Category: Breaking Corporate India Earnings News

NIIT Technologies have qualified as Approved Scanning Vendors (ASV) for Payment Card Industry Data Security Standard (PCI DSS). This brings NIIT Technologies into the league of an elite group of Security Service Providers, providing Scanning Services for all Payment Card Network Vendors, Merchants and credit card service providers, who deal in credit card transactions.

The Payment Card Industry Data Security Standard (PCI DSS) requires organizations to conduct quarterly remote network, system and application scans. NIIT Technologies would provide quarterly remote vulnerability scans to help organizations achieve and maintain compliance. NIIT Technologies’ security experts conduct the scan, and then provide comprehensive reporting and remediation documentation support for data security issues that are uncovered.

Rising borrowing costs had a severe impact on India’s industrial production, which grew at the slowest pace since 2002 in March. India IIP Data for March AT 3% Vs 8.6% in Feb. Sonal Verma of Lehman Brothers said,

Industry is facing headwinds from tight monetary conditions, high raw material costs and weakening foreign demand.There is unlikely to be much scope to cut policy rates in 2008 to boost domestic demand.

Analysts expects interest rates not to come down and higher interest rates are discouraging sales of 2 and 4 wheeler automobiles and residential real estate as well.

Voltamp Transformers 4Q08 net sales grew 10% yoy to Rs1.35bn, 18.3% lower than our estimates. For the year, they rose 36.9% yoy, to Rs5.55bn, 5.2% lower than estimated. Expect the company to clock sales of Rs8bn and Rs10.7bn for FY09 and FY10, at a 39% CAGR. The value of confirmed orders on hand for FY09 is Rs4.5bn. Capex (relocation to Vadodara) planned for FY09 is Rs350m. The expected transformer manufacturing capacity by FY10, postexpansion, is 13,000 MVA.

For the year, PAT more than doubled, to Rs799m (shooting up 102.3% yoy, at just 1.3% over our Rs789m estimate). The exponential growth was fuelled by significant savings in material costs, which nosedived 580bp yoy. For 4Q08, the company reported PAT of Rs217m, up 59.7% yoy (5% above our expectations). Revised PAT estimates for FY09 and FY10 stand at Rs1bn and Rs1.4bn, a 30.4% CAGR.

Punjab Tractors (PTL) for Q4FY08 reported robust 105% YoY recurring net profit growth to Rs267mn on low base (Q4FY07 was affected post the acquisition by Mahindra & Mahindra due to restructuring exercise undertaken, which included sharp reduction in inventory & debtors).

Revenues rose 29.5% YoY to Rs2.9bn on the back of 23.8% YoY volume growth – domestic volumes rose 23% YoY and exports surged 63.6% YoY. In Q4FY08, the company registered market share gains of 240bps YoY to 10.5%. EBITDA margin rose 400bps YoY and 50bps QoQ to 13%, driving 87.8% YoY EBITDA growth.

For FY08, the company registered muted revenue growth of 2% on the back of 6.6% sales volumes decline; it also lost market share 20bps to 9.1%, registered EBITDA margin contraction of 160bps to 10% and 7% decline in recurring net profit to Rs652mn.

Post restructuring, the company seems to be back on TRACK. Existing Investors can HOLD.

Inflation for the week ended Apr 26 comes at 7.61 % vs. market 7.57% for the week before. Inflation for the same period last year was 6.06%.

Late last week the price of Tea shot up by whopping 16% over the previous week. This week its rising again. Experts expect the Inflation to touch 7.68% for the week ending May 3rd 2008.

YTD Inflation for FY09 is at 7.41%. Morgan Stanley in its report has expressed concerns about India’s Macro scenario but however hasn’t downgraded India to a SELL yet 🙂

World’s leading banker, Citigroup has some harsh words for India in its report. Citi said,

It has become expensive to live in India but probably even more expensive to do business in India. A look at the rising costs of setting up business over the last 3 years – asset, capital and services based – suggests “business inflation” could be as high as 10-35% p.a., well ahead of 7-8% headline inflation. This could be meaningful, given India’s growth is primarily investment led.

The report further adds that Business inflation is raising break-evens and capital intensity, lowering returns.

Citi estimates, ballpark by nature, suggest that in cases, break-even periods are up 20-80% over the last 3 years, capital intensity is up 10-60% and distribution requires 2x sales to generate the same returns. A part of this pressure is global, and this does not apply to all but raises questions on the direction of returns.

Citi raises 4 questions 1. Growth rates – where will they settle? 2. Government/RBI policy stance, in the face of inflation and election [frequent elections, a dampener] . 3. Earnings momentum – slowing, but faltering? 4. Retail investor – will he come back and when ?