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Sunday, August 12, 2007

Investor's Eye dated August 10, 2007


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

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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

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