A flat end to the week

Sat, 27 Apr RoundUp

   Previous Close   

Most of the global stock markets witnessed a week of gains except China (down by 0.9%). In the US, higher corporate earnings growth brought cheers to the investors. On the economic front too, there was good news in the form of lower jobless claims. The jobless claims reduced by 16,000 last week. However, towards the end of the week the Department of Commerce reported that first quarter gross domestic product increased just by 2.5%, lower than the expected figure of 3%, causing some concerns to the investors.

Among the other stock markets, China (down by 0.9%) was the only exception to the list of gainers. France and Japan (up by 5% each) were the top gainers.

The Indian stock markets ended the week in the green, up by 1.4%. The earnings season provided boost to the stock markets along with the hope of an interest rate cut by the Reserve Bank of India (RBI) soon.

Source: Yahoo Finance

Barring software (down 4.8%), all sectoral indices ended the week in the green with auto (up by 4.1%) and capital goods (up by 3.2%) stocks leading the gains. Realty stocks were marginally down by 0.2%.

Source: BSE

Now let us discuss some of the corporate developments of the week gone by. Result season continued with quite a few companies including Wipro, HDFC Bank, Axis Bank, Maruti Suzuki, Idea Cellular and others declaring their numbers for the quarter ended March 31, 2013.

Wipro declared its 4QFY13 results. Total revenues (in rupee terms) for the quarter grew by 12% YoY, however total sales from continuing business operations were up by 13% YoY. The company's total net income grew by 17% and for continuing operations the net income growth was up 13%, for the said quarter. The revenues of IT services witnessed a de- growth of 0.6% QoQ in 4QFY13. IT Products segment (9.8% of total sales) grew by 7.8% QoQ during 4QFY13 and consumer care & lighting business (9.4% of total sales) grew by 1.5% QoQ during 4QFY13. The others segment (3% of total sales) saw a decline of 9% QoQ. The company has declared final dividend at Rs 5 per share which implies total dividend for the year to Rs 7 per share.

HDFC Bank reported 23% YoY growth in net interest income and 30% YoY growth in net profits in FY13. Net interest income during the year grew by 22.7% YoY backed by 23% YoY growth in advances. The bank was able to post good performance on account of growth in the corporate segment. NIMs came in higher at 4.5% at the end of 4QFY13 as against 4.3% in the previous quarter (CASA at 46% of total deposits). Net NPA to advances remained stable at 0.2% of advances in FY13. HDFC Bank's provision coverage ratio was at 80% at the end of March 2013. Capital adequacy ratio (CAR) too was comfortable at 16.8%, Tier I CAR was at 11.1% at the end of 4QFY13.

Another private sector bank Axis Bank too declared results for the quarter ended March 31, 2013. The bank reported 21% YoY growth in net interest income and 22% YoY growth in net profits during the year 2013. The rise in net income was due to growth in both core and non-interest income. Other income was up by 26.4% YoY during the quarter. Net interest margins (NIM) remain stable at 3.5%. The average NIM over the past 5 fiscals has been above 3.3%. 17% rise in fee income resulted in the bank reporting 22% YoY growth in net profits in FY13.

Telecom major Idea Cellular declared results for the quarter ended March 31, 2013. The consolidated sales for the quarter witnessed a growth of 12.9% on a year on year (YoY) basis. The growth was mainly driven by growth in the subscriber base as well as by higher minutes on the network during the quarter. The operating margins for the quarter stood at 27.6%, as compared to 25.3% in 4QFY12. The net profits for the quarter were up 29% YoY with net margins at 5.1%. The growth was mainly on account of growth in voice minutes and high data usage. The company has recommended a dividend of Rs 0.3 per share.

Automobile company Maruti Suzuki has announced its results for the fourth quarter and year ended March 2013. During the quarter, the company reported a 13% YoY growth in the topline. This was largely led by good growth in its volumes of 'Dzire', 'Ertiga' and enhanced export realisations. Operating margins during the quarter improved by 7.7% to 15%. This led to an impressive 133% YoY growth in operating profits. Net profits also grew at a robust rate of 94% YoY. However, this growth was lower than that in operating profits on account of higher finance costs and depreciation charges. For the full year, growth in revenues and net profits stood at 22.5% YoY and 46% YoY respectively. The Board of Directors have recommended a dividend of Rs 8 per share (dividend yield is 0.5%).

Movers and shakers during the week

Company	18-Apr-13	26-Apr-13	Change	52-wk High/Low
Top gainers during the week (BSE-A Group)
Jet Airways	512	613	19.7%	689/275
Mahindra Finance	201	229	13.6%	247/120
United Phosphorus	125	139	10.5%	144/105
Idea Cellular	111	122	9.7%	129/73
Muthoot Finance	119	130	9.7%	246/106
Top losers during the week (BSE-A Group)
Wipro	369	330	-10.5%	418/302
HCL Technologies	736	684	-7.1%	809/454
Coromandel International	198	184	-6.9%	305/180
Jindal Steel	337	315	-6.5%	515/313
TCS	1,451	1,368	-5.7%	1598/1164

Data Source: Equitymaster
In some other news form the corporate world, Lupin Pharmaceuticals is targeting a global sales growth of 25% over next 3 years including the highly competitive US market. The company wants to grow at the same rate in all its existing markets and not any particular one. The company is specifically looking to gain a strong foothold in the oral contraceptive (OC) space and has garnered 11 approvals. However, the US generic oral contraceptive market (OC) is largely dominated by a couple of player's viz., Teva and Watson. Thus, Lupin could face challenges in terms of gaining market share in that space. In India too, the company is looking to log in healthy growth rate of 20% led by new drug launches, in-licensing agreements and strategic alliances.

RBI is slated to announce its monetary policy for 2013-14 on May 3, 2013. Investors are hopeful of a rate cut by the RBI as inflation has cooled down and the economy needs a push to grow further. Also, the companies would continue to declare their quarter and year end results over next few weeks. This could determine the future course of stock markets in the short term. However, investors should note that investing in good quality stocks at reasonable prices in the long term is the only formula for success.