Markets continue in red

Thu, 28 Apr 01:30 pm

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The benchmark indices in the Indian stock market continued to trade in the red during the last two hours of trade. Stocks from Metal and realty are trading weak, while those from auto are trading firm.

The BSE-Sensex is down by 87 points while NSE-Nifty is trading 29 points below yesterday's closing. BSE Midcap and BSE Small cap indices are down by 0.4% and 0.2% respectively. The rupee is trading at 44.35 to the US dollar.

FMCG stocks are trading weak with Nestle, Godrej Consumer Products and Dabur India Ltd leading the pack of losers. Fast moving consumer goods (FMCG) company Dabur India Limited has announced its fourth quarter results for financial year 2010-2011 (4QFY11). The company has reported a 30% YoY and 8.5% YoY growth in sales and net profits respectively. This performance came on the back of a strong performance by the company's consumer care division. It was also boosted by the inclusion of the financials of the recently acquired Hobi Kozmetik of Turkey and Namaste Laboratories of the US. Operating (EBITDA) margins fell by 0.9% YoY during 4QFY11. This was on account of a sharp rise in other expenditure. The fall would have been more had it not been partially offset by the decline in raw material costs, advertisement costs and staff costs. Net margin declined by 0.9% YoY as well during the quarter due to higher interest costs and increase in effective tax rates.

As per the company's CEO, the external environment and inflation in raw material prices has continued to add pressure to the margins. However, the company has effectively used a combination of calibrated price increases as well as embark on cost management initiatives to report a 28% growth in operating profits during the fourth quarter. Going forward, the Company would continue with its initiatives to drive rural growth.

Indian pharma stocks are trading mixed as well with GSK Pharma and Elder Pharma leading the pack of gainers. However, Biocon and IPCA Labs are trading weak. Biocon has recently released its fourth quarter financials. The company registered 7% YoY growth in the topline for the quarter led by the strong performance of biopharmaceuticals. The net profits for the quarter rose 25% YoY, supported by strong sales in its biopharmaceuticals drugs including insulin as well as through effective cost management.

The company has suggested that it plans to divest its stake in German unit AxiCorp. However, no financial details have been given for the same. It was in 2008 that Biocon had agreed to buy 70% of AxiCorp for US$ 43.7 m to boost its business in overseas markets. The company suggested that the disinvestment decision would have no impact on development of biosimilar insulin and analogs in collaboration with Pfizer. The company has stated that the decision was in line with its focus on global alliances including Germany where a separate unit is not needed. Earlier in January, the company had said that the revenue from AxiCorp would be under pressure as it eliminated some low-margin drugs after the German government asked drug makers to offer a rebate.