Telecommunication
Record net adds
The GSM (global system for mobile communications) operators added 5.75 million subscribers in July 2007--that is higher than 5.38 million added in June 2007. This amounts to a growth of 4.2% (to 141.7 million subscribers) over the base of 136 million at the end of June 2007.
FMCG
Q1FY2008 earnings review
Companies from the fast moving consumer goods (FMCG) sector have reported an impressive performance for the first quarter of FY2008. On an average, the top line and bottom line of the FMCG industry grew by 17.5% and 20.6% respectively during the quarter. In spite of the rising pressure of high raw material prices, the industry was able to maintain its margins in Q1 and this was a positive surprise. The revenue growth was driven by higher volumes and improved pricing power. The strong growth in the revenues of companies like ITC (despite price hikes and declining volumes), Hindustan Unilever Ltd (HUL), Dabur India and Nestle indicates that the performance of the sector would be strong in the coming quarters.
Cement
Top three majors register a superlative dispatch growth
The top three cement majors registered a superlative dispatch growth in July. ACC's dispatches grew by 15.2% year on year (yoy) to 1.64MMT (million metric tonne) led by the higher capacities at its Lakheri and Kymore plants. Ambuja Cements recorded the highest dispatch growth of 19.5% yoy to 1.39MMT, whereas the AV Birla Group registered a dispatch growth of 13.1% yoy to 2.4MMT. We believe the growth looks inflated as most parts of India witnessed heavy monsoons in July last year. This is substantiated by the fact that the month-on-month decline in dispatches for July last year is very steep compared with that of the current year.
MUTUAL GAINS
Sharekhan's top equity fund picks
We have identified the best equity-oriented schemes available in the market today based on the following 3 parameter : the past performance as indicated by the one and two year returns, the Sharpe ratio and Fama (net selectivity).
The past performance is measured by the one and two year returns generated by the scheme. Sharpe indicates risk-adjusted returns, giving the returns earned in excess of the risk-free rate for each unit of the risk taken. The Sharpe ratio is also indicative of the consistency of the returns as it takes into account the volatility in the returns as measured by the standard deviation.
FAMA measures the returns generated through selectivity, ie the returns generated because of the fund manager's ability to pick the right stocks. A higher value of net selectivity is always preferred as it reflects the stock picking ability of the fund manager
Investor's Eye dated August 10, 2007