Godrej Consumer extends fall on disappointing Q1 results

STOCK MARKET - Godrej Consumer Products (GCPL) dipped 7% to Rs 958, extending its Monday’s 2% fall on BSE, after the company reported 9% decline in consolidated net profit to Rs 225 crore, as advertising and other expenditure grew sharply during the June quarter (Q1FY18).

Consolidated net sales grew 3% to Rs 2,177 crore, against Rs 2,117 crore a year ago. India business sales growth of 6% year-on-year, led by flat volume growth.

Analysts on average had expected profit of Rs 264 crore on net sales of Rs 2,279 crore.

“While sales in April and May were strong, June sales growth dipped due to channel de-stocking in the run up to the implementation of the transformative Goods & Services Tax (GST),” said Ms. Nisaba Godrej, Executive Chairperson, GCPL.

“At 3%, sales growth was in line with expectations; however, competitive pressure in Indonesia, higher spends on new launches and one-off costs led to a 200bps decline in operating margins,” according to analysts at SBI Cap Securities.

Thus far in the calendar year 2017, the stock had strong run-up, before it decline in past three trading sessions, rallied 42% against 22% rise in the S&P BSE Sensex till July 27, 2017.

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Marico falls 6% from record high on disappointing Q1 results

STOCK MARKET - Marico has dipped 5% to Rs 317 in intra-day trade, falling 6% from its record high of Rs 336 touched in early morning trade on BSE, after reported 215 bps declined in EBITDA margin at 19.2% in June quarter (Q1FY18).

The personal products company posted 12% year-on-year (YoY) declined in net profit at Rs 232 crore, while operational revenue fell 4% YoY to Rs 1,692 crore, over the previous year quarter.

Analysts on an average had expected net profit of Rs 254 crore on revenues of Rs 1,743 crore.

“For the quarter Q1FY18, India business witnessed volume decline of 9% on the backdrop of destocking by trade in June due to Goods & Service Tax (GST) transition. The volume decline is attributable to steep pipeline correction across channels, especially wholesale and rural, leading to a decline in the stock turnover ratios (STRs) in trade,” Marico said in a press release.

The margins saw a decrease this quarter due to significant increase in the input costs but company chose to hold back the price increase in Parachute Rigids portfolio. In the near term, the input costs are likely to rise further. The Company will revisit the prices in the near term. The focus on a balanced approach towards volume growth and profitable margins will continue. In the medium term, the Company would be comfortable at around plus 20% EBITDA (earnings before interest, taxation, depreciation and amortisation) margins, it added.

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Maruti Suzuki, TVS Motor, Eicher Motors, Maharashtra Scooters hit new high

STOCK MARKET - Shares of automobiles companies are in top gear with the S&P BSE Auto and Nifty Auto index gaining more than 1% after Maruti Suzuki and Eicher Motors reported a good set of sales numbers in the month of July.

At 12:21 pm; the S&P BSE Auto index (up 347 points or 1.4%) and Nifty Auto index (up 140 points or 1.3%), the largest gainers among sectoral indices, were up by more than 1% each, trading at their record high levels. By comparison, S&P BSE Sensex and Nifty 50 index were up by marginally 0.06% and 0.14%, respectively.

Maruti Suzuki India, TVS Motor Company, Eicher Motors and Maharashtra Scooters have hit their respective record highs on the BSE.

Maruti Suzuki India was up 3% to Rs 7,920 on BSE intra-day trade, after the country’s largest car maker clocked a growth of 22% in sales to dealers last month.  The company sold 153,298 passenger vehicles in the domestic market last month against 125,764 units in July 2016.

Motilal Oswal Securities, the domestic brokerage firm, was expected 11% YoY growth in domestic dispatches.

Eicher Motors too up nearly 3% to Rs 30,820, after the company said that July sales of Royal Enfield zoomed 21% to 64,459 units compared with 53,378 Units in the year ago period.

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Nifty Bank's journey from 20K to 25K: YES Bank surges 100%, all PSUs in red

STOCK MARKET - Continuing the record breaking spree, Nifty Bank settled above 25,000-mark for the first time ever on Monday. In July itself, the index outperformed frontline indices by rallying over 8% as compared to a 5.8% rise in the Nifty50 index.

The index first hit the 20,000 mark on January 23, 2015 on a closing basis. It took the index 623 sessions or 30 months to cross the next 5000 points. In this 5000-point journey, private banks contributed the most to the index while all PSU banks were negative for the period.

While YES Bank, IndusInd Bank, HDFC Bank and FEderal Bank rose between 60%-107%, Bank of Baroda, Punjab National Bank and Canara Bank lost between 19%-25% in the period.

Among individual stocks, YES Bank was the top performer, surging over 100% since Jan 23, 2015. The bank recently reported a 32% rise in its net profit (y-o-y) to Rs 965 crore, helped by 44% growth in net interest income to Rs 1,809 crore. The lender’s board also approved a 5-for-1 stock split of equity shares. It gained nearly 25% for the month of July.

IndusInd Bank, which rose 91% for the period also reported stellar earnings for the quarter ending June 2017. The bank’s net profit rose 26% to Rs 836 crore as compared with Rs 661.38 crore in the year-ago quarter on healthy interest income as the bank bucked the industry norm to grow its advances book at a fast clip.

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Tech Mahindra gains 7% post Q1 results

STOCK MARKET - Tech Mahindra has rallied 7% to Rs 414 on BSE in early morning trade after the company reported a better-than-expected 6.5% growth in its consolidated net profit of Rs 799 crore in June quarter (Q1FY18). Revenues grew 6% to Rs 7,337 crore, beating Street estimates.

Analysts, on an average, had expected profit of Rs 612 crore on revenues of Rs 7,311 crore from the country's fifth largest IT services firm.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) margin improved 70 bps sequentially at 12.7%.
CEO and managing director CP Gurnani said despite all the headwinds in a seasonally weak quarter, the company's digital business grew ahead of expectations.

"Our performance during the quarter reaffirms the early success of our D.A.V.I.D strategy and the journey we have undertaken to become a leading Digital Transformation Company," Gurnani added.

“EBITDA margin expansion of 70bps QoQ versus expectations of 20bps expansion sprung a positive surprise. Further, improvement is on the anvil as the company improves the growth trajectory and pulls on levers like utilisation, pyramid rationalisation and G&A optimisation. Full quarter benefit of the head count rationalisation will accrue in 2QFY18. We reiterate our thesis of margin improvement being the key trigger for valuation re-rating,” analysts at Antique Stock Broking said in Q1FY18 result review.

Meanwhile, thus far in the calendar year 2017, the stock had unperformed the market by falling 21% as compared to 22% rise in the S&P BSE Sensex till Monday.

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