Realty stocks drag markets

Fri, 12 Nov 11:30 am

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Indian indices continue to languish in the red on profit booking in heavy weights over the last two hours of trade. Stocks from the realty and consumer durable space are trading weak while stocks from the power and pharma space are trading firm.

The BSE-Sensex is down by 127 points while NSE-Nifty is trading 48 points below the dotted line. BSE-Midcap is down by 0.4% while BSE-Smallcap index is trading flat. The rupee is trading at 44.60 to the US dollar.

FMCG stocks are trading weak led by Godrej Consumer and Colgate. As per a leading financial daily, Dabur has identified healthcare as a new focus area for the company. This is as per a vision plan for 2010 to 2014 in which the company wants to double its turnover and profits to achieve a top line of Rs 70 bn and a bottom line of Rs 10 bn by the end of the period. As per the CEO of Dabur, the company aims to be the market leader in the consumer healthcare space. It may be noted that healthcare accounts for more than Rs 10 bn of the company's sales, nearly 30% of the company's top line. This is with a product portfolio of just about 80-odd SKUs, about 10% of Dabur's total SKUs. The company has invested about 3% of the turnover into R&D and consumer research each year and over the last couple of years. This has enabled the company to launch approximately 30 products, including variants, every year in the healthcare space. The company has also been taking several new marketing initiatives and investing in brand building to achieve its goal.

Real estate stocks are trading mixed with Atlanta Ltd and DLF leading the pack of losers. However, Parsvnath Developers is trading strong. Anant Raj Industries has announced its 2QFY11 results. Topline increased 49% YoY during 2QFY11 led by an increase in residential sales bookings coupled with a robust increase in rental income. However, the company's other business of ceramic tiles recorded a fall in sales of 73% YoY during the quarter. Its contribution to the overall business continues to remains minimal. Operating margins fell from 89.5% to 47.2% during the quarter as the company has gradually shifted its product mix. Initially the company's focus was on generating rental income through leasing. However, over time it has also ventured into outright sales of residential properties. In line with operating profits, net profits declined 33% YoY during the quarter owing to increase in interest expenses partially offset by decline in depreciation expenses.