Smallcaps outperform peers

Tue, 1 Feb 01:30 pm

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The Indian markets continued to trade well below the dotted line during the previous two hours of trade. Currently, stocks across sectors are trading weak led by the FMCG, realty and auto packs, while those from the consumer durables, metal and banking spaces are amongst the top performers.

The BSE-Sensex is currently trading lower by about 193 points while NSE-Nifty is trading lower by about 60 points. Stocks from the mid and smallcap seem to be performing better as the BSE Midcap and BSE Small cap indices are down by 0.8% and 0.4% respectively. The rupee is trading at 45.8 to the US dollar.

Nalco has announced its 3QFY11 results recently. The company has reported an increase of 2.8% YoY and 64.9% YoY in sales and net profits respectively. While the aluminium segment grew by 1.5% YoY, the chemical and electricity segment declined by 3.5% YoY and 28.5% YoY respectively. Operating profits increases by 40.2% YoY during the quarter. This was led by lower operating costs. Operating profit margins soared by 7% YoY to 26.1% during the quarter. Further, higher other income and lower effective tax rate resulted in the net profits rising by a whopping 64.9% YoY. The net profit margin rose to 18% from 11.2% in the corresponding quarter last year. The company has declared an interim dividend of Rs 2 per share for FY11.

Stocks of non banking financing institutions are trading firm led by HDFC, SREI Infra Finance, Power Finance Corporation and LIC Housing. The stock of IDFC is however trading weak on the back of the company's December 2010 quarter results failing to meet market expectations. During the quarter, the company's net interest income increased by 26% YoY on the back of a 31% YoY increase in income from operations. Interest expenses increased by 36% YoY during the quarter ended December 2010. However, IDFC's profits increased at a slower pace on the back of a higher tax outgo as well as higher operating expenses.

As for 9mFY11, IDFC's consolidated income from operations grew by 20% YoY, on the back of 51% YoY growth in advances. While disbursements grew by 183% YoY, approvals increased by 121% YoY. Net interest margins (NIM) improve marginally to 3.8% in 9mFY11 (rolling 12 month average) on the back of lower cost of funds. As for profits, the same grew at a slower pace of 19% YoY on the back of higher provisioning and increase in other expenses. At the end of 9mFY11, IDFC's capital adequacy ratio stood at 24.9% as compared to 22.6% at the end of the previous quarter last year.