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The week that was…

India Infoline News Service | Mumbai |

It was a week of big bang reforms, political posturing ahead of polls next year, economic data and marquee earnings.

The week started off with a high. On Sunday, petrol price were hiked by a steep Rs 1.55 a litre, the fourth increase in rates in six weeks, as falling rupee made oil imports costlier. This is the fourth increase in rates since June. Oil firms had on June 1 raised prices by 75 paisa, excluding VAT, and followed it with a Rs 2 per litre increase on June 16 and Rs 1.82 on June 29.

To stem the rupee's slide, the Reserve Bank announced few measures to curb speculation in the currency market and address exchange rate volatility with an aim at restricting liquidity in the banking system. With these measures, the central bank aims to make the debt market more attractive for foreign investors. The move, however, didn’t have the intended effect.

It turned cautious post that. The central bank did not want interest rate to rise sharply as that could create more problems for the economy. RBI rejected bids that quoted higher yields for its Rs 12,000-crore bond sale programme, netting a paltry Rs. 2,532cr.

There were several bids but RBI accepted only those close to the secondary-market rates.  Market took the cue and yields on the benchmark 10-year government bond softened to end the day six basis points lower at 7.98%, after touching 8.08% in intra-day trade.

In economic data, the Index of Industrial Production for May declined 1.6% versus a 2.5% growth in May 2012, primarily due to a contraction in the consumer durables segment. Wholesale Price Index inflation eased to 4.9% in June from 7.6% in the same period last year.

But the major newsmaker of the week was the easing of FDI caps with an eye to boost dollar inflows and stimulate a moribund economy. The Centre has eased foreign direct investment caps in 13 sectors like insurance  (from 26% to 49%, would require Parliament approval), commodities as well as stock exchanges (unchanged at 49% but allowed through automatic route instead of Foreign Investment Promotion Board's consent), tea (100% allowed; up to 49% under automatic route), telecom (from 74% to 100%), courier services, defence productions, asset reconstruction companies, credit information companies and others.

On the global front, Federal Reserve Chairman Ben Bernanke kept up with his guessing game on when the massive $85bn monthly bond buying program will be tapered. In his address to the US House of Representatives Financial Services Committee, Bernanke said the Fed expects to start scaling back its massive asset purchase program later this year. This was the prime reason for the rangebound market pre-lunch.

For the week, the benchmark indices - Sensex and Nifty -- gained 0.9% and 0.3% respectively. Among sectoral indices, FMCG was the star gainer, up 6.9%, followed by oil and gas (4.2%) and IT (3.9%). The losers pack was led by banking, down 6.2%, along with realty (-4.3%) and metal (-3.8%).

FMCG behemoth Hindustan Unilever turned market favourite this week. The stock shot up over 13.5% on account of FTSE rebalancing. From July 22, its float increases to 33% from 24% in FTSE's All-World and All Emerging indices. Meanwhile, the company has hiked prices of some of its best selling products in the soap category by up to 15%.


Top Stories

RIL Q1 FY14 PAT up 18.9% YoY at Rs. 5,352cr

Mukesh Ambani-led Reliance Industries has posted a Q1 FY14 profit after tax of Rs. 5,352cr as against Rs. 4,503cr in the same period last year, an increase of 18.9% year-on-year. Revenue dipped 4.6% YoY at Rs. 90,589cr on back of lower output from its flagship KG-D6 gas fields. Gross refining margins came in at $8.4 on turning every barrel of crude oil into fuel as compared to $7.6 per barrel YoY. KG-D6 gas production fell 53% to 49.2bn cubic feet in Q1.

RIL D6 gas output falls to 14 mmscmd: Oil Secretary

RIL may invest $16-bn to boost production: Reports

DGH refuses to clear RIL's $3.5bn gas production plan


Eyeing $, govt allows 100% FDI in telecom; Opens 13 sectors

The government has finally decided to bite the bullet on the foreign direct investment front. With foreign inflows drying up and the economy in the doldrums ahead of general elections next year, the government approved 100% FDI in telecom and courier services from the current 74%. At present, FDI is allowed either through automatic route or by approval of the Foreign Investment Promotion Board.

Removal of FDI limit positive for Indian telcos: Fitch

Policy relaxation can spur FDI: IACC

Next round of reforms initiated: CII


RBI announces measures to address exchange rate volatility

The Reserve Bank has chosen to target short-term rupee liquidity in order to contain currency volatility. The measures announced include hiking the Marginal Standing Facility and the bank rate by 2% to 10.25% with immediate effect. The MSF is a window that banks resort to when they fall short of the mandatory statutory liquidity ratio of 23% to borrow funds from the repo window. But banks have been running SLRs 3-4% over the mandated 23% due to risk aversion among banks and a lack of corporate demand for loans.

Which bank scrips will be impacted by RBI Re booster?

RBI measures to be rolled back if Re stabilises: PM

See Re at 57.60-58/$ by August-end: IIFL

Steps taken by RBI to curb Re liquidity necessary: Montek

Home loans, auto loans may become expensive

RBI gives Rs. 250bn booster to MFs

Managing growth-inflation balance in EMs a big task: RBI


Fed: To scale back bond prog this yr, no deadline set yet

Federal Reserve Chairman Ben Bernanke kept up with his guessing game on when the massive $85bn monthly bond buying program will be tapered. In his address to the US House of Representatives Financial Services Committee, Bernanke said the Fed expects to start scaling back its massive asset purchase program later this year. However, he left open the option open to change that plan in either direction if the economic outlook shifted.

Is the recent improvement in US labour market good enough?


China de-regulates lending rates to boost economy

The People's Bank of China has given the banking system greater freedom to set their own lending rates. Previously, Chinese banks were only allowed to lend at certain rates. The central bank hopes the move would lead to lower costs for companies.

China's economic growth slows to 7.5% in Q2 2013


Muted close to action packed week

The Indian equity market ended Friday on a flat note with a slight negative bias amid some selling in capital goods, banking, realty and pharma stocks. Even midcap and smallcap stocks were under pressure. The benchmark indices opened with a positive gap extending Wednesday’s momentum. However, it was unable to sustain itself at higher levels amid profit-booking ahead of the weekend...Read More

Stick to defensives, advises IIFL Inst Eq

No informal pressure on IPO-bound cos to include safety net

Ordinance gives Sebi search and seizure powers

Govt bars FinTech from launching new contracts till further notice

Raymond, Indian Hotels out of F&O segment w.e.f Sept

BSE adds 62 scrips to trade-to-trade category

NSEL to be penalised for violating norms

NSE regains No.1 spot in equity trade volumes


News in Focus

Eco blues: M&A activity dips 39% YoY in H1 2013 to $13.92bn

The value of merger and acquisition deals involving Indian companies touched $13.92bn, a 39% decrease from the first-half of 2012, data from Grand Thornton showed. This despite turbulent economic conditions prevailing in the country and rupee hitting all-time lows during the quarter. Domestic M&As stood at $3.1bn driven by power, energy, banking, financial services and real estate sectors.

India deals: Taking stock of the tiger

VC funding in healthcare IT on pace to exceed $2 bn in 2013

Blackstone to acquire stake in Agile Electric, Igarashi Motors

PepsiCo, Mondelez in race to acquire stake in Balaji Wafers

Eka Software acquires stake in MatrixGroup: Reports

Abbott to acquire OptiMedica Corp

Jana Mobile receives $15mn investment from Publicis Groupe


CFOs cautiously optimistic about biz prospects: Study

Senior finance executives and CFOs are cautiously optimistic about revenue growth, but are concerned about market uncertainty and its impact on their ability to predict and manage business performance, reveals a study conducted by Accenture. About 61% senior finance executives are projecting annual revenue growth of 5% or more by 2015, and one quarter of executives expect annual growth of at least 10%.

Cos sitting on a cash pile of €3.7 trillion: PwC

Investments expected to pick up in current fiscal: CII survey

Pitney Bowes releases digital commerce white paper

Is slowdown pushing job seekers away from pvt sector?


Anand Mahindra ranks third in Top 30 CEOs on Social Media

Anand Mahindra, Chairman at Mahindra Group, was ranked third in the inaugural WorldofCEOs.com ranking of the Top 30 CEOs on Social Media. This global ranking recognises those CEOs who are pioneers and early adopters of social media. Mahindra is the only Indian to feature on this list.

Tech Mahindra in race to acquire Polaris IT service biz


Which five luxury cars are on women's priority list?

About 90% women influence the car buying decision in every household, finds a survey conducted by Big Boy Toyz, a pre-owned exotic luxury car dealer. The top five luxury cars on the priority list of women include Mini Cooper, Cayman, BMW Z4, BMW 3 Series and Mercedes SLK.

18% single working women make own fin decisions: Study

Detroit: City of Champions to Motown to now Bankruptcy


Top B-school students lag in practical intelligence: Report

MBA graduates from top B-schools lag behind in practical intelligence, as indicated by the report 'Practical Intelligence in Top B-Schools in India’, an empirical quantitative study on students in Top B-Schools in India.

Are Indian organisations failing to keep employees happy?

B-schools get solid response on real estate courses

B-school to reveal how to convert shoppers into buyers

Indian men are addicted to work: Regus Survey

Total number of firms in official registry crosses 13 lakh

Is gender reservation in IIMs fair?

Rajat Gupta to settle insider trading case for $13.9mn

What are the key drivers needed for innovation in India?


Research Reports

Add Infosys, target Rs. 3100\share: IIFL Inst Eq

IIFL Institutional Equities, a part of the IIFL Group, has rated Infosys an add post its Q1 FY14 earnings. The IT bellwether reported an about 4% increase in consolidated net profit at Rs. 2,374cr for Q1 FY14 as against a Rs. 2,289cr in the same period last year. Consolidated revenue for the IT major firm is up 17.2% at Rs. 11,267cr from Rs. 9,616cr in the year-ago period. The brokerage is upgrading its FY14-16 EPS estimate by 4-6% on better revenue growth and EBITDA margins. It has a 12-month target price of Rs. 3,100, which is a 11% upside from its current market price of Rs. 2,804 per share...Read More

Infosys plans to acquire IT, BPO arms of European cos

Global IT outsourcing mkt to reach $288bn in 2013: Gartner

IT sector outlook remains stable: India Ratings

Bomb scare at Wipro Bangalore turns out to be a dud

Unitech arm UCP plans to sell IT SEZ

‘Firms fail to realise imp of ERP’s role in customer exp’

Which countries are the top spammers in Q2 CY13?


IIFL Inst Eq retains buy on HDFC Bank post Q1 FY14 results

IIFL Institutional Equities, a part of the IIFL Group, has retained its positive stance on HDFC Bank after yet another quarter of solid growth in Q1 FY14 net profit. "Robust loan growth and stable net interest margins underpin the strong earnings growth. The key positive surprise was the sharp improvement in cost-to-income ratio. Key negative surprises were sluggish core fee-income growth and uptick in accretion to gross non-performing assets."...Read More

Remain neutral on HDFC Bank post Q1 nos: Motilal Oswal Sec


What is IIFL Inst Eq betting on in telecom space?

Field surveys in 3-4 circles conducted by IIFL Institutional Equities, a part of the IIFL Group, show that telecom subscriber spending has been robust. "An initial period of voice revenue per minute expansion and low traffic growth should be followed by the opposite." For Bharti and Idea, it has maintained its 11.7% and 24.2% EBITDA CAGR for FY14 and FY15. It has cut FY14 and FY15 EBITDA estimates by 9% and 5% for Bharti's African operations and lower one-year forward enterprise value to EBITDA multiple from seven times to 6.5 times...Read More

Prefer Oil India, BPCL from oil & gas space: IIFL Inst Eq

IIFL Institutional Equities, a part of the IIFL Group, is betting on Oil India and BPCL from the oil and gas space. It cites benign valuations for Oil India and significant upstream value for BPCL for its buy rationale. It has a target price of Rs. 612 for Oil India and Rs. 555 per share for BPCL. According to the brokerage, earnings of public sector oil undertakings could be under pressure this fiscal. "The sharp rise in FY14 estimated under-recoveries could result in upstream share of burden staying flat year-on-year. Diesel under-recoveries at Rs. 9 per liter may take until FY16 to be eliminated at the current pace of monthly adjustment. We also see natural gas under-recoveries on sales to power and fertiliser adding to the subsidy burden in FY15. While these issues weigh on upstream PSUs, we believe the Finance Ministry’s insistence on exploration, production, processing would weigh on oil marketing companies' earnings this fiscal onwards."...Read More

Q1 review: IIFL Inst Eq rates TCS a reduce, tgt Rs. 1578\sh

Q1 FY14 review: IIFL Inst Eq rates Kotak Mahindra Bank a buy

Q1 FY14 review: IIFL Inst Eq rates Axis Bank a buy

See challenging times for Tata Steel ahead, add: IIFL Inst Eq

Buy Dr Reddy's Labs, target Rs. 2,887\share: IIFL Inst Eq

Reduce Sesa Sterlite on Niyamgiri stalemate: IIFL Inst Eq

Reduce Ashok Leyland post Q1 FY14 results: IIFL Inst Eq

Buy ITC, target price Rs. 375\share: IIFL Inst Eq

Maintain buy on Mindtree post Q1 FY13 results: IIFL

Buy Tata Power, target Rs. 120\share: IIFL Inst Eq

Reduce Titan, tgt Rs. 225\share: IIFL Institutional Equities

IIFL Inst Eq rates Exide a buy post its Q1 FY14 results

IIFL Inst Eq rates Oberoi Realty a buy despite subdued Q1

Q1 FY14 Review: IIFL maintains buy on DCB, target Rs. 60\sh


Earnings Preview

TCS Q1 FY14 PAT at Rs. 38.30bn

Tata Consultancy Services on Thursday reported a 6% quarter-on-quarter rise in consolidated Q1 FY14 net profit at Rs. 3,831cr. India's largest software exporter by revenue posted consolidated sales of Rs. 17,987cr, a jump of 9.5% QoQ. The strong numbers came on the back of increased deal wins and foreign exchange gains. The results were based on international accounting standards.

HDFC Bank Q1 PAT at Rs18.43bn

India's second largest private sector lender HDFC Bank posted a Q1 FY14 net profit of Rs. 1,844cr, an increase of 30% year-on-year. It was the 55th consecutive quarter of over 30% year-on-year growth in PAT. Higher interest income, rise in other income, lower provisions and stable margin aided the bank's earnings growth. The numbers came in above IIFL's expectations, however there were concerns on asset quality. Net non-performing loans as a percentage of total assets came in at 0.3% compared with 0.2% a year ago.

Hindustan Zinc Q1 PAT at Rs. 16.60bn

Hindustan Zinc's Q1 FY14 net profit rose 5% year-on-year at Rs. 1,660.45cr as impact of higher sales and output was partially offset by lower metal prices. It had reported a net profit of Rs. 1,581.34cr during the corresponding quarter of the previous fiscal. Net sales increased by 8.36% to Rs. 2,939.41cr as against Rs. 2,712.67cr in the same period last year.

Axis Bank Q1 net profit at Rs.14.09bn

India's third largest private sector lender, Axis Bank posted a higher-than-expected 22.5% increase in Q1 FY14 net profit at Rs. 1,409cr as against Rs. 1,150cr a year earlier. Net profit was aided by higher interest income and a marginal increase in bad loans. Net interest income grew 31% year-on-year to Rs. 2,860cr.

Hindustan Zinc Q1 PAT at Rs. 16.60bn


HDFC Q1 PAT at Rs. 11.73bn

India's largest mortgage lender, Housing Development Finance Corporation's Q1 FY14 consolidated net profit came in at Rs. 1,707.1cr, a gain of 34% year-on-year, as against a net profit of Rs. 1,275.86cr last year.

UCO Bank Q1 FY14 net profit at Rs. 5.11bn

DCB Bank net profit at Rs. 4.3bn

Bajaj Holdings Q1 cons net profit at Rs. 4.432bn

Kotak Mahindra Bank Q1 FY14 net profit at Rs. 4.03bn

IDBI Bank Q1 net profit at Rs. 3.07bn

NIIT Q1 net revenue at Rs. 2.22bn

Bajaj Finance Q1 net profit at Rs. 1.76bn

Exide Industries Q1 net profit at Rs. 1.59bn

Ashok Leyland Q1 net loss at Rs1.42bn

iGate Q2 revenue up 6%

Mindtree Q1 cons net profit at Rs1.35bn

Hexaware Q2 net profit up 23% QoQ

Supreme Industries cons net profit at Rs. 1.09bn

Oberoi Realty Q1 cons rev at Rs. 239.4cr, PAT at Rs. 101.8cr

Bajaj Finserv Q1 consolidated PAT up 143% YoY

Sundaram BNP Paribas Q1 net profit up 30% YoY

Mastek Q1 cons PAT at Rs. 110mn

NIIT Tech Q1 revenue up 15%

Infotech Enterprises Q1 net profit at Rs.540mn

Essar Ports Q1 FY14 net profit up 48%

V-Guard Ind Q1 net profit at Rs. 176mn

Magma Fincorp Q1 FY14 PAT up 38% YoY at Rs. 45.4cr

Zensar Tech Q1 PAT up 56%

Blue Star Infotech Q1 cons income up 49%

Steelcast Q1 PAT up 36%

RS Software Q1 net profit up 17.4%

Sify Tech Q1 revenue up 13%

CMC Q1 operating revenue up 7% YoY


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