TopNews

Indian market traded with good gains of almost 2%. Realty and capital goods attracted major buying followed by metals and Banking. Sensex closed at 18449, up 358 points from its previous close, and Nifty shut shop at 5526, up 94 points.

R&D cost to strain profitability Hero Honda (HH) posted another disappointing set of numbers with a profit de-growth for the third successive quarter. On a volume growth of 28.5%, revenues rose 35% to Rs51.6bn. Adjusted for exceptional and prior quarter expenses, margins nose-dived 560bps YoY (170bps QoQ) to 11.7%, a level last seen in FY07. Rise in input costs and an increase in other expenditure were the main culprits. Adjusting for a provision of Rs0.8bn, profits slumped 9% to Rs4.8bn as against our estimate of Rs5.8bn.

The Securities and Exchange Board of India (SEBI) forecasted that the mutual funds industry specifically assets under management (AUM) can simply achieve USD 1-trillion.

SEBI's Executive Director K N Vaidyanathan for capital markets regulator has said this could happen within the time span of next three to five years provided the asset management companies (AMCs) become customer-centric.

JSW Steel's standalone revenue at Rs58.1bn grew 26% YoY due to increased volume (up 12% YoY) and improved realisation (up 13% YoY) on better product mix and higher steel prices. However, adj. EBITDA at Rs10.1bn declined 2% YoY as operating cost/t rose 20% YoY on higher iron ore and coking coal cost. PAT at Rs3.8bn grew 18% YoY on lower interest and tax outgo.

Dabur’s Q3FY11 numbers were in line with our expectations. Net sales growth of 17% was driven by 10% volume growth, ~4%price & currency fluctuations and ~3% on acquisition of Hobi. Spike in RM prices led to gross margins declining 290bps. However, EBITDA margins were flat as SG&A and staff expenses were under control. Higher taxes have restricted the 16% EBITDA growth in 12% PAT growth. We retain our FY12 earnings estimates and maintain BUY with a TP of Rs110.

Strong growth in Foods