India’s largest petrochemical major Reliance Industries has surpassed street expectations on the gross refining margin and operational fronts while the profit was inline during January-March quarter, but it disappointed with its oil & gas business and other income.
Net profit in Q4FY14 grew 2.2 percent sequentially to Rs 5,631 crore during the quarter that was expected by analysts at Rs 5,655 crore. Revenue came in below forecast at Rs 97,807 crore, down 8.1 percent compared to previous quarter but up 12.9 percent over a year-ago period.
Net gross refining margin (GRM) jumped 22 percent to USD 9.3 a barrel from USD 7.6 a barrel in previous quarter. It was far better than analysts’ expectations of around USD 8.6 a barrel. “FY2013-14 was a satisfying year for RIL.
Refining business delivered the highest ever profits with a sharp recovery in GRMs towards the end of the year,” says Mukesh Dhirubhai Ambani, chairman and managing director. “Petrochemical earnings grew sharply with margin expansion across polymers and downstream polyester products.
While we continue to face technical challenges in growing domestic upstream production, the US shale gas business grew significantly during the year and has become a material contributor to our earnings,” he adds.
For the year ended March 2014, consolidated net profit grew 7.7 percent to Rs 22,493 crore on revenue of Rs 4,46,339 crore (up 9.3 percent over previous year).
It’s been a shortened week dominated by a recovery in US stocks that was more dramatic than their recent declines.
The US banks kicked off first-quarter earnings this week, and it will be a key theme next week too. Here’s a round up of what else to watch for.
US first-quarter earnings
Apple, Facebook, General Motors, Boeing and Procter & Gamble are just a handful of the companies lifting the lid on their first-quarter performances. So far, 84 of the companies on the S&P 500 have reported results.
The agreement to diffuse tensions in Ukraine that was reached on Thursday in Geneva will ensure focus remains on the region. The interest will be whether the steps that Ukraine, the EU, Russia and the US agreed upon to ease the situation will be followed through.
Bank of England minutes
Minutes of the latest meeting of the Bank’s Monetary Policy Committee are released on Wednesday. They will be carefully read for whether policymakers are warming to the prospect of an increase in interest rates.
Chinese manufacturing data
With growth in Chinese GDP slowing in the first quarter, data from the world’s second-largest economy will warrant careful scrutiny. The main report is a manufacturing index for April that is released on Tuesday.
The 10-year benchmark bond yield fell 4 basis points to 8.93 percent from 8.97 percent before the auction results after the better-than-expected cutoffs.
The yield was down 3 bps on the day. The RBI set the cut-off price for 8.35 percent 2022 bonds at Rs 95.45, yielding 9.1584 percent, while the cut-off price for 8.24 percent 2027 bonds were set at Rs 92.05, yielding 9.3122 percent.
The cut-off for 9.20 percent 2030 bonds were set at Rs 99.50, yielding 9.2585 percent, while 9.23 percent 2043 bonds were set at Rs 99.27, yielding 9.3004 percent.
The word conglomerate might as well have been invented to describe General Electric. It makes everything from x-ray machines to wind turbines.
However, that wasn’t enough to prevent America’s best-known conglomerate reporting that first-quarter profits fell $2.99bn, or 30 cents a share, from $3.52bn, or 35 cents a share, in the first three months last year. Revenues slipped 2 per cent to $34.2bn.
With discontinued operations stripped out, GE said it earned 33 cents a share, topping Wall Street’s estimates of 32 cents.
Chief executive Jeff Immelt, who has had the top job for more than a decade, is trying to return GE to its manufacturing roots after its lending and consumer finance business scarred the company during the financial crisis. The North American consumer finance business is, for example, being spun off this year.
GE, which divides its sprawling industrial business into seven divisions, including aviation and healthcare, said that its order backlog reached a record $245bn.
Diageo has made an open offer to all public shareholders of United Spirits (USL) to acquire an additional 26 percent stake in the company, which will increase Diageo’s holding in USL to 54.78 percent.
The open offer has been priced at Rs 3030 per share, which is a 22.5 percent premium to the price at which Diageo last acquired USL shares on January 31, 2014. With Diageo displaying an increased level of confidence in United Spirits, growth prospects of Indian liquor business can be looked into. Abhijeet Kundu, FMCG Analyst, Antique Broking and K Laxmi Narasimhan, Deputy MD, Tilaknagar Industries , give us an overview.
Kundu feels that individual investors should tender to USL open offer as it provides an attractive exit price. With all positives already factored into USL stock, Antique Broking sees a likely re-rating for most liquor companies. Narasimhan of Tilaknagar Industries, which mainly focuses on brandy and rum, said the Indian liquor industry for long has been under-rated, adding the country’s branded liquor business stands around Rs 1.2 lakh crore.
Market leader of brandy in South India, the company’s branded liquor sale is over Rs 6,000 crore. Tilaknagar Industries, which has been maintaining a compounded annual growth rate (CAGR) of around 25 percent for the last four years, sees the alcohol industry growing at 8 percent pace.
Standard and Poor’s may upgrade India’s outlook if the government that is elected next month addresses some of the country’s fiscal and economic challenges through steps such as passing a goods and services tax.
“If in the future they implement policies that effectively addresses some of the credit weaknesses that I have highlighted, we could revise the outlook to stable again,” said S&P senior director Kim Eng Tan in a webcast.
“In the absence of effective policy action, we could lower the ratings on the sovereign,” he added. S&P rates India at “BBB-minus” and is the only of the three major credit agencies to have a “negative” outlook.
Google Inc’s Internet business revenue grew 19 percent in the first quarter, falling short of Wall Street targets as the price of its online ads continued to decline. Shares of Google were down 5.7 percent at USD 525 in after-hours trading on Wednesday.
The number of “paid clicks” by consumers on Google’s ads increased by 26 percent year-on-year in the first quarter, while the average “cost per click” declined 9 percent. Google’s core Internet business revenue was USD 15.42 billion in the first quarter, versus USD 12.95 billion in the year-ago period.
Google posted USD 3.45 billion in net income, or USD 5.04 per share, in the three months ended March 31, compared to USD 3.35 billion, or USD 4.97 per share, in the year-ago period. Excluding certain items, Google said it earned USD 6.27 per share.
Google reported a USD 198 million net loss from “discontinued operations,” which includes the Motorola smartphone business. Google announced plans in January to sell the money-losing business to China’s Lenovo Group for USD 2.91 billion.
Reliance Communications Ltd , India’s fourth-biggest mobile phone carrier, will hike voice prices starting April 25, the company said in a statement, to counter an increase in input costs and higher spectrum payments.
Reliance will increase tariffs on discounted and promotional plans for its pre-paid customers by up to 20 percent and raise headline call tariffs to 1.6 paise every second from 1.5 paise, it said in a statement on Tuesday.
Reliance and its main rivals, including Bharti Airtel Ltd , India’s top phone carrier, and the local unit of Vodafone Group Plc , last year raised voice prices for the first time in three years as they continued to cut discounts previously offered to lure customers in a highly-competitive market. Carriers have seen the benefits of reduced competition after several smaller rivals were forced by a court order to either shut down or scale back operations. “We continue to focus on growing profitable/paid minutes on our network and the current tariff hikes are part of our continued efforts to reduce free and discounted minutes, and offset the ever-rising costs of input materials,” the company’s chief executive officer, Gurdeep Singh, said in the statement. Indian carriers receive more than 80 percent of their revenue from voice call services.
India’s number one software services exporter Tata Consultancy Services (TCS) fourth quarter earnings was a mixed bag, with net profit exceeding analyst estimates, and revenues falling short.
The company’s dollar revenues grew 1.9 percent to USD 3.503 billion. The estimate was USD 3.315 billion. The company said the performance was driven by strong growth in Europe, particularly UK, and the Asia Pacific region.
Earnings before interest and tax slipped 0.3 percent Q-o-Q to Rs 6,314 crore and margin declined 45 basis points to 29.3 percent in the quarter gone by. “Our strategic investments including those in Digital Technologies are providing a compelling value proposition as well as helping us anticipate and shape new market trends successfully,” N Chandrasekaran, CEO and MD said in the earnings release. “We are upbeat that the next 12 months will bring many more opportunities for growth across multiple industries and markets,” he said.
The company said it signed 9 large deals across verticals during the March quarter, saw a 2.6 percent growth in volumes, and managed to keep employee attrition rate to 11.3 percent. In all, it added 9,751 employees during the quarter.
The company said its retention rate of employees was among the highest in the industry. The company hired 61,200 employees in FY14 and is looking to add another 55,000 employees this year. In a press briefing to discuss the earnings, Chandrasekaran reiterated his view that FY15 would be a better year for the company, than FY14. He also expects the company’s domestic business to perform better this year, after a soft patch in FY14.
Britain’s headline unemployment rate fell to 6.9 per cent for the three months ended in February, below the 7 per cent “threshold” rate the Bank of England had previously flagged as a trigger for a possible hike in interest rates.
The dip was bigger than analysts’ polled by Reuters expected, and down from 7.2 per cent in the quarter through January.
Wage growth is also picking up, with the 1.7 per cent increase in average weekly earnings, including bonuses, matching February’s official rate of inflation
Sterling traded higher, reaching an intra-day high of $1.6815 immediately after the data were published, up from $1.6772 immediately beforehand.