FMCG, energy stocks out of favour

Fri, 25 May 01:30 pm

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After paring the losses of the morning session, the Indian equity markets traded in the neutral zone during the previous hour of trade. Stocks from the metal, capital goods and realty spaces are amongst the top performers at present while stocks forming part of the FMCG and Oil and gas indices are out of favour.

The Sensex today is trading lower by 15 points, while the NSE-Nifty is trading down by about 5 points. The BSE Mid cap and BSE Small cap indices are however trading higher by 0.5% and 0.6% respectively. The rupee is trading at 55.46 to the US dollar.

Stocks of most of the cement companies are trading firm led by India Cements, Ambuja Cement and Ultratech Cement. Madras Cements announced its results for the quarter and year ended March 2012 yesterday. The company reported a revenue growth of 33% YoY during 4QFY12 on the back of the strong demand from the south India. However, as the company was not able to full pass on prices to its customers, operating margins declined owing largely due to higher logistics and other expenses. Operating profits for the quarter increased at a slower pace (as compared to the sales growth) of 17% YoY. However, the company's net profits grew by 55% YoY on the back of higher other income coupled with lower interest costs. As for the full year FY12, sales and net profits increased by 24% YoY and 83% YoY respectively. The company's operating profits grew by 49% YoY as margins expanded to 28.4% as against 23.7% in FY11. Higher other income coupled with a strong operating performance led to a strong growth in profits for the full year.

Retailing stocks are currently trading mixed with Zodiac Clothing and Trent trading firm while Titan Industries and Shoppers Stop are trading weak. As per a leading financial daily, Titan Industries' jewellery arm Tanishq has revised downwards its sales growth forecasts for FY13 to 30% from 40% last year. The reason for the scale-down has been attributed to sluggish demand as people are holding back gold purchases in view of high prices of the yellow metal. However despite the slowdown, the company plans to expand organically. The company has plans to open 40 new stores in FY13 at an investment of Rs 30-50 m per store, with half of them in C and D class towns. Of the total new stores, one-third are expected to be company-owned and the remaining through franchise. The lion's share of 70% of the total revenue of Titan is contributed by the jewellery business with the Tanishq brand accounting for 95% of that. The other jewelley brands owned by Titan include Zoya and GoldPlus.