Strong finish to the week

Fri, 20 May Closing

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Indian stock markets had a strong outing today, finishing off the week in style. The markets opened in the positive zone and sustained strong positive momentum throughout today's session. 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 185 points (up 1%), the NSE-Nifty closed higher by around 58 points (up 1.1%). The BSE Midcap and BSE Small cap, although trading positive, could not match the largecaps' performance. They closed higher by 0.6% and 0.5% respectively. Gains were largely seen in consumer goods and auto stocks.

As regards global markets, Asian indices closed mixed today while European indices have all opened in the green. The rupee was trading at Rs 44.96 to the dollar at the time of writing.

FMCG major, ITC announced its fourth quarter results (4QFY11) and full year (FY11) financial results today. The top line (revenues) for ITC grew by 15.9% YoY in 4QFY11, bolstered by a strong growth in FMCG (including cigarettes), hotels, paper and packaging and agriculture businesses. The operating (EBITDA) margins increased by 0.4% as a result of fall in raw material costs and staff costs (as a percentage of sales). Net profit grew by 24.6% YoY during the quarter. This increase was a result of a growth in operating income, higher other income and a sharp fall in interest expense. For the full financial year FY11, ITC's net profits grew by 22.8% YoY while net profit margins expanded by 1.1% to 23.2%. This performance comes on the back of higher operating income, increase in other income, and a fall in interest expense. Lower depreciation charges and a lower effective tax rate also helped add to the full year profits. Despite a good operating performance, the stock closed close to 2% lower for the day.

Print media, DB Corp declared its fourth quarter results (4QFY11) and full year (FY11) financial results recently. Revenues grew by 23% YoY in 4QFY11 led by a strong growth of 31% YoY in advertising. For the full year, revenues grew by 19% YoY on the back of 24% YoY growth in advertising. However, it saw a contraction in operating margins as raw material expenses increased on account of a rise in newsprint costs. This has risen by nearly 8% over the past 12 months. The company is focusing on increasing its presence across various regions and languages. During the year DB Corp launched operations in Jharkhand. A Marathi newspaper edition will soon start from Aurangabad, Maharashtra. Post this, the total number of languages in which DB Corp publishes newspapers will increase to 4.

Net profits for the company grew by 22.6% YoY during the quarter and 41.4% YoY during the year. The growth in profits was higher than that in operating profits mainly due to reduction in interest costs and a moderate increase in depreciation charges. Profit margins remained stable at around 14% during the quarter. However there was a considerable improvement (3%) in margins during FY11, to stand at over 20%. The stock closed marginally lower for the day.