Indian Equity Research and Investment Strategy
Havells India’s (Havells) management indicated that growth in Sylvania could become challenging, especially in Europe that accounts for over 70% of revenues. Further, the domestic business is likely to be negatively impacted by slowdown in construction activities and industrial capex.
Sylvania is witnessing troubled times with 6% contraction in its European revenues in Q2FY09. Other geographies such as Latin America and Asia, which offered Sylvania (more…)
November was a disappointing month for the two-wheeler sector. Bajaj put up a dismal performance, which was significantly impacted by weaker retail demand and correction of dealer inventories. Bajaj’s domestic volumes declined by 51% YoY. Hero Honda performed above our expectations in November (flat YoY vs. -3-4% expected) and gained 30 bps market share MoM over Bajaj Auto. TVS’ domestic volumes also declined by 28% YoY.
Maruti Sales was down 25%. Domestic sales were down 27% YoY, driven by a 27% YoY decline in A2 segment volumes. We believe that Swift and Dezire volumes continued to hold out in this challenging environment, but demand for old models was extremely disappointing.
Mahindra & Mahindra November sales declined 38% YoY, driven by weak UV (- 41% YoY) and tractor sales (-32% YoY). Domestic tractor sales declined 33% YoY, reflecting a sharp reduction in dealer inventories to match the slowdown in retail off-take.
Due to the recent happenings in Mumbai, Hotels was the most vulnerable sector already reeling under the pressure of economic slowdown and Travel Budget Cuts. The recent attacks will significantly impact business/tourist traffic (occupancy/RevPARs) across India, further deteriorating the earnings outlook for hotels, which witnessed a muted 1H on lower occupancy of 64% (down 300bps) and moderating ARR growth of 12%. (more…)
Here is an excerpt from the Conference Call with the Management of Infosys Technologies held on the 28th of Nov,
Is Gopalkrishnan’s strategy right in sailing through difficult times ?
In the wake of the events in Mumbai last week, investors could turn more defensive. We feel that because of the resilient spirit of the society, valuations in the market and likely other support from investors and governments everywhere, there is some chance [though little] of any lasting economic or market impact, except for in some select sectors, where it is inevitable.
Additionally, with the change of guard in the Finance Ministry will have almost no impact as Dr. Singh was constantly in touch with the developments through his trusted lieutenants in the south block including Dr. Montek Singh and Dr. Rangrajan.
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India’s GDP (gross domestic product) grew 7.6% in 2QFY09 (Jul-Sep ’08), in line with our estimate and ahead of consensus (7.2%).
There has been a slowdown in all the major components: agriculture (2.7%), manufacturing (6.1%) and services (9.6%). The deceleration, however, has been much more modest than what was envisaged by the Street. The growth in 1HFY09 at 7.8%.
In line with liquidity and credit problems faced in recent months, we expect GDP growth to slow in 3QFY09 to around 7.2%. The trend is likely to reverse in 4QFY09 and projected to be 7.8% in FY09. The performance of agriculture, mining, electricity and personal and social services are likely to improve in 2HFY09, while manufacturing, construction and trade, hotel, transport and communication are likely to witness deceleration.
Tax Revenues Decline in Oct-2008: