1.44bn (EPS: Rs0.50) was down 35% yoy and came in 44% below estimate.
ARPU dropped 6% qoq (3% in 1Q) to Rs266 as MOU/subscriber slid 3.5% (+4.1% in 1Q). We suspect this reflects: weaker quality of new subs and seasonality – reduced roaming during the monsoons. ARPM was down 3.6% qoq to Rs0.63/minute.
EBITDA margin collapsed 673bps as network and S&M costs soared 19.4% and 33.8%, respectively. Excluding Mumbai, the margin was down 520bps, which reflects rapid network expansion and brand building costs.
HDFC – Core Business Strong + Subsidiary Under Pressure
HDFC’s 2QFY09 net income, adjusted for extraordinary gains from sale of stake to Intellenet, grew by 32% yoy. The recurring earnings were driven by a 29% topline growth supported by steady margins and loan growth of +30%. Reported profits, however, declined by 17% yoy as last year HDFC had a one-time gain from sale of its stake in Intellenet.
Non-interest income was strong with yoy growth of 57% yoy. Also, core fee income (lending biz.) increased by +90% yoy. HDFC has been building up retail deposits during the period. While term loans have grown at 5% yoy, retail deposits have grown by 28% yoy. Resources (deposits+ borrowings) have grown 22% yoy and 6% qoq. (more…)
HDFC – Disbursement slips marginally
HDFC – India’s largst Housing Finance company reported net profit of Rs5.34bn (higher than our estimate), a ~32% yoy growth on a pre-exceptional basis (17% yoy de-growth including exceptionals). As anticipated, there is some moderation in disbursement growth to ~23% in Q2FY09 from ~26% in FY08 in the context of high interest rates, however approvals have continued to grow at ~26% yoy to ~Rs141.8bn.
Growth in the retail segment continues unabated with individual disbursements up 30%+ yoy. Despite sustained loan growth and elevated property prices & interest rates, HDFC has witnessed an improvement in asset quality in Q2FY09. Gross NPAs and Net NPAs have declined in absolute and percentage terms on a yoy and qoq basis.
Break-up of HDFC’s loan book:
Individuals – 54,726 crore
Corporate – 24,509 crore
Others – 1,959 crore
Financing for Realty Projects – 755 crore
Chambal Fertilisers and Chemicals
Chambal Fertilisers and Chemicals’ (Chambal’s) adjusted PAT of Q2FY09 was better than expectation on the back of a sharp jump in the trading sales, resulting in an addition to the bottom-line. Chambal has shown a YoY growth of 130.2% in the adjusted PAT to Rs985.7m. The company has provided MTM losses of approx. Rs510m on trading creditor of US$170m, payable in July 2009. Hence, the reported PAT was Rs475.7m. Chambal’s Q2FY09 has declared a result which is standalone, while our annual estimates are consolidated.
Chambal has shown a YoY growth of 133.5% in sales to Rs17,451.3m, on the back of higher trading sales and fertilizer subsidy due to rising input costs. The company has added three ships in H1FY09 that resulted in a YoY growth of 45.4% in the shipping business to Rs1051.7m in Q2FY09. In Q2FY09, Chambal has charged the interest of capitalized new ships in the profit and loss account, instead of the cost of ships as done earlier. Hence, the interest cost jumped by 112.4% to Rs416.3m. Chambal has received entire outstanding fertiliser subsidies till August 2008.
The stock yields good dividend around 9% if bought sub Rs 40 levels. Investors looking for dividend yield can look at the stock.
And What is HSBC’s India Strategy ?
If you are a regular reader here, we started recommending HSBC and also track their Sr. Fund Manager, Mr. Duggal. We now present to you an insight on HSBC’s India investment strategy. Indian markets continue to face headwinds in the form of global risk aversion and deceleration in corporate profit growth due to slowing economic activity. Risk aversion is unlikely to end soon but don’t expect it to get worse either. India’s Growth (more…)