Inventories in place; see revival Q2 onwards: Raymond

Textiles manufacturer Raymond Ltd yesterday posted its first quarter results. The company saw its net loss widen to Rs 49.68 crore in the quarter ended June 30.

M Shivkumar, CFO of  Raymond says Rs 8 crore provision towards forex cover on an unexecuted export contract, which will get reversed in the next quarter on contract execution, had an impact on the bottomline this quarter. He expects volumes to improve in the second quarter. "Decline in official performance has bottomed out and we will be heading northwards from now onwards in the apparel segment," he told CNBC-TV18.

There has been a drop in the tools and hardware segment as the company is entering into price sensitive markets, particularly in Latin America and the African continent, he says. The inventory situation in the apparel segment has corrected adequately, he adds.

Also Read: Raymond Q1 net loss widens to Rs 49.68 cr

Below is the verbatim transcript of M Shivkumar's interview on CNBC-TV18

Q: Your suiting and fabric business did okay but the pressure is seen in the apparel business, what is going wrong there?

A: As a standalone entity where Raymond Textile is there, we grew by 15 percent with a significant reduction in loss at the profit before tax (PBT) level. The topline was higher by 4 percent while loss is down by 10 percent. One of the important thing is this is largely due to provisioning of Rs 8 crore towards forex cover on unexecuted export contract, which will get reversed in the next quarter on contract execution.

What happens is Raymond always follows the path of hedging its exposure and we are a net earner of foreign currency. So this is a temporary phenomenon of Rs 8 crore, which we had to provide to follow the accounting standards - should we exclude this component - then there is a healthy growth of 12 percent in EBITDA and the profit after tax (PAT) level, there has been a significant decrease in the recognition of deferred tax assets over the corresponding period, hence the losses widened.

If you look at each of the segment, textile segment grew by 13 percent largely led by exports, Combo pack and the Makers brand. The sales growth in the retail outlet or The Raymond Shop (TRS) network was seen at 9 percent while the overall growth was placed at 15 percent. Domestic segment of the fabric business barring Makers and Combo pack remained at the same level as that of last year as there has been a concentrated effort to increase exports.

In the apparel segment, we are aware of the problem. Our efforts to consolidate operations continued for most of these quarters including frontend sales and distribution setup, right sizing of man power, healthy channel management with right sizing of inventory, outsourcing of in-house manufacturing activities, which we were carrying out and including the IT infrastructure.

In the distribution channel in the apparel business, the exclusive brand outlet and large format stores (LFS) registered 18 percent growth in the secondary sales outlet while underperformance was noticeable in the trade channel led by multi-brand outlets (MBO) and TRS.

Volume offtake is likely to improve in Q2. It will not be unreasonable to conclude that our decline in official performance has bottomed out and we will be heading northwards from now onwards in the apparel segment.

As far as garmenting segment is concerned, our business growth was led by exports and we held on to our profitability level. Engineering segment, there is auto segment which is affected by the automobile sector though we held on to the same levels as of last year. The tools and hardware segment, there has been a key drop because we are entering into the price sensitive market particularly in Latin America and African continent.

Our denim and shirting business improved. We continue to pursue our real estate activity.

Q: Are you confident of setting out a year-end sales target also for margins and whether your inventory situation has been corrected adequately?

A: The inventory situation in the apparel segment has corrected adequately. We have now built up inventories for the season with respect to other businesses also. So we expect better performance from Q2 onwards.

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Drug pricing policy issue hurting sector's growth: Biocon

Biotechnology major Biocon which today posted a strong first quarter earnings raised concerns about confusion in India's drug pricing policy, which has impacted the growth of pharma-biotech sector.

"We are still seeing very challenging environmental condition in India especially around regulatory aspects of the pharma-biotech sector. We hope that the government will really address this with the sense of urgency," Kiran Mazumdar Shaw, CMD, Biocon said in a earnings press conference.

She alleged that due to confusion in pricing policies stockists have been reluctant to take stock on hand until the pricing issues are resolved. She added that although clinical trials are resuming now, India needed a regulatory robustness. "We don't want more layers being put in to approvals but have expertise and the knowledge with which to approve clinical trials expeditiously," she stressed.

The company reported 18.65 percent rise in consolidated net profit at Rs 93.50 for the first quarter on account of strong performance in the biopharma segment. Consolidated revenue rose to Rs 723 crore from Rs 594 crore in a year ago quarter. 

Mazumdar said that Q1 result reflect the company's inherent strength in product portfolio. She expects insulin to be the strong growth driver in current fiscal. The company will launch its second novel biologic drug Alzumab used in psoriasis treatment in August. "We are now of course looking at taking this molecule global and we are in discussion with several companies that are very keen to partner this program in our global development plan," she said.

Below is the verbatim transcript of the interview

Q: I heard you mention at your press conference that you are seeing some challenges in the India business because of the pricing pressure etc, what kind of a pressure are you expecting to see going ahead and what could the growth slip to?

A: I do not think I am referring to pricing pressures. I am talking about pricing policy issues because basically the industry itself has had a steady decline in terms of growth. Quarter-on-quarter (Q-o-Q) for the last five quarters largely because there has been uncertainty and lack of clarity around the drug pricing policy. So now that has been sort of fairly addressed hopefully now all the questions are answered and the sector will start correcting because I think as far as Biocon is concerned, we haven't had a major hit out of all these price control issues. So we have had a very nominal kind of impact on all our products.

This has created a lot of market uncertainty in terms of pharmacists and stockists of product and about labeling of pricing on products and whether we need to sort of wait till we get the prices ascertained and things like that. So those kind of issues, an unnecessary issues including things like the knee-jerk reaction to the Pioglitazone issue where the government suddenly banned it and now they are planning to revoke the ban.

This does not augur well for the sector. So these are the kind of issues, which are more external in nature. It is not about competitive pricing pressure. There we are very clear that Biocon has done extremely well because we have such a differentiated portfolio and we have done extremely well and that is where we have seen improved margins as reflected in this quarter's earnings.

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Nifty hovers around 5900; PNB at 4-year low on poor Q1 NPA

12:27

Moneycontrol Bureau
Live Market Commentary
The market is completely listless in noon trade today with the Nifty hovering around the 5900 level. Public sector lender Punjab National Bank (PNB) disappointed the street with the non-performing asset rising further during April-June quarter, though the net profit increased higher-than-expected 2.3 percent year-on-year to Rs 1,275 crore.

Gross non-performing asset (NPA) jumped 57 bps quarter-on-quarter (up 1.5 percent Y-o-Y) to 4.84 percent while net NPA increased 63 bps Q-o-Q (up 1.3 percent Y-o-Y) to 2.98 percent during June quarter. Gross NPA of the state-owned lender surged 12 percent Q-o-Q to Rs 15,090 crore and net NPA soared 25 percent Q-o-Q to Rs 9,060 crore in first quarter of FY14. The stock slumps 6%. The stock touched a 4-year low of Rs 585.95, which fell more than 5 percent.

The BSE Sensex is down 20.97 points at 19783.79, and the Nifty is down 10.40 points at 5897.10. The broader markets declined 0.4-0.8 percent as declining shares outnumbered advancing ones by 1158 to 757 on the BSE.

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ACC Ltd's Q1 PAT may decline 40% on higher expense: Poll

ACC Ltd is expected to post around 40 percent year-on-year drop in profit in June quarter on higher depreciation and freight cost, states CNBC-TV18 poll. The cement firm had posted Rs 414 crore profit in corresponding quarter of last year.

Sales could also decline over 4 percent to Rs 2800 crore as demand remained weak in most markets  Analysts also expect EBITDA margins to shrink around 800 bps to Rs 14.5 percent.

Read This: Ambuja Cements, ACC down after Holcim tweaks stakes

Factors likely to impact ACC 's numbers

-Volumes may be flattish on weak demand

-Despatches growth will almost be flattish and may grow hardly a percent Y-o-Y.

-Average realisations are likely to decline 5-6 percent Y-o-Y

-Feedback from cement dealers suggests that in 1Q FY14, pan-India cement prices were down around 6 percent Y-o-Y 

-Prices were weak in most other parts of the country

-Prices in south market gained (q-o-q) in Q2CY13 but extremely weak demand will hit topline.

-ACC has the highest exposure to east and central India.

-Demand is likely weakest in north India, while east and central India was relatively better.

Incase net profit comes in much lower:
Watch out for any "Provisioning for Competition Commission of India (CCI) penalty":
COMPAT served an interim order directing cement companies to deposit 10% of the total penalty levied by the CCI
ACC's penalty amount was Rs. 1148 crore and hence 10 percent will be around Rs.114.7crore

Key issues to watch out
-Volume growth recovery and outlook
-Cement pricing outlook, considering volatility in 2QCY13
-Progress in ongoing capex for 5MT Jamul expansion
-Any Commentary with regard to merger of the cement twins

 

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Ambuja Cements has support at Rs 125-130: Sudarshan Sukhani

Jul 25, 2013, 12.26 PM IST

Sudarshan Sukhani of s2analytics.com is of the opinion that one may see support for Ambuja Cements at around Rs 125-130.

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Ambuja Cements has support at Rs 125-130: Sudarshan Sukhani

Sudarshan Sukhani of s2analytics.com is of the opinion that one may see support for Ambuja Cements at around Rs 125-130.

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Ambuja Cements has support at Rs 125-130: Sudarshan Sukhani

Sudarshan Sukhani of s2analytics.com is of the opinion that one may see support for Ambuja Cements at around Rs 125-130.

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Sudarshan Sukhani of s2analytics.com told CNBC-TV18, " Ambuja Cements ' chart looks disastrous. After today's decline its next place of support is about Rs 125-130 which seems likely. So there is no sense in holding on."

"Cement has begun correction. When this correction is over then the buying opportunities will come in Ultratech Cement , perhaps not in ACC and Ambuja," he said.

Also Read: Ambuja Cements, ACC down after Holcim tweaks stakes

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Hero MotoCorp gains on Q1 margins; Macquarie upgrades

Jul 25, 2013, 12.30 PM IST

Hero reported a net profit of 5.49 billion rupees for the three months to end-June, compared with 6.15 billion rupees a year earlier. Net sales fell to 61.27 billion rupees from 62.47 billion rupees.

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Hero MotoCorp gains on Q1 margins; Macquarie upgrades

Hero reported a net profit of 5.49 billion rupees for the three months to end-June, compared with 6.15 billion rupees a year earlier. Net sales fell to 61.27 billion rupees from 62.47 billion rupees.

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Hero MotoCorp gains on Q1 margins; Macquarie upgrades

Hero reported a net profit of 5.49 billion rupees for the three months to end-June, compared with 6.15 billion rupees a year earlier. Net sales fell to 61.27 billion rupees from 62.47 billion rupees.

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Shares in Hero MotoCorp Ltd gain 4.4 percent after its adjusted operating margins for June-quarter came in at 14.85 percent, higher than estimates of about 13 percent, analysts say.

Hero reported a net profit of Rs 549 crore for the three months to end-June, compared with Rs 6.15 crore a year earlier. Net sales fell to 61.27 billion rupees from 62.47 billion rupees.

"Operating profit is appearing substantially higher than expectation as the company has not taken the full impact of increase in raw material cost given company compensates its vendors with a lag of a quarter," said Abhishek Gaoshinde, an analyst tracking the sector at Sunidhi Securities.

Also, Macquarie upgrades the stock to "outperform" from "underperform" and raises its target price to Rs 1,960 from Rs 1,250, citing attractive valuations.

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Panasonic Energ standalone Jun '13 sales at Rs 51.19 crore

Jul 24, 2013, 12.28 PM IST

Panasonic Energy India Company has reported a sales standalone turnover of Rs 51.19 crore and a net profit of Rs 0.66 crore for the quarter ended Jun '13

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Panasonic Energ standalone Jun '13 sales at Rs 51.19 crore

Panasonic Energy India Company has reported a sales standalone turnover of Rs 51.19 crore and a net profit of Rs 0.66 crore for the quarter ended Jun '13

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Panasonic Energ standalone Jun '13 sales at Rs 51.19 crore

Panasonic Energy India Company has reported a sales standalone turnover of Rs 51.19 crore and a net profit of Rs 0.66 crore for the quarter ended Jun '13

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Panasonic Energy India Company has reported a standalone sales turnover of Rs 51.19 crore and a net profit of Rs 0.66 crore for the quarter ended Jun '13. Other income for the quarter was Rs 0.23 crore. For the quarter ended Jun 2012 the standalone sales turnover was Rs 49.51 crore and net profit was Rs 0.33 crore, and other income Rs 0.31 crore. Panasonic Energ shares closed at 42.15 on July 23, 2013 (BSE) and has given -14.24% returns over the last 6 months and -17.35% over the last 12 months.

Panasonic Energy India Company Standalone Quarterly Results -------- in Rs. Cr. --------

Jun '13 Mar '13 Dec '12 Sales Turnover 51.19 47.01 59.65 Other Income 0.23 0.67 0.32 Total Income 51.42 47.68 59.97 Total Expenses 49.58 46.13 57.47 Operating Profit 1.61 0.88 2.18 Profit On Sale Of Assets -- -- -- Profit On Sale Of Investments -- -- -- Gain/Loss On Foreign Exchange -- -- -- VRS Adjustment -- -- -- Other Extraordinary Income/Expenses -- -- -- Total Extraordinary Income/Expenses -- -- -- Tax On Extraordinary Items -- -- -- Net Extra Ordinary Income/Expenses -- -- -- Gross Profit 1.84 1.55 2.50 Interest 0.02 0.03 -- PBDT 1.82 1.52 2.50 Depreciation 0.74 0.80 0.78 Depreciation On Revaluation Of Assets -- -- -- PBT 1.08 0.72 1.72 Tax 0.42 0.28 0.56 Net Profit 0.66 0.44 1.16 Prior Years Income/Expenses -- -- -- Depreciation for Previous Years Written Back/ Provided -- -- -- Dividend -- -- -- Dividend Tax -- -- -- Dividend (%) -- -- -- Earnings Per Share 0.88 0.59 1.55 Book Value -- -- -- Equity 7.50 7.50 7.50 Reserves -- -- -- Face Value 10.00 10.00 10.00 Source : Dion Global Solutions Limited

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Mahindra Forg standalone Jun '13 sales at Rs 103.50 crore

Jul 24, 2013, 12.28 PM IST

Mahindra Forgings has reported a sales standalone turnover of Rs 103.50 crore and a net profit of Rs 5.56 crore for the quarter ended Jun '13

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Mahindra Forg standalone Jun '13 sales at Rs 103.50 crore

Mahindra Forgings has reported a sales standalone turnover of Rs 103.50 crore and a net profit of Rs 5.56 crore for the quarter ended Jun '13

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Mahindra Forg standalone Jun '13 sales at Rs 103.50 crore

Mahindra Forgings has reported a sales standalone turnover of Rs 103.50 crore and a net profit of Rs 5.56 crore for the quarter ended Jun '13

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Mahindra Forgings has reported a standalone sales turnover of Rs 103.50 crore and a net profit of Rs 5.56 crore for the quarter ended Jun '13. Other income for the quarter was Rs 1.32 crore. For the quarter ended Jun 2012 the standalone sales turnover was Rs 105.00 crore and net profit was Rs 4.53 crore, and other income Rs 0.99 crore. Mahindra Forg shares closed at 65.05 on July 23, 2013 (NSE) and has given 31.02% returns over the last 6 months and 16.79% over the last 12 months.

Mahindra Forgings Standalone Quarterly Results -------- in Rs. Cr. --------

Jun '13 Mar '13 Dec '12 Sales Turnover 103.50 109.47 108.86 Other Income 1.32 0.67 1.45 Total Income 104.82 110.15 110.30 Total Expenses 89.36 89.54 91.28 Operating Profit 14.14 19.93 17.58 Profit On Sale Of Assets -- -- -- Profit On Sale Of Investments -- -- -- Gain/Loss On Foreign Exchange -- -- -- VRS Adjustment -- -- -- Other Extraordinary Income/Expenses -- -- -- Total Extraordinary Income/Expenses -- -- -- Tax On Extraordinary Items -- -- -- Net Extra Ordinary Income/Expenses -- -- -- Gross Profit 15.46 20.60 19.03 Interest 0.02 1.28 1.07 PBDT 15.44 19.31 17.95 Depreciation 7.05 7.02 6.96 Depreciation On Revaluation Of Assets -- -- -- PBT 8.39 12.29 10.99 Tax 2.83 -3.33 -- Net Profit 5.56 15.62 10.99 Prior Years Income/Expenses -- -- -- Depreciation for Previous Years Written Back/ Provided -- -- -- Dividend -- -- -- Dividend Tax -- -- -- Dividend (%) -- -- -- Earnings Per Share 0.60 1.70 1.19 Book Value -- -- -- Equity 92.17 92.17 92.17 Reserves -- -- -- Face Value 10.00 10.00 10.00 Source : Dion Global Solutions Limited

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Modern India standalone Jun '13 sales at Rs 70.09 crore

Jul 24, 2013, 12.28 PM IST

Modern India has reported a sales standalone turnover of Rs 70.09 crore and a net profit of Rs 0.98 crore for the quarter ended Jun '13

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Modern India standalone Jun '13 sales at Rs 70.09 crore

Modern India has reported a sales standalone turnover of Rs 70.09 crore and a net profit of Rs 0.98 crore for the quarter ended Jun '13

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Modern India standalone Jun '13 sales at Rs 70.09 crore

Modern India has reported a sales standalone turnover of Rs 70.09 crore and a net profit of Rs 0.98 crore for the quarter ended Jun '13

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Modern India has reported a standalone sales turnover of Rs 70.09 crore and a net profit of Rs 0.98 crore for the quarter ended Jun '13. Other income for the quarter was Rs 1.69 crore. For the quarter ended Jun 2012 the standalone sales turnover was Rs 97.53 crore and net profit was Rs 1.35 crore, and other income Rs 1.56 crore. Modern India shares closed at 42.00 on July 23, 2013 (BSE) and has given -8.89% returns over the last 6 months and 55.56% over the last 12 months.

Modern India Standalone Quarterly Results -------- in Rs. Cr. --------

Jun '13 Mar '13 Dec '12 Sales Turnover 70.09 110.89 99.78 Other Income 1.69 1.79 1.86 Total Income 71.78 112.68 101.64 Total Expenses 69.92 110.59 98.03 Operating Profit 0.17 0.30 1.75 Profit On Sale Of Assets -- -- -- Profit On Sale Of Investments -- -- -- Gain/Loss On Foreign Exchange -- -- -- VRS Adjustment -- -- -- Other Extraordinary Income/Expenses -- -- -- Total Extraordinary Income/Expenses 1.28 -- -1.63 Tax On Extraordinary Items -- -- -- Net Extra Ordinary Income/Expenses -- -- -- Gross Profit 1.86 2.09 3.61 Interest 0.75 0.68 0.51 PBDT 2.40 1.41 1.47 Depreciation 0.37 0.40 0.41 Depreciation On Revaluation Of Assets -- -- -- PBT 2.03 1.01 1.06 Tax 1.05 0.12 -0.69 Net Profit 0.98 0.89 1.75 Prior Years Income/Expenses -- -- -- Depreciation for Previous Years Written Back/ Provided -- -- -- Dividend -- -- -- Dividend Tax -- -- -- Dividend (%) -- -- -- Earnings Per Share 0.26 0.24 0.47 Book Value -- -- -- Equity 7.51 7.51 7.51 Reserves -- -- -- Face Value 2.00 2.00 2.00 Source : Dion Global Solutions Limited

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Nifty may gain 5% in next few days: Barclays

Dhiren Sarin, Technical Analyst, Barclays is bullish on Nifty and sees it gaining 5 percent in next few days. "We can be modestly bullish but we can't be aggressively bullish until that 6400 area gives way," he told CNBC-TV18.

He explained that Indian stocks have recovered on the back of global sentiment and optimism. The S&P is making all-time highs and Sarin expects it to gain another 4-5 percent by the end of 2013 with a target at 1700. All of this is reflected in emerging market (EMs) indices.

Sarin further said that in his view the trading range for rupee would be at 58-60 per dollar. He also advises buying gold for short term.

Also read: Mkt correction likely as Q1 nos start to disappoint: IL&FS

Below is the verbatim transcript of his interview to CNBC-TV18

Q: What have you made of the Nifty move over the last few weeks - it has been a very narrow move but it is moving up nevertheless?

A: For the Nifty and Sensex, Indian stocks have recovered somewhat and this is on the back of global sentiment and optimism that has come back into the markets. This is also the case for broader emerging markets (EM) indices for Thailand stock exchange, for Malaysia so this is not just an effect of the Nifty itself, it is global markets.

If one looks at the west, the S&P is making all-time highs, the Dow transports and the list goes on so it is not surprising to see Nifty pretty buoyant at this point. We think it can head higher another couple of percent.

The big levels that come in are around 6360-6400 area for the Nifty. These were the peaks in 2008, 2010-2011 and we have not been able to overcome this on several attempts. We can be modestly bullish but we can't be aggressively bullish until that 6400 area gives way.

Q: Even at this point though you would put a long trade on the Nifty. You think essentially the trend is up?

A: Yes, indeed I would. If 5910 or so would be the support zone. If the Nifty starts to drop back below there then we would take profits on our bullish position. We have been recommending bullish positions since 5500-5600 area so we are quite happy to see this move.

Now what we would do is tighten our stops and look at about 5900 on the downside. As long as we stay above there the market can continue to chop higher.

Q: There has been some heartburn over how the banking space has suffered within this market any targets on the Bank Nifty and whether that as well is set for a recovery?

A: We think that the Bank Nifty will move in line with the broader Nifty. In fact, the Bank Nifty can start to outperform a little bit. Again this sentiment comes from abroad, the US is starting to outperform the banking sector and especially leading the way higher.

With these markets posting all time highs the higher beta indices like the banks, technology might start to do better. We are keeping an eye on that, but for India specifically it should be quite in line the Nifty and Nifty banks both going up a couple of percent together.

Q: Any thoughts on the rupee-dollar?

A: It is quite range bound at this point, not too aggressive. We think that it probably trades sideways. The range is 58.95 to about 60. Within that range we would look to sell rallies, very modest bias here though.

If we start to pop up above 60-60.10 then the INR starts to become a worse situation. We are patient and do think the medium to long-term trend is still higher for dollar INR. Even when dollar-rupee is 55, you are calling 62-63 and we still think that is the case. However, at this point over the week or so we prefer to be patient and just watch price action quite closely between the levels that we have just mentioned.

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