Realty stocks drag the markets

Fri, 4 Feb 09:30 am

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Asian markets have opened the day on a good note. Japan (up 1.1%) is leading the gainers’ pack. However, Indonesian markets (down 0.4%) are trading in the red. Indian markets have opened the day in the on a weak note. Markets in Hong Kong, Singapore, China and Taiwan are closed on account of the lunar holiday. Stocks in the realty space are the biggest losers

The BSE-Sensex is trading lower by around 55 points (0.3%), while the NSE-Nifty is down by around 12 points (0.2%). However, mid and small cap stocks are trading in the positive, with the BSE Midcap and BSE Small cap indices up by about 0.1% and 0.2% respectively. The rupee is trading at 45.68 to the US dollar.

Engineering stocks have opened the day on a subdued note with Voltas Ltd. and Thermax leading the losers' pack. Voltas recently announced its 3QFY11 quarter results. The company has reported a 5% YoY growth in sales. This was driven by a strong growth in its unitary cooling products division as well as by its engineering products & services business, which witnessed a growth of 36% YoY and 12% YoY respectively. The electro mechanical projects & services segment witnessed a decline of 3% YoY. The company's operating margins declined by nearly 13% YoY. This was mainly on account of higher input costs as a percentage of sales. The net profits for the company have declined by 7%YoY. This was mainly on account of lower operating margins as well as higher interest costs during the quarter. Interest expenses have increased by almost 1.7 times as compared to the same period last year. The increase offset the gain from the sale of properties during the quarter. The total order book for the electro mechanical segment stood at Rs 47 bn. International markets account for almost 65% of the total order backlog for the company.

Cement stocks have opened today on a mixed note. On one hand, India Cements and Mangalam Cement are trading in the green. On the other hand, Shree Cement and ACC are trading in the red. Cement major ACC announced its results for the year ended December 2010. On a consolidated basis, the company has recorded around 3% YoY decline in net sales. This came on the back of a 1% YoY drop in volume sales. The company net profits were severely hit due to rising input prices (of coal, power, and fly ash) and, at the same time, falling cement prices. Profits declined by 31% YoY during the year. The company expanded its capacity by 4.5 m tonne (MT) at its Wadi plant. This took its total cement manufacturing capacity to 30 MT. ACC also commissioned a 25 megawatt (MW) captive power plant, which is expected to bring down its power costs in the future. The company is now working on another 25 MW power plant, and the same is likely to get commissioned in the current January-March quarter.