Auto holds the market firm

Thu, 27 May 01:30 pm

   Previous Close   

   Pre-Open   

   09:30 am   

   Closing   

The Indian markets continued to gain further ground on account of buying activity witnessed across sectors. Stocks from the auto, energy, FMCG and consumer durables spaces are leading the pack of gainers, while select stocks from the metals and telecom sectors are in the red.

The BSE-Sensex is trading up by 130 points, while NSE-Nifty is trading higher by about 35 points. Stocks from the midcap and smallcap spaces are trading firm as well as the BSE-Midcap index and BSE-Smallcap indices are trading higher by 0.4% each. The rupee is trading at 46.92 to the US dollar.

Transmission and distribution equipment major Emco announced its results. Standalone topline remained almost flat during 4QFY10. Operating margins contracted by a significant 6.4% YoY, impacted by higher costs of raw materials as well as higher staff costs (both as percentage of sales). Net profits fell by 67% YoY due to the fall in operating margins, as also a proportionately lower fall in interest expenses and depreciation charges when compared to the fall in operating profits. For the full year FY10 on the other hand the company reported a 2% YoY and 33% YoY fall in sales and net profits respectively (excluding extraordinary income). The company’s board has recommend a dividend of Rs 1.4 per share which works out to a dividend yield of 1.9% at the current price. While the stock of Emco is taking a significant beating on the bourses today, its peers like Voltamp Transformers and Bharat Bijlee are trading relatively flat.

As per a leading business daily, Hindustan Petroleum Corporation (HPCL) plans to invest Rs 300 bn to set up a 15 to 16 m tonne per annum a refinery on the west coast. This new refinery which is likely to come up in the Raigad district of Maharashtra is being mulled to make up for space constraint that its Mumbai refinery faces at present. The Mumbai refinery of size 6 .5 MTPA is spread across 350 acres of land which ideally should have been spread over 2,000 acres of land. Going forward space constraint is likely to make unit inefficient. Thus, the company might eventually shut down the Mumbai refinery over the next six to seven years as new refinery comes in place.

HPCL, which has a 7.5 MTPA unit at Vizag in Andhra Pradesh and is also building a 9 MTPA plant at Bathinda in Punjab, in a joint venture with steel czar Lakshmi Mittal, is contemplating a refinery of the size of 15 or 20 MTPA. The stock is trading higher currently.