The slowdown is showing on the balance-sheet. During the quarter ended March 2008, India Inc reported the lowest net profit growth in the last nine quarters, after the state-owned oil marketing and power companies declared poor results.
Companies post the slowest sales growth in four years, profits low, too. The last financial year has been the slowest year in four years for corporate India, according to the financial results for 1,354 companies released so far. Cumulative net sales grew by 18.2 per cent in fiscal 2007-08, in contrast to the 29.3 per cent growth in the previous financial year, 21.1 per cent in FY06 and a rapid 31.5 per cent in FY05.
Early birds post better profit growth than the preceding two quarters.A total of 345 companies have so far declared their results. Analysis of the results of a common sample of 237 companies showed that the net profit growth at 21.97 per cent was better than that recorded in the previous two quarters
Numbers collated by the Business Standard Research Bureau show that in the last three years, leading cement manufacturers have multiplied their nine-month profits manifold and mining and paper companies have more than doubled it.
The fourth quarter (January-March) is usually a weak quarter for the Indian IT companies due to the lesser number of billing days. This time, however, the good news is that the rupee has depreciated by about 1.3 per cent during the quarter. Every increase/decrease of a percentage point in the rupee lowers/adds to the operating (EBIDTA) margins by 30-50 basis points (bps).
Companies disbursing high dividends are good for investors looking for higher returns than bank deposits. High dividend-yield stocks give high dividends & the capital value increases. Dividend-yielding stocks are recommended in volatile markets as they are more stable than growth stocks. These stocks do not fall steeply in a falling market. An investor can even beat the index returns, if he invests in good dividend-yielding stocks & rebalances his portfolio from time to time.
The big flops of the year -- Reliance Power and Future Capital Holdings -- are currently available at 25 per cent below their issue price. The other major post-listing losers include BGR Energy, Shriram EPC, J Kumar Infraprojects and KNR Constructions. Among the smaller issues, Precision Pipes and Profiles, Manaksia, and Porwal Auto Components are currently available at 50 per cent below their issue prices.
Promoters of mid- and small-cap companies are grabbing the opportunity provided by a falling market to raise their holdings in their respective companies. In most cases, the shares of their companies are trading at over 30 per cent discount to the all-time high market prices.Promoters of 54 small- and mid-size firms acquired 8.3 million equity shares of their companies from the secondary market, between January 10 and February 27 this year.
India Inc looks all set to grow at a slow pace in the current financial year. That is, if the financial performance of Corporate India for the first nine months of 2007-2008 is any indicator of things to come.
Report sees the index at 16,000 points in the worst-case scenario.
The rising cost of production and interest outgo have shrunk operating margins by 53 basis points to 15.16 per cent in the quarter ended December 2007, while net profit margin has slipped 39 basis points to 9.31 per cent as compared to 9.70 per cent in the corresponding quarter a year ago.
The BSE Sensex bounced back by 14.8 per cent (2,261.65 points) from Tuesday's intra-day low of 15,332.42 to close at 17,594.07 on Wednesday. The index, which lost 5,874.35 points from its all-time high of 21,206.77, has retraced 39 per cent of its total losses.
Short covering also took place in RNRL (futures up 22 per cent, OI down by 51.48 lakh shares), Reliance Energy (futures up 18.6 per cent, OI down by 57,750 shares) and NTPC (futures up 13.3 per cent, OI down by 25.11 lakh shares).
The market wide open interest declined by 15 per cent and is 25-30 per cent below the peak levels, indicating covering of long positions. The Nifty futures OI declined further by 19.5 per cent or 74.45 lakh shares. The current Nifty January OI of 30.97 million shares is the lowest for the current month series.
The Anil Dhirubhai Ambani Group, which is raising Rs 11,700 crore through the public offer of Reliance Power, has seen a value erosion of Rs 48,000 crore in the last seven days.
They have increased their holdings in Infosys Technologies, TCS and Wipro between two and four per cent, going by the shareholding data for the quarter ended December 31, 2007.
The Essar group of Shashi and Ravi Ruia was the biggest overseas borrowers, mobilising $4.67 billion for Essar Global ($3.59 billion) and Essar Oil ($1.08 billion). AV Metal mobilised $3.1 billion followed by Reliance Industries ($2.7 billion), OP Jindal group ($2.40 billion), Tata Steel ($2.38 billion), Guru Gobindsingh Refineries ($1.95 billion), Suzlon Energy ($1.87 billion) and ICICI Bank ($1.8 billion).
Aviation stocks - Jet Airways, Deccan Aviation, SpiceJet and Jagson Airlines - closed at their 52-week highs on the Bombay Stock Exchange on Tuesday in falling market. All the four stocks gained between 5 per cent and 20 per cent on Tuesday.
The BSE Small-Cap Index (up 34 per cent) and the BSE Mid-Cap Index (up 28 per cent) have outperformed the Sensex (up 16 per cent) in the last two-and-a-half months, while the NSE Junior Nifty (up 25.4 per cent) and the NSE Mid-Cap Index (up 30.2 per cent) have beaten the S&P CNX Nifty (up 20.4 per cent) during the same period.
Forty six new FIIs opened their offices in India during November, which is the highest ever single month registration by foreign investors. The previous highest monthly registrations took place in September 2005, when twenty nine FIIs enrolled with Sebi. The total number of FIIs registered with the regulator has increased to 1,170 from 1,124 at the beginning of the month.
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