Power Ministry figures paint a power-surplus picture, but India is far from providing quality power to consumers willing to pay for it, according to panelists at the Power Line Summit 2016. Also, much needs to be done to unshackle state regulatory commissions from state politics so that tariffs can be rationalised. Panel discussions among utilities, policymakers, regulators and financiers furth
Q2FY17 is expected to witness tepid revenue momentum despite being the seasonally strongest quarter for the industry. Revenues at the top-5 large cap companies in our coverage universe are expected to grow by just 1.5% QoQ in Q2FY17 (~2.3% in CC terms) – which is the slowest Q2 growth in the past decade. However, unlike Q1FY17, investor expectations are also already reset downwards with c
* Global steel prices improved slightly in the month of September. Demand remained tepid. Also, China and India registered record high steel production in the month of September. Therefore, steel prices are expected to remain under pressure at its current level
* Hard coking coal price continued to rally upwards by 54% to US$
The listed larger SoEs and private steel players in China are among the most efficient players and have typically contributed more towards exports. Large part of the government initiative today is to tackle/close inefficient capacities in smaller inefficient SoEs and consider a viable restructuring plan in them, including acquisition by larger SoEs. We see that the balance sheet of larger and e
Treasury comes to the aid.
Earnings growth is likely to be in the negative zone at 15% yoy as banks make high provisions for bad loans. We see public banks reporting lower slippages qoq, but high provisions will continue, while Axis/ICICI Bank would have very weak quarters on slippages. Treasury gains would be strong mostly used to improve coverage. We
Two wheelers: Eicher and Yamaha indicate strength, incumbents awaited
* Royal Enfield (RE) sales continued to stay above the 50,000 mark, and have also been growing MoM for five straight months since May. RE volumes grew by 30% YoY to 55,842 units (H1FY17: up 34% YoY).
* India Yamaha Motors (Yamaha) volumes crossed the 100,000 mark and record
NIFTY FMCG Current Close: 21542.05 Trend : Negative
* NIFTY FMCG is one of the most underperforming sectoral indices last week, as it has closed down by 3.47% at 21542.05, as against a down move of 2.50% in benchmark NIFTY 50.
* The Sector has made an all time high @ 23219.30 few week
NIFTY MEDIA Current Close: 2969.80 Trend : Positive
* NIFTY MEDIA is the only POSITIVE sector amongst all the indices last week, as it has moved up by 1.32%, as against a down move of 2.50% in benchmark NIFTY 50.
* In the previous week, the Sector has made an All Time High at 3034.15 and al
Seven telecom companies namely Bharti Airtel, Vodafone, Idea Cellular, Reliance Jio, Aircel, Reliance Communications and Tata Teleservices are in the fracas for attaining 3G and 4G airwaves. It is going to be essential for retaining competitive edge in the market and offering next generation services in the world's 2nd largest telecom market.
The most important telecom operators B
* Domestic gas prices now one of the lowest in the world..:
The government has maintained status quo on the gas pricing formula, allowing price to fall 18% to US$ 2.50/mmbtu (GCV, ~US$ 2.8/mmbtu on NCV) for period from Oct’16 to Mar’17. Considering the formula is based on international gas prices for a period of Jul’15 to Jun’16
We expect another weak quarter of US$ growth for our IT universe in Q2FY17 as performance remains challenged across players. Large-caps are likely to report US$ revenue growth of only (0.5)-2.4% QoQ (organic), with INFO leading the pack and WPRO at the bottom end. Overall performance for large-caps under our coverage would be mixed as the sector grapples with lower growth and FX headwinds. Amon
Monsoons dampen demand; Lead to flat generation
* Generation remained flat at 0.1% YoY in August’2016, as demand across the agriculture sector was down due to improved YoY rainfall
* With moderate demand and flat generation, the overall industry PLF declined by 438 bps YoY to 42.
We are positive in tyre sector as the demand for passenger vehicles in the Indian market have gathered momentum on the backdrop of above average monsoons, significant improvements have been observed in the current market sentiment. A wide range of new and affordable models have triggered the onset good times in the Passenger Vehicle segment. Renault has been the pick of the lot as it declared t
* Accenture (Unrated) continues to beat guidance and consensus expectations as has been the case through the past few quarters. Company has reported a double digit revenue growth for 2 years in a row albeit the trajectory seems to be a tad moderating
* Accenture guides for a 5-8% local currency growth in FY17 but highlights that macro uncertainty would limit any case for outperformanc
Accenture’s (ACN) Q4FY16 revenues at US$ 8.5bn (+9% YoY LC) came in line, with the consulting segment leading growth. New bookings were up 4% YoY LC to US$ 9bn. However the first full-year revenue growth guidance for FY17 at 5-8% was a tad below expectations and a sentiment-negative for the sector given that ACN has had a solid FY16 with 10.5% LC growth. While ACN is having tough comps, i
As per RBI data, credit growth for the fortnight ended 16 Sep declined to 9.3% YoY while deposit growth remained stable at 9.9%. Investment growth increased marginally to 7.5% YoY, while SLR declined to 26.8%. Credit growth has been weak over the last few months due to low corporate demand and a lack of fresh investments. We do not see material improvement ahead and forecast 12% YoY growth for
* After encouraging start of the monsoon followed by favourable forecast by weather forecasting agencies (IMD and Skymet), current month has witnessed relatively poor rainfall leading to downward revision in cumulative monsoon forecast at 3% below LPA
* Slowdown in monsoon has adversely affected the sentiments among the farmers and dealers resulting into some moderation in demand. Inc
Our analysis indicates an improvement in most parameters for oil marketing companies (OMCs) over the last 4 years. While IOCL has lagged in terms of profitability, HPCL’s and BPCL’s profitability seems to have peaked out. We remain bullish on cyclical business, on robust fundamentals from rising consumption, higher complex GRMs and petrochemical cracks. We adjust estimates to factor
As the bull market in India heads into 7 straight months of gain, one sector which has stood out and outperformed is the Auto Sector. This sector has gained not only from cost benefits but also from topline growth in sales.
As the global economy is still recovering from a period of slow growth, commodity prices
Post underperforming the overall markets for the earlier part of the fiscal, Nifty Pharma has outperformed the overall markets in recent times. Nifty has risen 8% over the last three months whereas Nifty Pharma rose by 10.7%. The coming months would see news flows around plant inspections and probably resolutions of a few of pending issues. With a host of companies lined up to bid for certain a
Domestic Airlines have been stressed by intense pricing pressure during most of the 1HCY16. However, there are signs of reversal in the same with better than expected yields in Q2FY17 and better supply side dynamics. Our thesis of supply side growth lagging the traffic growth has played out well with domestic Available Seat Kilometer (ASK) growing by 20%/19% compared to significantly higher dom
* Indian gold demand declined by 18% yoy in Q1FY17, adversely impacted by higher gold prices, new regulatory measures to curb black money and challenging consumer sentiment. We believe that normal monsoons, uptick in consumer demand and higher number of wedding days in H2FY17 will be key drivers
* Organised retailers are likely to benefit from increased regulatory measures in the long
Both 2Ws and 4Ws grew at 15%+ YoY in Aug’16 led by a weak base and channel filling ahead of the festive season. Hero’s sub-110cc motorcycle volumes grew 26% YoY while Honda’s 36% growth led scooter segment sales. Among 4Ws, UVs grew 47% YoY helped by new launches. Maruti’s UV market share has caught up with Mahindra’s (25.6% vs. 26%), but it has conceded mini-car s
This sector started performing post Budget as:
* 100% FDI is allowed under the automatic route in the textile sector; investment is subject to all applicable regulations and laws.
* Government introduced the scheme for integrated Textile Parks, this will provide world class infrastructure to the sector. Till date 57 textile parks have been st
In an exercise to reassess our projections for the sector, we have cut our voice tariff by 20% in next two years, but maintain our data tariffs. We ascribe an aggressive RMS of 10.2% to Reliance Jio (RJIO) by FY20E (~50% of inc. industry RMS). We see a slower revenue growth of ~5% for Bharti/Idea during FY16-FY18E. We see tailwinds in Bharti’s cost, thus restricting EBITDA margin contract