Category: Breaking Corporate India Earnings News

We are presenting to you the Chart from our data that we have maintained over years about Indian Industrial Production Growth Rate.

Data from the following chart suggests that India’s IIP reported in Jan-09 is the lowest in the past 6 years.

Industrial production declined 0.5% YoY in January-09 compared with a decline of 0.6% in December-08 (revised upwards from -2% earlier) and growth of 1.7% in November. The decline in January was lesser than market expectations (Bloomberg survey) of -0.9%.

The manufacturing segment declined 0.8% in January compared to -1% in the previous month. The key contributors to this decline were food products, non metallic mineral products, basic metal & alloy industries and metal products & parts. The mining segment also declined 0.4% in January compared to growth of 1.8% in the previous month. The growth in the electricity segment, however, accelerated to 1.8% vs. 1.6% in December.

Growth in consumer goods decelerated to 1.1% in January compared to 1.5% in December. Within consumer goods, growth in the durables segment accelerated to 2.5% on low base effect (vs. -4.1% in December) while non-durables segment growth slowed to 0.7% vs. 3% in December. Capital goods growth accelerated to 15.4% in January mainly on low base effect compared to 5.2% in the previous month. Basic and intermediate goods declined 1% and 9.2% in January (vs. +1.9% and -9.4% in December) .

Other indicators of activity such as the Purchasing Managers Index, exports growth, non-oil imports, and motor vehicle sales have also been very weak in January. We continue to expect activity to slow considerably in the January-March quarter of FY09.

In a related development, Indian Inflation Touched a new 6 year low at 2.43%.

Goldman Sachs has revised the EPS estimates of PSU Banks – SBI, PNB and BOB. The 3Q2008 results of these banks reflected strong demand for new loans, significant improvement in their pricing power for loans leading to higher NIM and significant gains on their bond trading portfolios due to rise in bond prices.

SBI:
SBI is expected to report an EPS of Rs 132.80 and Rs 147.35 for FY09 and FY10 respectively.

PNB:
Punjab National Bank is expected to report an EPS of Rs 51 and Rs 68 for FY09 and FY10 respectively.

BOB:
Bank of Baroda is expected to report an EPS of Rs 32 and Rs 36.02 for FY09 and FY10 respectively.

Latest data indicate that ECBs have been holding up reasonably well. Flows in Jan 09 were up US$1.3bn, only marginally lower than the US$1.9bn seen in Jan 08. On a cumulative basis, however, ECB flows have slowed, to US$15.6bn in Apr-Jan FY09 from US$20.1bn in the same period last year.

However, the key is the sustainability of flows. This would depend on whether the current inflows are due to (i) recent policy changes or (ii) prior commitments. Inflows in Jan were largely due to borrowings by Vodafone Essar and Air India.

While companies are still accessing ECBs, borrowing via the foreign currency convertible bonds (FCCBs) route which had dwindled in the first few months has now ceased. In fact, with the bulk of the FCCBs turning out of the money (i.e., stock prices are trading at a discount to the conversion prices), the RBI introduced measures last year allowing companies to buy back FCCBs from rupee resources or by raising ECBs. However, due to limited funding, companies have found it difficult to buy back FCCBs.

KEC International, a global leader in power transmission EPC business, has bagged two orders worth Rs 340 crore from Power Grid Corporation of India (PGCIL) and one order worth Rs 25 crore from Central Organization for Railway Electrification (CORE), Allahabad.

The first order worth Rs 185 crore from PGCIL is for the supply & construction of 400 kV D/C (Twin) Kameng Balipara & 400 kV d/C (Quad) Balipara – Bongaigaon Line (Part-I) associated with North East – Northern / Western Interconnector-I, while the second order is for the supply & construction of 400 kV D/C Gandhar – Navasari Line, LILO of 220 kV D/C Kawas – Navasari & 400 kV D/c Navasari-Navi Mumbai Line (Part-I) associated with ATS Mundra Regional System for WR.

The company has bagged its third order worth Rs 25 crore from CORE, Allahabad for design, supply, erection, testing & commissioning of 25 kV A.C. Single Phase, 50 Hz. traction overhead equipments, switching stations, booster transformer stations and LT. supply transformer stations including foundations, structures and all ancillary equipments for Pathankot (Excl.) -Jammutawi (Incl.) station of Ferozepur Division of Northern Railway under RE Project, Ambala.

We decided to run a Status Check of the Home Loan Market in India and found that the Growth Rate market has been continuously declining in the past 6 quarters. YoY Growth peaked in Q2 FY07 to a whopping 80% and fell for the next 2 quarters to touch 25% in Q1 FY08 and saw a momentary rise to 32% in Q2 FY08 and since then began its downward journey and is now recording a growth of mere 10% YoY. The following Chart shows the Home Loan Outstanding Vs Growth in Home Loan Disbursal.
Home Loan Lending Data for the Past 2 Months:
Top 5 Banks are as follows – No of Loan Accounts + Amount in Rs mn
SBI & Associates 6,970 2,605.7
Oriental Bank of Commerce 993 375.9
Syndicate Bank 1,528 336.8
Union Bank of India 1,228 301.5
Bank of Baroda 710 255.7

India Real Estate has mentioned from various research reports that the Realty market in India is headed for a deeper and longer correction. Historically, it is proved that Equity is a better investment over Real Estate as proved by Kotak Research.