LM: Moody’s downgrades Yes Bank rating; outlook negative

28 August 2019: Global rating agency Moody’s Investors Service on Wednesday downgraded YES Bank’s long-term foreign-currency issuer rating, citing lower than expected amount of capital raised and a sharp fall in its stock price which “will challenge its ability to raise sufficient capital to maintain the rating at its previous level.”

Moody’s downgraded YES Bank’s foreign currency issuer rating to Ba3 from Ba1, long term foreign and local currency bank deposit ratings to Ba3 from Ba1, foreign currency senior unsecured MTN program rating to (P)Ba3 from (P)Ba1, and Baseline Credit Assessment (BCA) and adjusted BCA to b1 from ba2.

It said the outlook on the bank’s ratings, where applicable, was negative. The negative outlook primarily reflects the risk of further deterioration in the bank’s solvency, funding or liquidity, as the bank continues to work through asset quality issues and rebuilds its loss absorbing buffers

In August, the lender has raised around $270 million via qualified institutional placement, and plans to raise $600 million more from large investors to bolster its capital buffers. The board will meet on 30 August to mull raising funds via equities.

YES Bank stock has declined over 85% so far in 2019 due to asset quality concerns. At 3.10 pm, the scrip traded at ₹59.30 on BSE, down 7.8% from its previous close.

Following the downgrade, private lender’s 3.75% USD notes, due February 2023, fell 3.1 cents on the dollar to 86.4 cents as of 05:07 pm in Hong Kong, set for the biggest decline since 28 November, according to prices compiled by Bloomberg.

Moody’s also expects the bulk of YES Bank’s operating profits to get consumed by loan loss provisions over the next 12-18 months, and thus will be unable to support internal capital generation. “This will leave the bank dependent on external capital raising to improve its loss-absorbing buffers, which in Moody’s opinion is becoming more challenging given the substantial decline in its share price.”

It noted that YES Bank’s asset quality deteriorated in the June quarter, with gross non performing loan ration rising to 5% from 3.2% a quarter ago. Around ₹10,000 crore of loans or 4% of its total loans remain on a watchlist – meaning that these watchlist loans may turn into non-performing assets over the next 2-3 quarters. In addition, around ₹7,500 crore of bond investments or 10% of its total investment holdings have experienced rating downgrades in the past quarters.

Though the bank’s funding and liquidity profile has remained broadly stable, it compares weakly to other rated private sector peers in India.

Moody’s has maintained a negative adjustment for corporate behavior in YES Bank’s BCA, which results in a one-notch negative adjustment to the bank’s BCA when compared to its financial profile.

The LiveMint reported

BTVI: Moody’s Downgrades Bharti Airtel Credit Rating To ‘Ba1’; Outlook Negative

5 February 2019: Moody’s Investors Service on Tuesday downgraded the credit rating of telecom operator Bharti Airtel and the backed senior unsecured notes issued by the telco’s Africa arm on account of uncertainty around the company’s profitability, cash flow situations and debt levels.

“Moody’s Investors Service (“Moody’s”) has downgraded to Ba1 from Baa3 the senior unsecured rating for Bharti Airtel Ltd. (Bharti) as well as the backed senior unsecured notes issued by Bharti’s wholly-owned subsidiary, Bharti Airtel Int’l (Netherlands) B.V.,” the agency said in statement.

Credit ratings reflect the company’s calibre to repay debt and raise funds. Ratings range between Aaa, which means best, to lowest category C.

Ba1 rating means obligations are judged to have speculative elements and are subject to substantial credit risk, but have a superior ability to repay short-term debt obligations.

“At the same time, Moody’s has assigned a Ba1 corporate family rating (CFR) to Bharti and withdrawn the company’s Baa3 issuer rating. The ratings outlook is negative,” Moody’s report said.

The negative outlook indicates possibility of further downgrade of rating.

“The downgrade reflects uncertainty as to whether or not the company’s profitability, cash flow situation and debt levels can improve sustainably and materially, given the competitive dynamics in the Indian telco market,” Moody’s Vice President and Senior Credit Officer, Annalisa DiChiara said.

The report said that Bharti Airtel reported EBITDA (cash flow indicator) of Rs 26,500 crore for the 12 months ending December 31, representing a 15.5 per cent year over-year contraction and the profitability of its core Indian mobile segment — which contributes around 37 per cent of EBITDA – remained low, generating just Rs 9,800 crore over the same period.

Bharti Airtel, last week, reported a 72 per cent drop in consolidated net income for the three months ended December 2018 at about Rs 86 crore, amid market turbulence triggered by cut-throat competition in India business.

Change in accounting structure with respect to Airtel Payments Bank brought an exceptional gain of Rs 1,017 crore for Bharti Airtel and bolstered the company’s financials.

“After accounting for gain of Rs 1,017 crore towards exceptional items (net of tax), the resultant net income for the quarter ended December 31, 2018, came in at Rs 86.2 crore,” Airtel said in a statement.

Its net income stood at Rs 306 crore in the same period of the previous year.

While rival Reliance Jio posted a 22 per cent rise in profit at Rs 831 crore on a year-on-year basis in the home turf, Airtel’s losses from India operations (before exceptional items) stood at Rs 971.9 crore, compared to a net income of Rs 373.5 crore in the year ago period.

Among telecom service business arm, only Airtel Africa recorded increase in the profit.

Moody’s, BTVI reported

WEEKEND EQUITY UPDATE: 18 AUGUST 2012 – 19 AUGUST 2012

ASIA

Prices of new homes in China rose in 49 of the 70 cities in July over the previous month’s data. The cutting of interest rates, improved sentiment and incentives for new home buyers weighed in on the data. Prices declined in nine cities and were unchanged in twelve. (Bloomberg)

INDIA

FII’s have infused a total of USD 11 b in Indian equities in 2012 on a YTD basis. USD 1 b alone came in the month of August as the government could put in a fresh round of initiatives and reforms to stimulate the slowing economy. (Economic Times)

The combined market capitalization (m-cap) of top ten co.’s rose by INR 17,658 cr for the week ended 17 August. Reliance Industries contributed the most with gains of INR 10,696 cr followed by ONGC, Coal India, Infosys while TCS, HDFC Bank, ITC and NTPC saw their m-caps decline over the week. (Economic Times)

ONGC Videsh Ltd – OVL, the overseas arm of ONGC, is planning to invest in oil fields in Russia, mostly in the Arctic Ocean with joint-ventures. The co. is to form JVs with ExxonMobil and ENI. (Business Standard)

Tata Steel – Co.’s Ferro Alloys and Mineral Division to add 1.1 lac tons of ferro chrome and silico manages production capacity by 2012 at its Odisha plants.  (Financial Express)

Reliance Power – Co. refuted allegations made by India’s Comptroller and Auditor General (CAG) that the firm benefitted from the auctions of the coal mines. The co. is alleged to have made benefits of INR 29,000 cr by diverting its surplus coal output for its operations in Sasan, MP, India. The co, has stated that the allegations are erroneous and the co. did not receive any undue benefits. (Economic Times)

Lanco Infratech Limited – Co.’s management plans to increase the coal out to 5.5m tons per annum but March 2014 at its Griffin coal mines located in Western Australia. The Griffin coal mines are expected to hold total reserves over 1.1b tons and co. is expected to secure various clearances by the end of the current financial year. (The Hindu Business Line)

United Bank of India – Co. expects to recover INR 400-500cr in cash in this financial year, as gears up to fasten its recovery process, according to co.’s Executive Director Deepak Narang. (Business Standard/ PTI)

EUROPE

According to a German weekly magazine report, ECB is considering setting interest rate thresholds for any purchases of struggling euro zone country’s bonds so that it would buy such bonds if their interest rates exceeded a certain premium over German bonds. In other news the weekly magazine also reported that, Greece will likely need to cut additional EUR 2.5b in spending over the next two years to meet the requirement for financial aid. Der Spiegel cites an interim report by the troika. (Economic Times/Reuters)

Spain’s Economy Minister Luis de Guindos stated that the bank bailout fund would take care of restructuring and recapitalizing the banks. The funds received from the EU will be put up for approval by the Cabinet by 24 August. The non-performing assets of the bad banks will be transferred into the FROB fund to access loans. (Bloomberg)

Germany’s Finance Minister Wolfgang Schaeuble dismissed talks of providing a fresh round of funding to Greece even though the state of country remains in a difficult situation. The nation has received two rounds of funding worth EUR 240 b since the onset of the crisis. With GDP expected to contract at a slower pace in the next two years on the funding, Germany is aware of the additional constraints on the EU and other nations if the funding were to continue. (Bloomberg)

The U.S Justice Department have started investigating Deutsche Bank to understand its possible role in the transactions linked with Iran, Sudan and other nations currently facing international sanctions. (Reuters)

NORTH AMERICA

Rating agencies Moody’s and S&P are to face lawsuits filed by investors for falsely assigning inflated ratings to debt backed by subprime mortgages. Morgan Stanley sold the notes during the 2008 crisis incl. The Abu Dhabi Commercial Bank. (Bloomberg)

Caterpillar – Heavy equipment manufacturer stated that the uncertain outlook of the global economy was worse than the state during the 2008 crisis. Lower demand in the construction and infra sector on account of the slowdown has affected the co in terms of lower orders. (Financial Times)

 

 

 

 

 

 

EQUITY UPDATE: 11 AUGUST 2012

ASIA

Singapore’s GDP declined 0.7 percent in the 2Q12 period on a q/q basis. Preliminary estimates pegged the GDP to decline 1.1 percent. (Bloomberg)

INDIA

Issuance of structured notes in India declined more than 70 percent to INR 5.88 b (USD 106 m) in the 1HY12 period on a y/y basis. Stricter regulations aimed at risk minimization and investors avoiding securities linked with co.’s not performing well in the equity markets was cited as some of the major factors contributing to the declining volumes. (Bloomberg)

GMR Infra – Co. received approval from its Board to raise INR 2500 cr through issuance of fresh equity or bonds. The co. aims at issuing equity, depository receipts, foreign currency convertible bonds to raise the required amount. (Business Standard)

Some of the FII’s investing in India have decided to surrender their licenses on SEBI’s tightening market norms. The move by SEBI to identify FII’s into similar groups based on their investments affected FII’s with multiple operating licenses prompting them to cease operations. As per Indian law, FII is permitted to hold a maximum stake of 10 percent in a co and would now on count an owner’s investments in a co. through multiple sub-accounts into a single one. The no. of FII’s registered with SEBI have declined to 1756 from 1781 in March. (Business Standard)

According a BNP Paribas Securities report, FII’s nought USD 10.7b of Indian equities till August, the highest ever on a year to date basis.(Economic Times)

Maruti Suzuki India Ltd – Co. is most likely to decide this weekend on its decision to resume operations at its Manesar plant. The plant was shut on account of violent clashes between the workers and the management and is expected to resume operations early next week. (Economic Times)

Indian Oil Corporations – According to Moody’s, co.’s refining margins declined more than expected. Margins capped at USD 4 a barrel for the full year ending FY13. (Economic Times/PTI)

Tata Motors – Fitch rating affirmed co.’s and JLR’s rating at ‘BB’ and ‘BB-‘; with outlook stable.  (MoneyControl)

Reliance Infra – Co. has been shortlisted for various national level road projects worth INR 40,000 cr. (Business Standard)

INDIAN EARNINGS

Sun Pharma – Co. reported 1Q12-13 net profit at INR 795.55cr vs. previous 1Q11-12 net profit at INR 501cr. Net Sales at INR 2,658.14cr vs. previous INR 1,635.72cr. Co.’s board declared an interim dividend of INR 4.25 per share of INR 1 each. (Financial Express)

Siemens India – Co. reported 3Q11-12 net profit at INR 36.42cr vs. previous 3Q10-11 at INR 154.77cr. Sales at INR 2,793cr, up 2 per cent. (Financial Express)

Novartis India – Co. reports 1Q12-13 net profit at INR 26.98cr vs. previous 1Q11-12 net profit at INR 37.57cr. Net sales at INR 219.52cr vs. previous INR 200.13cr. (Financial Express)

Eros International – Co. reported 1Q12-13 net profit at INR 31.7cr vs. previous 1Q11-12 at INR 21.7cr. Total income at INR 259.cr vs. previous INR 162.2cr. (Economic Times/PTI)

EUROPE

Greece’s Public Debt Management agency to auction EUR 3.125b in short term debt to pay off a EUR 3.2b bond repayment due on August 20. (Boston.com/ AP)

Julius Baer Group Ltd – Swiss investment management firm is almost finalizing a takeover of Bank of America Corp’s Merrill Lynch wealth management business outside the U.S. The total buyout could be valued at USD 2 b. (Bloomberg)

KKR & Co. – PE firm’s investments in European distressed debt rose almost twice as much over the previous year as banking institutions have cut back on lending activities amid the crisis. KKR increased its investments to USD 512.5 m in 1HY12 vs USD 260 m a year ago. Lending in the euro region declined to high yield borrowers globally excl. U.S to USD 104 b vs USD 139.4 b a year ago. (Bloomberg)

NORTH AMERICA

According to Philadelphia Federal Reserve’s survey of 48 forecasters, showed that 3Q GDP annual growth rate at 1.6 per cent  versus previous estimate of 2.5 per cent in May. real GDP growth at 2.2 per cent in 2012 versus a previous growth forecast of 2.3 per cent. FY 2013 real GDP forecast at 2.1 per cent, 2.7 percent in 2014, and 3.1 percent in 2015.(Reuters/Philadelphia Fed)

Prices of imported goods in the U.S declined 0.6 percent in July vs 2.4 percent decline in June on lower costs of fuel and food. Expectations came in at a price rise of 0.2 percent. Prices excl. fuel declined 0.4 percent. Petroleum products saw a 1.6 percent decrease in their prices vs 12 percent decline a year ago. (Bloomberg)

EQUITY UPDATE – 10 AUGUST 2012

ASIA

China’s Industrial output for July rose slower than expected by 9.2 percent to near three year lows, adding to concerns that the country is slowing in its recovery process. Inflation in the county declined for the fourth consecutive month in July to 1.8 percent vs 2.2 percent a year ago. On a m/m basis, inflation rose 0.1 percent vs -0.6 percent previously. (Bloomberg)

The Bank of Japan kept benchmark interest rates unchanged at 0.10 percent, in line with expectations. The bank stopped short of lowering its monetary policies and kept its asset purchasing fund at JPY 45 t (USD 573 b) and the lending fund at JPY 25 t. Stimulus measures would only come into force if the yen appreciated significantly against the US dollar. (Bloomberg)

South Korean central bank The Bank of Korea (BoK) kept its benchmark seven day repo rates unchanged at 3.00 percent which was unanimously taken by the members. The central bank would give more focus to propping up domestic demand. (Reuters)

Sale of passenger vehicles in China for July rose slower than forecast on a m/m basis on slowing demand and buyers postponing purchases on expectations of stimulus measures from the government. Deliveries of vehicles incl. multipurpose and utility vehicles rose 11 percent to 1.12 m units vs expectations of 1.16 m units. Sale of mini-commercial vehicles saw the biggest decline which could impact logistic operations in the country. Sale of vehicles incl. trucks and buses rose to 1.38 m units, a 8 percent m/m rise. Customers who held back on purchase are due to expectations of various subsidies and other incentives to be offered by the government. (Bloomberg)

INDIA

The Reserve Bank of India has transferred surplus profit of INR 16,010cr in 1Q12-13 (vs. previous INR 15,009cr) to the government of India. (The Hindu Business Line)

Fitch has downgraded India’s 2H12 outlook on the retail sector to negative. The rating agency cited sustained deterioration in discretionary spending ability and its unlikely recovery in the short term. Fitch revised FY13 and FY14 real GDP forecast to 6.5 per cent and 7 per cent from the earlier 7.5 per cent and 8 per cent respectively. (The Hindu Business Line)

Reliance Industries – Co. has slashed its natural gas reserves in its KG-D6 gas field by 70 per cent to 3.10tr cubic feet due to unforeseen geological surprises. (Business Standard/PTI)

Infosys – IT firm secured a USD 700 cr deal with India’s Department of Post for provision of core banking and insurance services across various post offices in India. It will also assist in installing ATM’s in these post offices. (Economic Times)

JSW Steel – Co. and other steel co. that depend on iron ore from Karnataka could face closure due to severe shortage of iron ore, if mining did not resume in the state. The state’s steel industry, whose 21m ton output accounts for 25 per cent of the national production, is operating with just a 45-day supply of iron ore. According to JSW Steel’s management it would be difficult to operate its plants if mining operations didn’t resume. JSW Steel has purchased about 14m ton of iron ore sold at the e-auctions. (Business Standard)

Sail – Co. to outsource the development of its two virgin iron ore mines in Chatisgarh and Jharkand. The mines will have a capacity of 14m tons per annum and 15m tons per annum respectively. (Business Standard/PTI)

INDIAN EARNING

HPCL – Co. reported 1Q12-13 net loss at INR 9,248 cr.vs previous INR 3,080 cr. Net Sales of the co. rose to INR 44,076.5 cr. vs INR 40,795 cr on a YoY basis. (Moneycontrol)

Tech Mahindra – Co. reported 1Q12-13 consolidated Profit After Tax (PAT) at INR 338 cr vs estimated INR 310.73 cr. Sales for the firm increased by 8.7 percent  on a QoQ basis and 19 percent on a YoY basis to INR 1,543cr vs estimated INR 1,539 cr. EBITDA margins increased by 38.66 percent on a q/q basis to INR 330 cr vs estimated INR 295 cr. (Moneycontrol)

Jindal Stainless – Co. reported 1Q12-13 net loss at INR 231.41cr vs. previous 1Q11-12 net profit at INR 85.79cr. Net sales at INR 2,206.69cr vs. previous INR 1,976.93cr. (MoneyControl)

GE Shipping – Co. reported 1Q12-13 net profit at INR 181cr vs. previous INR 162.59cr. Income from operations at INR 802.42cr vs. previous INR 680.53cr. (MoneyControl)

Eicher Motors – Co. reported 2Q12 net profit at INR 75.96cr vs. previous INR 76.31cr. Income from operations at INR 1573.05cr vs. previous INR 1,268.75cr. (MoneyControl)

EUROPE

According to the ECB governing council member Christian Noyer, ECB was ready to intervene in secondary bond markets very soon, to bring down the excessive borrowing costs of Spain and Italy. (Reuters)

U.K Trade Deficit for 2Q12 ended June increased to GBP 28.3 b vs GBP 25 b in the previous quarter on lower exports. The ongoing euro crisis saw lower demand for Britain’s goods which declined 4.9 percent on a q/q basis while imports also lowered by 0.5 percent. The trade deficit for June came in higher than expected at GBP 10.119 b vs a deficit of GBP 8.364 b previously vs estimates of a deficit of GBP 8.73 b. Exports to Germany declined by GBP 525 m, while Netherlands trade declined the most to GBP 819 m. Exports for June declined 8.4 percent over May and imports fell 1.2 percent for the same period. (Bloomberg)

NORTH AMERICA

According to estimates, the trade deficit in the U.S for June narrowed to USD 47.5 b vs USD 48.7 b in May on lower oil prices reducing the country’s imports. The lower oil prices are attributed to low demand emanating from the global crisis. (Bloomberg)

U.S Non farm productivity rose 1.6 percent on an annualized basis for the 2Q12 period vs exp advance of 1.3 percent vs prv rise of 0.7 percent. Co.’s and businesses expanded their operations but still saw hourly work rate output rise by just 0.4 percent. (Bloomberg)

U.S Initial Jobless claims for unemployment benefits declined by 6000 applications to a seasonally adjusted number of 361,000 for week ended 3 August. Expectations came at 370,000 and prv period’s claims were revised to 367,000 applicants. The four-week moving average for fresh claims rose by 2250 applicants to 368,250. Nonfarm payrolls rose by 163,000 in July, but the unemployment rate rose to touch 8.3 percent. (Reuters)

Moody’s downgrades of US municipal bonds issuers hit a 10 year quarterly high in 2Q12. The rating agency cited stressed budgets and weaker liquidity. (Reuters)

Google Inc – Co. is to pay Apple Inc a total of USD 22.5 m in settlement charges for bypassing the privacy settings of customers who used Apple’s safari web browser. (Reuters)

Research in Motion – A US judge has overturned the USD 147.2m for patent infringement in favors of co. (Boston.com/AP)

COMMODITIES

OPEC forecasted FY 2012 oil demand at 88.72m barrels per day vs. previous estimate of 88.68 barrels per day in July. FY 12 demand forecasted at 89.52mbpd vs. previous estimate of 89.50mbpd in July. (MoneyControl)

TATA STEEL’S UK UNIT DOWNGRADED BY MOODYS

Tata Steel UK Holdings Ltd – The UK-based subsidiary of Tata Steel (India) saw its credit rating suffer a downgrade by Moody’s by a single notch to B3. The reason for the downgrade was the overall glum outlook of the operations in the European steel industry. The outlook on the rating was unchanged as it remained at “negative”.

The agency also stated that the outlook on the rating would not reverse unless the outlook of the industry and the fundamentals affecting it undergo significant improvement. (Moneycontrol)

EQUITY UPDATE: 1 AUGUST 2012

ASIA

China’s steel factories saw a 96 percent decline in profits for the 1HY12 period on economic slowdown lowering demand. The China Iron and Steel Association revealed that profits came in at RMB 2.39 b (GBP 376 m) on rising costs and lower demand. (Financial Times)

INDIA

FIIs saw net buying of INR 879.97 cr in trade today on a provisional basis with gross purchases of INR 2940.75 cr and gross sales of INR 2060.79 cr. DIIs became net sellers of INR 493.48 cr on gross purchases of INR 827.81 cr and gross sales of INR 1,321.29 cr. (Business Standard)

The Reserve Bank of India relaxed foreign exchange retention rules, by allowing corporate and exporters to keep entire foreign exchange earnings in respective currencies for a limited period versus a existing provision of 50 per cent conversion to Indian rupee. In other news, RBI lowered India’s growth forecast for the current financial year to 6.5 per cent versus previous estimate of 7.5 per cent. (MoneyControl/BBC)

Reliance Power – Co. is set to utilize USD 800 m as four international banks sanctioned its loan for its power project in Sasan, India. (Business Standard)

Maruti Suzuki – Rating agency ICRA will scrutinize around 14 auto parts suppliers to Maruti Suzuki India on account of the ongoings at the co.’s Manesar plant. Violence at its factory in Manesar has severely affected the co.’s production, thus affecting its suppliers. (Economic Times)

Tata Steel – Co. is stated to have lowered its operating capacity on account of power outages in the northern region of India. (Economic Times)

Bharti Airtel – Co. is exploring options of issuing new shares to raise funds, citing two people aware of the situation. (Business Standard/Reuters)

Tata Motors – Jaguar Land Rover is recalling 2,229 Freelander 2 SUV’s in China due to a potential perforation in power steering hose. (The Hindu Business Line)

Power Co.’s – According to the rating agency Fitch, the outlook on domestic power sector was stable, due to some progress in availability in fuel and a possibility of debt restructuring of SEBs. In related news Coal India agreed to supply at least 80 per cent of coal requirements for new power projects.  (Financial Express/Money Control)

INDIAN EARNINGS

IDBI Bank – Co. reported 1Q12-13 net profit at INR 427.34cr vs. previous INR 335.10cr in 1Q11-12. Total income at INR 6,786.81cr vs. previous 6,059.83cr. (The Hindu Business Line)

Cipla – Co.reported 1Q12-13 net profit at INR 400.76cr vs. previous 1Q11-12 net profit at INR 253.34cr. Net sales at INR 1,917.34cr vs. previous INR 1,550.33cr. (Financial Exprees)

Petronet LNG – Co. reported 1Q12-13 net profit at INR 270.85cr vs. previous INR 256.71cr. Turnover up 52 per cent to INR 7,030.41cr. (The Hindu Business Line/PTI)

Bhushan Steel – Co. reported 1Q12-13 net profit at INR 205.97cr vs. previous INR 209.96cr. Net sales at INR 2747.34cr vs. previous INR 2165.85cr. (Business Standard/PTI)

Titan Group – Co. reported 1Q12-13 net profit at INR 156.09cr vs. previous INR 143.51cr. Net income at INR 2,205.81cr vs. previous INR 2020.60cr. (Business Standard/PTI)

Karur Vysya Bank – Co. reported 1Q12-13 net profit at INR 145.95cr vs. previous INR 116.70cr. Total income at INR 1,109.81cr vs. previous INR 768.72cr. (Business Standard)

Jaiprakash Associates – Co. reported 1Q12-13 net profit at INR 138.84cr vs. previous net profit at INR 184.06cr. Net sales at INR 2,963.57cr vs. previous INR 2,902.30cr. (Business Standard/PTI)

EID Parry – Co. reported 1Q12-13 net profit at INR 22.47cr vs. previous net loss of INR 7.18cr. Total income at INR 578cr vs. previous INR 398.49cr. (Financial Express)

GTL – Co. reported 1Q12-13 net loss of INR 203.95cr vs. previous 1Q11-12 net profit of INR 12.93cr. Revenue at INR 615.98cr vs. previous INR 820.62cr. (The Hindu Business Line)

Man Industries – Co. reported 1Q12-13 net profit at INR 26cr vs. previous INR 24cr in 1Q11-12. Net Sales at INR 326cr vs. previous INR 466cr. (The Hindu Business Line)

Shoopers Stop – Co. reported 1Q12-13 net profit at INR 50 lac vs. previous INR 11.7cr. Gross retail revenue at INR 516.9cr vs. previous INR 448.5cr. (Business Standard/PTI)

Muthoot Capital Services – Co. reported 1Q12-13 net profit at INR 4.93cr vs. previous INR 2.35cr. Revenue at INR 22.17cr vs. previous INR 12.23cr. (Business Standard/PTI)

EUROPE

Italian PM Mario Monti, stated that the timely assistance from the ECB and the bailout funds could slowly help the country return to stability, ahead of his tour to Helsinki, Madrid and Paris this week. Italy is faced by rising government bond yields and surveys indicate that around more than half of the public believe that Monti would not be able to achieve the target of lowering the country’s fiscal deficit. (Financial Times)

ECB’s plans of staging a bailout program for troubled European economies, hit a resistance. As according to a Bundesbank source, most troubled European economies faced a fiscal problems and which should be addressed using fiscal instruments. (CNBC)

EU unemployment rate for the 17 country block rose to 11.2 percent or 17.8 m unemployed people in July vs. 10.2 percent in June 2011. Youth unemployment, the under-25 age group, rose to 22.4 percent. The results were affected mostly by Spain and Greece where the rates were 24.8 percent and 22.5 percent respectively. Germany, was more stable as the rate declined to 5.4 percent vs 5.5 percent previously. The data would weigh on the ECB meet this Thursday when it decides on its monetary policy and interest rates. (Financial Times)

Euro zone inflation for June was stubbornly stuck at 2.4 percent in July, similar for the last three months. The data, combined with the rising unemployment rates, could weigh in on the ECB meet this Thursday. (Financial Times)

Italian unemployment rate at 10.8 per cent in June versus 10.6 per cent in May. (Economic Times)

Moody’s lowered U.K’s GDP forecast to 0.4 percent for FY12 and 1.8 percent growth in FY13. However, the agency did not alter its AAA rating and its outlook on it. The agency stated that policies such as asset purchases, the government’s ability to reduce debt without hampering growth all prompted for the forecast. (Financial Times)

According to Fathom consulting, a Eurozone break-up could force UK into a deep recession, force governments to nationalise banks and trigger a GBP 1tr of QE. (Telegraph UK)

Deutsche Bank – Co. admitted that some of their staff was involved in LIBOR rate-rigging scandal. However an internal inquiry has cleared senior management. In other news, co. to cut 1,900 staff, mostly outside Germany, due to the European economic downturn. (BBC)

Tesco – Standard and Poor’s cut co.’s outlook to ‘negative’, warned on weakening profits. The rating agency has suggested that co. should sell off businesses. (Telegraph UK)

EUROPEAN EARNINGS

BBVA – Spanish bank saw its 2Q12 profit decline to EUR 505 m vs expectations of EUR 700 m. Profits declined 58 percent y/y on its property loan delinquencies. Net interest income rose 16 percent to EUR 3.74 b. The co. set aside EUR 1.43 b of the reqd. EUR 4.6 b to comply with Spanish regulatory laws. The bank’s Latin American division saw revenues rise to EUR 1.02 b vs EUR 774 m on stronger demand for loans and rise in deposits. (Financial Times)

British Petroleum plc – Co. saw its 2Q12 profits decline to USD 3.7 b vs USD 5.7 b a year ago, a 35 percent decline on lower production, higher writedowns on its shale gas unit and a tax charge in Russia. The numbers came in below estimates as lower crude oil and nat gas prices weighed on its earnings. The charges on its Deepwater rig oil spill could still weigh on profitability as it appeased shareholders with its strategy of delivering a 50 percent increase in cash flows by 2014. The co. was also affected by the sale of its Russian JV with TNK where income was lower by USD 700 m on a y/y basis. Lower output also hampered its operations. (Financial Times)

NORTH AMERICA

US consumer confidence for July at 65.9 versus estimated 61.5 versus previous 62.7 ; revised from 62. (FXStreet)

NORTH AMERICAN EARNINGS

Pfizer – Pharma co. saw its profits rise to USD 3.25 b, a 25 percent y/y rise on cost cutting vs USD 2.61 b previously. EPS came in at 43 cents vs 33 cents a year ago. EPS excl costs came in at 62 cents vs expectations of 54 cents. Overheads declined 17 percent with R&D expenses lowered by 24 percent. Revenues declined 9 percent to USD 15.1 b, declining 9 percent y/y on a 53 percent fall in the sale of Lipitor, its anti cholesterol drug, whose patent expired. The co. plans to sell its nutrition and animal health units to raise USD 3.0 b through 20 percent divestment to offset declining revenues of Lipitor. It reaffirmed its FY2012 earnings at USD 2.14 – 2.24 a share. (Financial Times)

 

 

GERMAN IFO BUSINESS CONFIDENCE FOR JULY AT 103.3 vs exp 104.5 vs prv 105.2

German IFO Business Confidence Index declined more than expected on account of worsening outlook created by the euro debt crisis. The index declined to 103.3 in July from 105.2 in June. Expectations came in at 104.5.

The previous news of Moody’s lowering its outlook on Germany and this data could increase the likelihood of the country expanding moderately in the second quarter.

In related news, the German current assessment index declined to 111.6 vs exp 113  vs prv 113.9 in June.

Business expectations index, which presents outlook for the next six months, also declined to 95.6 in July vs expectations of 96.7 vs previous month’s data of 97.2. (Bloomberg)

DAILY MARKET REPORT – 24 JULY 2012

Markets closed marginally in the positive territory in trade today. Global cues, too, were mixed, as we also saw some disappointing PMI numbers coming out in trading hours. Sensex closed at 16918.08 points, up 40.73 points (0.24%). The Sensex touched highs of 16953.94 and a lows of 16884.32 points today. The Nifty closed marginally higher by 10.25 points at 5128.20 (0.20%). It touched a high of 5139.40 and a low of 5116.75 points today. Earnings and PMI data combined with Moody’s lowering outlook on Germany summed up the day today.

On news from the global cues, Asia ended mixed but between +/- 0.20 percent to 0.80 percent in trade on Spain. Europe currently is trading flat today on Spain and PMI data which came in lower. France, Germany and Eurozone PMI came in today while China’s HSBC PMI data came in better than expected.

On the sectoral indices front on the BSE, Midcap Index was up 0.22 percent and the BSE Smallcap Index rose 0.23 percent. The FMCG Index rose 1.57 percent, Oil & Gas Index increased by 0.60 percent and the Metal Index also gained 0.54 percent. The Capital Goods Index declined 0.73 percent, the IT Index fell 0.49 percent and the Healthcare Index declined 0.17 percent.

On the individual stock front, we saw earnings come in today. Co.’s such as Lupin, Shriram Transport, Canara Bank, Tata Elxsi, Wipro, Torrent Pharma amongst other which reported their numbers.

RCom declined 4 percent to INR 59.60, still the effects of the deferred IPO weighing in on investors. Wockhardt rose 6 percent to INR 976 as FII’s purchased an additional stake in the co.

On the currency front, the Rupee rose to INR 55.92 to the US Dollar. Citigroup Inc stated that the currency could touch levels of 57 and above on absence of policies implemented by the government.

Commodities traded higher during the session with WTI at USD 88.43 up 0.33% and Brent trading at USD 103.28 up 0.02%. On the weather front, severe thunderstorm expected in parts of New York, eastern Pennsylvania, northern New Jersey, Vermont and New Hampshire Monday.

Kindly check the Market Summary tab for further information on stock-related data.

(CNBC, Business Standard and Economic Times)