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Consumer durables buck the trend
Fri, 19 Oct 01:30 pm

Indian equity markets shed some initial gains but continued to trade in the green during the last two hours of trade. Sectoral indices traded mostly in the positive except metal, realty and energy stocks.

The BSE-Sensex is trading lower by 80 points and NSE-Nifty is trading lower by 27 points. BSE Mid Cap is trading down by 0.2% and BSE Small Cap is trading flat. The rupee is trading at 53.69 to the US dollar.

Food stocks are trading mixed with gains led by Wadala Commodities and ITC. Agro Tech Foods and Golden Tobacco are the top losers. Cigarette manufacturer, VST Industries has posted a 4.8% increase in topline for the quarter ended September 2012. However, operating profit margin contracted by 3.5% to 24.6% due to a steep escalation in raw material costs partially offset by lower other expenditure. At the net level, profits fell by 17.8% on account of an 8.2% decline in operating profit coupled with 65% slump in other income earned during the quarter. For 1HFY13, the company's revenues grew by a mere 5.2%. However a faster 12% rise in operating expenditure eroded 4.5% of the company's operating margin to 26.2%. Although depreciation outgo decreased by 7%, a 27% downfall in other income coupled with lower operating profit resulted in a 14.3% drop in the company's bottomline for 1HFY13.

Hotel stocks are trading in the red led by Indian Hotels and Country Club. According to a leading financial daily, Tata owned Indian Hotels Company Limited (IHCL) has launched a hostile bid for Orient Express Hotels. IHCL has made an unsolicited bid for the US luxury hotels group amounting to US$ 1.42 bn. As per IHCL, it is offering a 40% premium over the valuation of Orient Hotels. IHCL seems to have arranged for funding including debt for the said transaction from lenders like Bank of America, ICICI Bank and Standard Chartered Bank. It has also entered into an agreement with Italian group Charme II Fund, under which it would invest US$ 100 m for a minority stake in the newly combined group. We may recollect here that in 2007, IHCL had acquired a 10% stake in Orient Express for about US$ 211.3 m. As of now, IHCL has 99 hotels in 56 locations across India and 16 international hotels too.

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