India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Showing posts with label Update. Show all posts
Showing posts with label Update. Show all posts
Tuesday, August 30, 2011
Monday, August 29, 2011
Friday, March 30, 2007
Monday, March 05, 2007
Wall Street Braces for Bumpy Ride
If last week was Wall Street's big dive, this week will be where it tries to figure out how deep the water is.
Stocks are in for a shaky ride, now that the past five sessions have erased all of this year's gains and then some. Investors in the coming days will be grasping at any and all signals, both domestic and foreign, to see if the market can find a foothold.
Most market watchers now agree that last week's plunge doesn't signal disaster. The stock market, which pushed the Dow to 31 record highs since early October, had been climbing at a pace that was arguably more extraordinary than the depth of Tuesday's drop. Chatter about a big correction had been circulating the floors of stock exchanges for months -- it just came as a shock that so much of the correction happened in a single day.
What the sages are split over is whether stocks have hit a short-term dip or entered a bear market, so they'll be closely watching this week's economic data. Many say there's no reason that stocks shouldn't resume their trek into record territory in the coming months, given that little has changed fundamentally in terms of the average consumer, corporate earnings, manufacturing activity or inflation. But others argue that stocks had inflated way too much given the torpidity of many areas of the economy, and that there is still more air to be let out.
The Dow Jones industrials are down 3.3 percent on the year, the Standard & Poor's 500 index is 4.4 percent lower, and the Nasdaq composite index is down 5.9 percent.
If the Labor Department's employment data on Friday shows stability in U.S. jobs -- previously a big market driver, as it suggests consumers will keep spending money -- the stock market has a better chance of regaining its footing. At the end of last week, the market was expecting February nonfarm payrolls growth to slip to 100,000 from 111,000 in January; February's unemployment rate to hold steady at 4.6 percent; and hourly earnings to inch up 0.3 percent, more than January's 0.2 percent. Other reports, including a snapshot of the nation's service economy and the U.S. trade balance, will also be closely watched.
No matter where the data falls, however, Wall Street is anticipating choppiness this week as some investors flee from stocks to the traditionally safer Treasury market, while others swoop in to scoop up bargains.
And because last week's plunge was triggered in large part by a sharp decline in Chinese stocks, which also set off drops in other Asian markets and European markets, U.S. investors will undoubtedly be looking abroad to see if other countries' stocks are recovering or collapsing.
OTHER ECONOMIC DATA IN THE FOREFRONT
The Institute for Supply Management on Monday will report its index on the services economy in February. The market is expecting a reading of 57.5, down slightly from 59.0 in January.
Also Monday, St. Louis Fed President William Poole will speak on inflation and economic growth in Santiago, Chile.
On Tuesday, the market expects the Labor Department to revise its fourth-quarter productivity growth measure to an annual rate of 1.7 percent from a previous 3.0 percent, and the Commerce Department to report a 4 percent slowdown in January factory orders. Factory orders include the previously reported durable goods -- one of the many disappointing factors contributing to last Tuesday's freefall -- plus non-durable goods orders.
Meanwhile Tuesday, the National Association of Realtors reports January's pending home sales.
On Wednesday, investors will read the Fed's beige book, which describes economic conditions in regions around the country. The Federal Reserve's monthly measure of consumer credit comes Wednesday as well, and is expected to be $7 billion for January, up from December's $6 billion.
On Thursday, the nation's retailers report their sales for February.
And Friday will be a data-heavy day, bringing the jobs report and the trade balance for January. The market is forecasting the trade gap will come in narrower at $60.0 billion from $61.2 billion in December. Also, January wholesale inventories are expected to show a 0.1 percent decline, less than December's decrease of 0.5 percent.
AND IN THE BACKGROUND, A TRICKLE OF EARNINGS
Earnings season is mostly over, and corporate growth in the last quarter of 2006 came in at around 10 percent -- slower than in previous months, but still healthy. Investors haven't been too occupied lately with individual company news, but they shouldn't discount the possibility of a big earnings surprise rattling the markets.
BJ's Wholesale Club Inc. and Costco Wholesale Corp. release their earnings Wednesday and Thursday, respectively. The market is expecting BJ's to report profit of 66 cents per share. BJ's closed at $31.93 Friday, at the upper end of its 52-week range of $25.18 to $34.04.
Costco is also expected to report profit of 66 cents per share. Costco closed at $55.75 Friday, at the upper end of its 52-week range of $46.00 to $58.70.
Meanwhile, analysts predict homebuilder Hovnanian Enterprises Inc. on Thursday to report a loss of 59 cents per share. Hovananian closed at $30.75 Friday, in the middle of its 52-week range of $24.79 to $47.80.
Saturday, February 17, 2007
Cost cuts, higher prices spur profit
Profit growth was much sharper than sales growth in the 3 quarters of FY07
Massive cost cuts, buoyant sales and improved price realisations accelerated Corporate India’s profit growth in the first three quarters of 2006-07.
A study of 808 companies (excluding oil & gas, software, banks and non-banking financial companies) shows that profit growth in these quarters was much sharper than sales growth. Further, the growth in bottom line was much higher in those quarters in which sales outpaced the rise in the cost of production.
While sales increased 28.24 per cent during the quarter ended December 2006, the total cost of production rose 25.79 per cent, indicating that the latter rate is 284 basis points (bps) lower than the former. As a result, net profit jumped 53.66 per cent.
In the second quarter, while sales rose 27.9 per cent, the increase in production cost was lower by 112 basis points at 26.8 per cent. Thus, net profit surged 35.7 per cent.
In the first quarter, sales were up 27.39 per cent, while cost of production rose 26.59 per cent, 80 bps lower than the former. Profit shot up 40 per cent. A Business Standard Research Bureau study shows that the share of cost-cutting in bottom line was 16.6 per cent in the first quarter, 25.74 per cent in the second quarter and 40 per cent in the third quarter.
In other words, while net profit, in absolute terms, increased by Rs 7,752 crore in Q3, the total cost of production was lower by Rs 3,100 crore (See ‘Methodology’). In Q2, savings on account of lower growth in the cost of production stood at Rs 1,329 crore compared with Rs 5,163 crore increase in net profit. In Q1, savings amounted to Rs 844 crore vis-a-vis the absolute rise of Rs 5,099 crore in net profit.
The study also attributes the rise in profit to savings in other costs, which include salaries and wages, interest and general administrative expenditures. However, raw material costs, which galloped past the sales growth, remained a major concern.
The increase in input costs was higher by 161 bps compared with the sales growth in the third quarter, 338 bps in the second quarter and 48 bps in the first quarter. As a result, raw material costs were higher by Rs 3,283 crore, Rs 3,340 crore and Rs 879 crore in the first quarter, the second quarter and the third quarter respectively.
The corporate sector saw a rise in tax provision in all the three quarters as profits surged. The tax provision was higher by Rs 210 crore in the third quarter, Rs 172 crore in the second quarter and Rs 194 crore in the first quarter.
More than half of the 808 companies studied managed to save on total costs during all the three quarters. Over 60 per cent of them made saving on other expenditure. And, about 50 per cent firms effected saving on interest and salaries/wages. Only 40 per cent of the companies saved on raw material tax provision.
One-fourth of the sample or 197 companies registered decline in net profits largely because of higher cost of production. Of this, the total cost of production was lower for 38 firms, while for 88 companies raw material costs were lower. However, 103 firms managed to save on other expenditure, and another 132 outfits showed a growth in sales income.
Further, of the 45 sectors studied, the sales growth rate of 29 per cent was higher compared with the growth in the total cost of production in the third quarter. The sales growth rate of 24 sectors was higher in the second quarter and of 28 sectors in the first quarter. However, the growth in raw material costs was higher than the sales growth for 26 sectors in the third quarter, for 30 sectors in the second quarter and 22 sectors in the first quarter.
Cement has done well in all the three quarters with net profit growth of 264 per cent in the third quarter, 145 per cent in the second quarter and 244 per cent in the first quarter.
The sales growth rates ranged between 40 per cent and 53 per cent, while cost of production moved between 20 per cent and 25 per cent in the three quarters. This shows that cement companies benefited from cost-cutting and higher price realisations.
Sugar companies suffered a severe setback on account of lower prices with 8 per cent decline in sales in the third quarter and a modest 4 per cent sales growth in the second quarter. However, raw material costs rose 14.5 per cent in the third quarter and 2.08 per cent in the second quarter. The result was obvious: bottom lines of sugar companies declined 17 per cent in the second quarter and slumped 53 per cent in the third quarter.
The first quarter offered a different picture. Net profits of sugar companies zoomed 113 per cent on the back of 33 per cent surge in sales, though there was 30 per cent rise in raw material costs as well. This was because there was buoyancy in prices in that quarter.
Methodology
The study is based on a sample of 808 companies that have posted profits in the last six quarters.
The study excludes the finance, software and services sectors, which do not use raw materials for production purpose. Oil & gas companies have also been excluded as the government controls the pricing power for oil marketing companies. In the third quarter, profits of state-run oil companies increased largely on account of oil bonds.
Savings on cost of production were calculated by applying the cost-to-sales ratio of the previous corresponding quarter to the current quarter. This was done to find out the cost of production for the current quarter based on the cost-to-sales ratio for the previous corresponding quarter. The study shows that the ratio was higher in all the previous quarters and lower in the quarters under review.
Had the cost-to-sales ratio during the quarters under review been higher or the same as the year-ago quarters, the cost of production would have been higher. In such case, bottom lines of these firms would have risen 27.3 per cent in the third quarter, 24.9 per cent in the second and 31.5 per cent in the first. However, they posted net profit growth of 53.7 per cent in the third, 35.7 per cent in the second quarter and 40.1 per cent in the first.
The total cost of production-to-sales ratio was lower at 82.51 per cent (84.11 per cent) in the third quarter, 83.03 per cent (83.76 per cent) in the second and 82.35 per cent (82.87 per cent) in the first.
Friday, December 29, 2006
Monday, November 27, 2006
Sun shines on Sun TV
The board also approved merging Udaya TV excluding the FM (frequency modulation) radio division, with itself.
1.12 lakh shares were traded on the counter on BSE.
The stock surged 11% in the past week, from Rs 1361.55 on 17 November to Rs 1511.30 on 24 November, as buying momentum continued.
Gemini TV owns five television channels, Gemini TV, Teja TV, Gemini News, Gemini Music and Gemini Cable Vision, and is operating with revenue of Rs 174.69 crore for the year ended 31 March 2006.
Udaya TV owns four television channels, Udaya TV, Udaya Movies, Udaya Varthegalu and Udaya TV II, and is operating with revenue of Rs 94.31 crore for the year ended 31 March 2006.
The company added that with this proposed merger, the companys shareholders would benefit immensely from the highly profitable operations and strong growth plans of both Gemini TV and Udaya TV. Sun TV will have an integrated growth strategy for all south Indian language channels, and thus build a dominant presence in entire south India.
Sun TV currently operates four television channels - Sun TV, KTV, Sun News and Sun Music - in Tamil language and two television channels - Surya TV and Kiran TV - in Malayalam language, and three FM Radio Stations, and another three FM Radio Stations through its subsidiaries. The two subsidiaries of the company, viz., Kal Radio and South Asia FM, jointly holds 41 FM Radio Licences for FM Radio Stations across India.
Recently, Sun TV announced increase in its advertisement rates by 5-27% to be effective from 1 January 2007, because of an increase in viewership. The increase in rates has come after a gap of two years.
For Q2 September 2006, Sun TVs net profit rose 42.7% to Rs 47.96 crore (Rs 33.61 crore). Net sales rose 17.7% to Rs 94.47 crore (Rs 80.24 crore).
Saturday, November 11, 2006
Sun TV prevails
Sun TV jumped 8.6% to Rs 1,424.35, on sustained buying.
As many as 89,150 shares changed hands in the counter on BSE.
A combination of positive announcements such as rates for pay channel, strong Q2 results and launch of more FM radio stations has lifted the stock recently. Market’s recent interest in small-cap and mid-cap shares had aided the stock’s solid move today. From Rs 1,196.75 on 30 October 2006, it has risen 19% in the past nine trading sessions, to current Rs 1,424.35.
At the beginning of this month, Sun TV announced that SUN TV, the flagship channel of the company, will be a pay channel with effect from 2 December 2006. This will add to the revenue of the company. Sun TV is a television broadcaster in South India, and the second largest in India in terms of audience share. The pay channel for the cable operator for SUN TV will be Rs 12 per month, per subscriber.
The company, which also has interests in FM radio business, recently announced commencing operations of three more FM radio channels this month. It has already received licence for 45 FM radio stations and would be top FM radio operator, once these are operational.
For Q2 September 2006, Sun TV’s net profit rose 42.7% to Rs 47.96 crore. Net sales rose 17.7% to Rs 94.47 crore.
Wednesday, November 08, 2006
Subscribe to:
Posts (Atom)