Firm finish to a volatile day

Thu, 19 May Closing

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Indian stock markets had a volatile outing today. Although they traded in the green for the larger part of today's session, alternate bouts of buying and selling meant that they traded within a range. Buying activity intensified a bit in the final trading hour and led the markets to close well above the dotted line. While the BSE-Sensex closed higher by around 55 points (up 0.3%), the NSE-Nifty closed higher by around 8 points (up 0.1%). The BSE Midcap and BSE Small cap cap were, however, not spared as they closed lower by 0.7% and 0.5% respectively. Gains were largely seen in oil & gas and IT stocks.

As regards global markets, Asian indices closed mixed today while European indices have opened in the green. The rupee was trading at Rs 44.98 to the dollar at the time of writing.

Power stocks closed mixed today. While Coal India and PTC India closed form, Tata Power and NTPC were at the receiving end. NTPC announced its results for the fourth quarter and full year ended March 2011. The company's net sales grew by 19% YoY and 26% YoY during 4QFY11 and FY11 respectively. This was largely a result of improvement in electricity tariffs, as the company volume sales did not have much to cheer about. Volumes grew by a meager 0.8% YoY for the full year. Operating margins declined to 22% from 27% in FY10. This was largely on account of higher fuel costs (as percentage of sales). Despite weaker operating margins, higher other income and lower depreciation charges cushioned the net profit margins. The company recorded its highest ever capacity addition of 2,490 MW for FY11. The Board has recommended an interim dividend of Rs 3 per share (dividend yield of 1.8%).

Larsen & Toubro (L&T) also announced its results for the fourth quarter and year ended March 2011 a short while ago. During the quarter, the company's sales grew by 13% YoY, while net profits registered a 17% YoY growth. For the full year, however, while sales grew by 19% YoY, net profits declined by 9.5% YoY. The company's order book registered a growth of 27% YoY during the quarter and stood at Rs 1,302 bn. This is 3 times its net sales for the year ended March 2011. Although the growth in order book is expected to provide revenue visibility into the future, execution will remain the key. Besides, intense competition and rising input costs will exert some pressure on the operating margins going forward. The stock closed higher by 7% today while its peers Voltas and Blue Star closed in the red.

Pratibha Industries Limited declared its fourth quarter results today. The company's consolidated top line grew by an impressive 29% YoY. However, the operating income grew by a tepid 5% YoY. This was because of a sharp increase in raw material costs as compared to sales. For the quarter, raw material costs increased by 35% YoY. However, slower growth in staff costs as compared to sales helped support operating income growth. Staff costs increased by 13% YoY. On a segmental basis, infrastructure and construction segment grew by 23% YoY. However, operating margins for this segment came in lower by 1.7% to stand at 14.5%. On the other hand, sales of the manufacturing segment grew by 6% YoY, while its operating margins fell by 5.1%. Net profit of Pratibha Industries increased by 31% YoY during the quarter. This growth came on the back of fall in interest costs and in effective tax rates. While interest costs fell by 13.7% YoY, effective tax rate fell from 28% in 4QFY10 to 20% in 4QFY11.