ET: Tata Motors Q3 hits China wall: Major takeaways

7 February 2019: Tata Motors dropped a shocker on Thursday when the auto major reported its biggest-ever quarterly loss for October-December.

Net loss came in at Rs 26,961 crore for the quarter compared with a net profit of Rs 1,214.60 crore in the year-ago period.
Bottom line was impacted by an exceptional item of asset impairment in JLR of Rs 27,838 crore.

Here are top takeaways from Tata Motors Q3 results.

Revenue: Consolidated revenue increased 5.79 per cent YoY to Rs 76,264.69 crore during the quarter under review. “Weak sales in China and de-stocking impacted JLR,” Tata Motors said in a release.

Ebitda: The figure declined 8.50 per cent YoY to Rs 6,522 crore. Ebitda margin slipped by 370 basis points to 0.1 per cent.

Updates on JLR: JLR reported net loss of 3,129 million euros in Q3 FY19 while revenue of the subsidiary declined 1.40 per cent to 6.20 billion euros. “One time exceptional non-cash charge taken for asset impairment read 3.1 billion euros. It reduces growth in depreciation and amortisation by 300 million euros per annum,” Tata Motors said in a release.

“Performance was impacted by challenging market conditions, particularly in China and inventory corrections. We continue to invest in exciting products and leading edge technologies. Taking decisive actions to make the business fit for future by stepping up competitiveness, reducing costs and improving cash flows,” it stated.

Management-take: “Tata Motors domestic business continues to see strong momentum and has delivered market share gains as well as profitable growth. The Turnaround 2.0 strategy is delivering well with a continuing portfolio of product launches, which are the requisite building blocks for sustainable growth,” said N Chandrasekaran, Chairman.

“In JLR, the market conditions continue to be challenging, particularly in China. The company has taken decisive steps to step up competitiveness, reduce the costs and improve cash flows while continuing to invest in exciting products and leading edge technologies. With these interventions, we are building Tata Motors group to deliver strong results in the medium term,” he added.

Total expenditure: Consolidated expenditure jumped to Rs 78,797.08 crore in Q3 FY19 over Rs 72,303.95 crore in the same period last year.

The Economic Times reported

EQUITY UPDATE: 17 AUGUST 2012

ASIA

Japan would soon overtake China to become the biggest creditor to the U.S as it purchased USD 10.4 b of Treasuries in June to take its total to USD 61.3 b. total holdings in U.S Treasuries came in at USD 1.193 t vs China’s USD 1.164 t. (Bloomberg)

South Korea’s jobless rate declined marginally to 3.1 percent in July vs 3.2 percent in June. Expectations came in at 3.3 percent. The decline was contributed by rise in the no. of self-employed workers and rise in service-sector jobs. (Reuters)

China National Gold Group Corp – Precious metals mining firm is in early talks to purchase Barrick Gold Corp’s 73.9 percent stake in mining firm African Barrick Gold plc. (Bloomberg)

China Mobile – Co. reported lower than expected 2Q12 profit at RMB 54.40 b (USD 5.4 b) vs RMB 34.42 b a year ago, based on its 1HY12 earnings data. The co. saw its sales rise to RMB 139.1 b vs USD 131.9 b in the quarter a year ago. Estimates came in at RMB 140.5 b. The co. saw higher costs on attracting new customers amid slowdown in the economy. (Bloomberg)

INDIA

DII’s made gross purchases of INR 1,259.33cr and sales of INR 1,034.03cr. FII’s made gross purchases of INR 2,447.90cr and sales of totaling at INR 2,352.89cr. (Business Standard)

Indian oil marketing co.’s (OMCs) are faced with losses of INR 450 cr a day on rising prices of crude oil in the international markets and the fall of the rupee. Since the OMCs purchase oil, diesel and cooking gas at international rates and sell them at government-controlled rates, the difference in prices would see losses widen if it does not receive timely subsidies from the government. (Business Standard)

Maruti Suzuki – Co. to restart its Manesar plant on 21 August and said it is planning to remove 500 contract workers over their alleged involvement in the violence.  Co. to make 150 cars a day at its Manesar plant. (Times of India/PTI/Reuters/Yahoo)

Bank of Baroda – Nomura downgraded co. to a ‘reduce’ from ‘neutral; price target cut to INR 590 from INR 628. According to Nomura co.’s asset quality will continue to impacts its earnings growth over the next several quarters, and increased its delinquency forecast for fiscal 2013 and its loan loss provisioning forecast for fiscal 2012. Also expected change in top management later in 2012 reiterate the asset quality risk to earnings. (Economic Times/Reuters)

Punjab National Bank – Nomura downgraded co. to a ‘reduce’ from ‘neutral; price target cut to INR 680 from INR 719. Nomura expected loan delinquency to continue to increase over the next few quarters. (Economic Times/Reuters)

Wockhardt – Co. got US FDA approval to market Clopidogrel bi-sulfate tablets, used to help reduce risk of heart attack or stroke, in 75 mg strength. Co. also got a tentative nod for the 300 mg strength tablets. (MoneyControl)

Tata Motors – Co.’s July global sales at 101,605 units, up 21 per cent. (The Hindu Business Line)

Gitanjali Group – Co. acquired 15.3 per cent stake in Japanese firm Verite for INR 25cr. (Indian Express)

INDIAN EARNINGS

Nalco – Co. reported 1Q12-13 net profit at INR 223cr vs. previous 1Q11-12 net profit at INR 377cr. Net sales at INR 1,718cr vs. previous INR 1,733cr. (Yahoo/IANS)

RINL – Co. reported 1Q12-13 net profit at INR 150cr vs. previous 1Q11-12 net profit at INR 74cr. Turnover at INR 2,976cr vs. previous INR 2,582cr. (Financial Express)

ABG Shipyard – Co. reported its 1Q12-13 net profit at INR 41.31cr vs. previous 1Q11-12 net profit at INR 40.06cr. (Business Standard)

Jain Irrigation – Co. reported 1Q12-13 net loss of INR 16cr vs. previous 1Q11-12 net profit at INR 82cr. Sales at INR 865cr vs. previous INR 951cr. (The Hindu Business Line)

EUROPE

Spain’s exports touched EUR 18.9 b (USD 23.2 b), exceeding imports by EUR 1.2 b for the period of June 2012. The county still faces risk of declining exports as demand for its goods mainly comes in from Europe, which is still in recession. Besides, the exporters are not receiving adequate financing and incentives from the government, which itself is reeling from severe austerity cuts. Imports have declined to EUR 21.6 b in June vs EUR 21.4 b two years ago. The marginal rise is due to lack of domestic demand, which can be a worrying factor. (Reuters)

According to the Bank of England policy maker Martin Weale, the British economy was mired in stagnation rather than recession. The European debt crisis was the biggest source of uncertainty. The BOE policy maker was of the opinion that, squeeze on household spending through rising fuel prices was coming to an end. (Economic Times/Reuters)

ArcelorMittal – Steel mining giant is planning to hold discussions with the Indian government to expedite the procurement of a mining lease for its proposed INR 50,000 cr plant in Jharkhand, India. (Economic Times)

Airbus – Co. saw a loss of 10 A-380 aircrafts amounting to USD 3.8 b as Hong Kong airlines wound up its first class business category flight services. (Financial Times)

NORTH AMERICA

Construction of New homes in the U.S declined 1.1 percent to 746,000 vs June’s 754,000, falling below estimates of 756,000. The decline was offset by a rise in building permits to 812,000, its highest since 2008. The mixed data of low mortgage rates, decline in foreclosures, rising hiring and access to cheaper credit could show signs of an improvement in the property markets in the 2HY12 period. Construction of single-family homes declined 6.5 percent to 502,000 and multi-family home construction rose to 244,000, a five month high in 2012. (Bloomberg)

U.S initial jobless claims rose marginally by 2000 applicants to 366,000 for week ended 11 August vs prv week’s revised 364,000 vs exp rise to 365,000. The less volatile four week moving average declined to 363,750, a sign that labor markets picked up in July after the temporary layoffs caused by the auto plant maintenance activity. Unemployment rate remained at 8.3 percent. People on continuing jobless benefits declined by 31,000 to 3.31 m for week ended 4 August. (Bloomberg)

Ford Motors – Co.’s EU sales down 12.3 per cent at 83,100 units from a year earlier. YTD sales down at 10.6 per cent. Industry sales down 7.1 per cent through July, the lowest since 1995. (Boston.com/AP)

NORTH AMERICAN EARNINGS

Walmart – Retailer’s rising profits were reduced on unfavourable movements in the exchange rates which affected its revenues from international operations. Profits came in at USD 4 b, a y/y rise of 5.7 percent. EPS came in at USD 1.18 a share, marginally exceeding expectations. Revenues came in at USD 114.3 b vs exp USD 115.8 b. U.S like-for-like sales rose 2.2 percent on a y/y basis. Revenues from its global operations rose 4.5 percent to USD 113.5 b. The co. plans to expand its operations in markets such as Mexico, China and Brazil. (Financial Times)

7 banking firms have been issued subpoenas from U.S State prosecutors in the context of rigging the Libor rates. Banks summoned will be HSBC, Deutsche Bank, Citigroup, J P Morgan, UBS, RBS and Barclays. (Financial Times)

Brazil will implement a Brazilian Rias (BRL) 133 b (USD 66 b) worth of stimulus measures to increase investments in the nation to prop up the economy. The government plans to grant concessional opportunities on rail and roadways construction. Slowdown in the economy combines with shortage of skilled labour raised inflation and contributed to a slowdown in the economy. (Financial Times)

Cisco – Networking equipment manufacturer saw its profits and revenues rise that it raised its dividend and full year earnings estimate. Revenues rose to USD 11.7 b, exceeded estimates of USD 11.6 b. EPS came in at 47 cents vs exp. 45 cents, all on a pro forma basis. Cost cuts and prudent utilization of its resources saw the co. raise its FY12 forecasts at USD 46 b and EPS to 1.85 a share. The co. raised its dividend for the next quarter to 14 cents, a 75 percent increase. (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)

TATA MOTORS CUT TO ‘UNDER PERFORM’ BY CREDIT SUISSE

Tata Motors – Co. cut to ‘underperform’ from ‘neutral’, on account of cut in volumes forecast and increased tax rate assumption for its Jaguar Land Rover unit. The investment bank said that the co.’s results were in-line with expectation, but expects margins for JLR division to decline due to pricing pressures in various markets. (MoneyControl/Reuters)

DAILY MARKET REPORTS – 9 AUGUST 2012

The day saw markets start on a positive note on global cues, but the disappointing economic data saw the markets end lower and flat today. Major market moving event for the day was the disappointing IIP numbers. After a barrage of lowering GDP forecasts, everyone talked of policies and stimulus but now only see more gloom on the Indian front. Nevertheless, it looks like a long path to recovery to normalcy.

On the Indian markets, the Sensex closed down 39.69 points at 17560.87 points today on highs of 17702.98 and lows 17516.99 points. The Nifty closed 15.05 points lower at 5322.95 points. It touched a high of 5368.20 points and a low of 5312.10 points in intra day trade today.

The Midcap Index on the BSE declined 0.18 percent and the Smallcap Index fell 0.30 percent. Among sectoral indices, the Oil & Gas Index declined 0.99 percent, the Bankex declined 0.49 per cent and the Healthcare Index fell 0.12 percent. The FMCG Index gained 1.37 percent and the Auto Index rose 0.69 percent.

On the earnings front, Tata Motors, Indian Oil Corp. and Ranbaxy were some of the major ones. IOC saw a heavy duty loss this quarter.

On the macro front, institutions right from CLSA, Citi and now Moody’s Analytics have panned the country for its GDP growth. Macquarie also has advised investors to stay away from the PSU banks.

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

(Economic Times, Moneycontrol ,Business Standard)

DAILY MARKET REPORT – 2 AUGUST 2012

The markets ended lower in a range bound trading session on lack of any significant global economic data. As we covered earlier, investors would await the decision taken by ECB President Mario Draghi on benchmark interest rates. Yesterday, the U.S Fed left rates unchanged and with the Bank of England also sticking to not changing rates, it looks very much likely that the ECB could also follow suit. Will Draghi cut rates or not? Markets and investors are also waiting cautiously and hence the flat trading sessions today.

Coming back to the Indian markets, the Sensex closed at 17224.36 points, down 33.02 points or 0.19 percent on highs of 17246.01 and lows of 17157.28 points.

The Nifty closed at 5,227.75, down 12.75 points or 0.24 percent on highs of 5236.90 and lows of 5209.95 points in intraday trade today.

On the BSE, the Midcap Index gained 0.21 percent and the Smallcap Index rose 0.45 percent. The Oil & Gas Index was declined 1 percent, the Bankex fell 0.29 percent and Metal Index fell 0.28 percent. The Power Index rose 0.77 percent and the Capital Goods Index gained 0.64 percent.

On stock specifics, power giant NTPC rose 4 percent in trade after Coal India’s agreement this week to supply 80 percent of the coal needed to fuel new power projects eased concerns about supply of the key commodity. Tata Power gained 1.5 percent. Tata Motors declined 2 percent on lower sales numbers. NIIT Tech fell 6 percent to INR 280 as its promoters sold a 7.4 percent stake in the co. The rupee still hovers at 55.5 levels.

Summing up the session, the much touted Fed and BoE  decisions were non-events. All eyes on the ECB meet now.

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

(Economic Times, Bloomberg and Business Standard)

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)

 

 

DAILY MARKET REPORT – 16 JULY 2012

Well, inflation numbers came in today, and it came in lower than expected. Markets, which were volatile in trade, were affected by the news of a lower than expected monsoon season, which potentially could have an impact on the economy of India. The Meteorological Department announced that rains would miss its forecast in July and would be lower in September. IT stocks also disappointed in trade today.

On the global scenario, markets ended flat but China declined on earnings worries. Europe has also traded flat in trade today as not much in terms of events happened.

Markets ended near their day lows today. The Sensex closed 110.39 points or 0.64 percent lower at 17103.31 points today. Sensex touched a high of 5246.85 and a low of 5190.45 in trade today. The Nifty index closed lower by 30 points, below the 5200 mark at 5197.25 points which is near its 20-day moving average. Nifty touched a high of 17282.30 and a low of 17079.63 in intraday trade.

Amongst the sectoral indices on the BSE, the IT Index was continued to decline by2.56 percent, the Metal Index declined 2.09 percent, the Realty Index  and Power Index declined 1.86 percent  and 1 percent respectively.

On the individual stock front, Bank of America Merrill Lynch panned Reliance Industries by stating that the firm could see reduced output by 24 percent for its 2Q12 results as the GRM from its Singapore operations touched USD 5.5 a barrel, a 19 month low. Kingfisher Airlines declined 5 percent to INR 9.85 a share, below its face value of INR 10 on news of the co.’s employees going on a strike for nonpayment of dues. Lupin gained 4 percent to INR 574 a share. United Phosphorous acquired a Netherlands based firm Agrichem. Tata Motors saw a 6 percent rise in vehicle sales on a y/y basis.

Commodities traded mixed during the session with WTI at USD 86.69 down 0.47% and Brent trading at USD 102.42 down 0.02%. In Geopolitical news Saudi Arabia and United Arab Emirates have opened a new pipeline bypassing the Strait of Hormuz. The new pipeline bypassing the strait to carry 6.5m barrels of oil accounting for 40 per cent of the oil that passes through the Strait of Hormuz.  Brent trading at USD 102.42 up 0.02%

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

(Bloomberg, Business Standard, Economic Times and Moneycontrol)

EQUITY UPDATE – 11 JULY 2012

GEO-POLITICAL

Iran’s oil output for June came in at 3.2 m barrels, leading to record 20-yr low output. Sanctions imposed on the country have adversely impacted its output. (Financial Times)

ASIA

China’s trade surplus rose of USD 31.7 b in June, nearly twice as that in May. Exports increased 11.3 percent on a y/y basis  but was lower than May’s number by 15.3 percent. Imports increased 6.3 percent on a y/y basis and 12.7 percent on a m/m basis. Lower imports would be a cause of concern for investors as a slowdown in the Chinese economy could further dent global recovery. (Financial Times)

Superior Aviation Beijing – Co. is in talks to acquire  airplane manufacturer Hawker Beechcraft for around USD 1.79 b. (Financial Times)

INDIA

Non-resident Indian, or Indians living abroad infused a total of USD 4.753 b in Indian banks in the form of deposits during the April – May 2012 period. The amount was almost 7 times in excess of the amount invested a year ago for the same period. The weakening rupee and India’s high domestic interest rates contributed to the inflow. (Economic Times)

Direct tax collections incl. refunds rose 47.2 percent to INR 84,273 cr for the April-June 2012 period vs INR 57,267 cr a year ago.  (Business Standard)

Renault India – Co. launched its brand Renault Duster in Kerala and aims to sell a total of 30,000 vehicles of the brand in India by 2012. The co. is also keen on introducing smaller cars costing below INR 450,000. (Economic Times)

FII’s were net buyers in today’s trade at INR 606.54 cr on gross purchases of INR 2170.26 cr and gross sales at INR 1563.72 cr. Domestic institutional investors were net sellers at INR 488.33 cr. They made gross purchases of INR 830.16 cr and sold INR 1318.49 cr in trade. (Business Standard)

Vehicle sales in India for the June 2012 period  rose by 8.2 percent under tough market conditions. Sales totaled 155,763 units with domestic ca sales at 143,851 units. Maruti Suzuki led the sales by recording a 23 percent m/m rise at 70,977 units.  Tata Motors saw a decline in sales of around 26 percent at 13,595 units vs 18,522 units in the previous month. (Economic Times)

Automobile industry body Society of Indian Automobiles Manufacturers (SIAM) stated that forecasts for March 2013 would be lower than expected on higher costs,  slower economic expansion and fuel prices affecting consumers. The body also stated that demand would revive by the second half of the year.  Rise in excise duty also pushed up vehicle prices. (Economic Times)

Gujarat State Petroleum Corporation (GSPC): Co. plans to invest a total of INR 25,000 cr with INR 13,704 cr outlined for two gas transmission projects.  The firm is also in talks to acquire a 65 percent stake in BG Group for INR 2500 cr. (Business Standard)

EUROPE

UK trade manufacturing data for May exceeded expectations of median forecasts, which was taken as a positive signal in today’s trade. Factory output rose 1.2 percent in May vs -0.8 percent in April. Median forecasts came in at a decline of 0.1 percent. (Bloomberg)

Italian Industrial Output data rose 0.8 percent in may vs a fall of 1.9 percent in April. (Bloomberg)

NORTH AMERICA

Job openings in the US rose by 195,000 to touch 3.64 m for May vs a 294,000 decline in April. Hiring picked up marginally as co.’s expanded sales and operations at a moderate pace while layoffs also increased. Employment rose by 148,000 to 4.36 m in May, driving the hiring rate to 3.3 percent vs 3.2 percent in April. Layoffs, excl. retirements rose  to 1.89 m in May vs 1.74 m in April. (Bloomberg)

The National Federation of Independent Business’s index of investor confidence in the US declined to 91.4 from 94.4 for May 2012 period. (Bloomberg)