Indices sail along choppy waters

Wed, 10 Nov 01:30 pm

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The Indian indices continued a choppy trading session during the past two hours of trade. Stocks from the auto and consumer durables space retained their gains while stocks from the capital goods and FMCG are trading weak.

The BSE-Sensex is down by 45(0.2%) points while the NSE-Nifty is down 20(0.3%) points. BSE-Midcap and Smallcap indices are up by 0.6% and 1.1% respectively. The rupee is trading at 44.35 to the US dollar.

Auto stocks are currently trading firm led by Tata Motors, Escorts, M&M and TVS Motor. Gains in the stock of Tata Motors is on the back of the company reporting a better than expected numbers for the quarter ended September 2010. During the quarter, the company's consolidated revenues increased by 37%, led by a good growth in both its businesses - standalone as well as Jaguar Land Rover (JLR). While revenues of Tata's auto division (and other brands; including spares and financing) increased by 36% YoY, JLR's revenues rise by 43% YoY during the quarter. At the operating level, the company's profits were up by 166% YoY as margins expanded by 6.8% YoY to 13.9%. This was possible due to lower input, employee as well as other expenses. The improvement in margins was largely led by better performance of JLR. During the quarter, Tata Motors' consolidated profits surged by over 100 fold. During 1HFY11, revenues were higher by 49% YoY, while the net profit came in at Rs 42 bn as compared to a loss of Rs 3 bn during the corresponding period last year.

Bharti Airtel has announced its 2QFY11 results. On a consolidated basis, the company has reported a 47% YoY growth in sales and a 27% YoY decline in net profits during the quarter ended September'10. The growth in revenues was achieved by a 24% YoY growth in the passive infrastructure services segment. The mobile service segment, excluding African operations, grew by 6% YoY during the quarter. The growth was led by an expansion of the customer base. However it was offset by the 20% YoY decline in average revenue per user (ARPU). The telemedia services segment reported a growth of 7% YoY during the quarter. The enterprise segment on the other hand witnessed a decline of 8% YoY during the quarter due to lower average revenue per minute as the long distance segment witnessed aggressive price competition with operators slashing tariffs.

Bharti's operating margins stood at 33.7% during 2QFY11. This decline was due to higher access charges, higher employee costs as well as higher selling and administration related expenses (as percentage of sales). Operating margins were also impacted by the consolidation of the African operations. Furthermore, higher interest costs related to the African acquisition as well as 3G and BWA spectrum acquisition has led to a decline of 27% YoY in the net income