Auto stocks fuel the rise

Mon, 14 Feb 09:30 am

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Asian markets have started the week on a positive note. Currently all the major markets are trading in the green with China (up 1.7%) and Korea (up 1.5%) leading the pack of gainers. Indian markets have followed cues from its Asian peers and have opened the day on a positive note as well. Stocks in the auto and capital goods space are leading the pack of gainers.

The BSE-Sensex is trading higher by around 130 points (0.8%), while the NSE-Nifty is up by around 55 points (1.0%). Mid and small cap stocks are trading in the positive as well, with the BSE Midcap and BSE Small cap indices up by about 1% each. The rupee is trading at 45.56 to the US dollar.

Oil marketing major HPCL announced its 3QFY11 results late last week. The company's topline has increased by 22% YoY during the quarter. For the 9-month period, sales have increased by 23% YoY. The growth in sales was led by 10% YoY increase in throughput and a 6% YoY increase in the market sales. The company has also realized better average gross margins. The gross refining margins stood at US$ 3.96 per barrel. Operating margins improved to 2.3% as against 1.3% seen during the same period last year. This was on account of partial compensation for under-recoveries by the government and upstream companies. The company accounted subsidies on final petroleum products to the extent of Rs 4,806 m versus subsidies of Rs 4,482 m for 9mFY10. Net profits grew by almost 5 fold on a YoY basis. This was on account of better operating margins as well as higher subsidy receipts during the quarter. The stock has opened the day in the green. Other energy stocks witnessing buyers' interest are IOC, BPCL and Oil India. However, stock of Reliance Industries has opened the day in the red.

Tyre major Apollo Tyres also announced its 3QFY11 results recently. The company has registered a 3% YoY growth in topline. This was driven entirely by higher realizations as volumes were down by 12% YoY during the quarter. The company had hikes its prices to offset the increase in raw material costs. Volumes in the replacement market declined by 20% YoY due to the lower demand by the end customers. Higher raw material costs led to lower operating margins during the quarter. Operating margins have declined by 5% YoY. The net profits for the company declined by 36% YoY. This was mainly due to higher interest costs as well as higher depreciation charges during the quarter. Net profits were also impacted negatively by the lower operating margins during the quarter. The company has embarked on several initiatives to boost exports. In line with this, it has launched its brand in Europe as well. The stock is currently trading in the green. Peers like Ceat, Goodyear and MRF are trading in the positive zone as well.