India’s own Marketing Wars may not reach the IPL in this case as botht he Hindu and the barter driven Times of India could stay away from expensive IPL truf wars even as they open a slugfest for each others readers in Chennai

stay ahead of the Times stirkes a chord as today’s Times generation stays snug in malls and theaters without a clue, eh?

Wake up to The Times of India

Stay ahead of the Times

Starbucks went ahead with its earlier planned 50:50 JV vehicle with Tata Global Beverages to open the chain in India. The first store come sup in August 2012. The global coffee chain is apparently not confident about replicating its 1000 store China success in India without a local Partner. Tata Global has knowledge from running an earlier upmaret coffee chain with Baristas it sold back to/as Lavazza later.

With the 50:50 JV option the investment of INR $4.83 bln or $100mln bypasses the local sourcing clauses which led Ikea to change plans about entering the lucrative India market earlier this month. Luxury retail with LVMHa and global automakers like Audi BMW apart from Volkswagen and Ford continue to pursue their India investment interests having grown a definitive share of market in Luxury and small car ranges.

Cafe Coffee Day would be eager for the competition as also Dominos franchise owner Jubilanft Foods which is rolling out the Dunkin’ Donuts franchise stores this year as well. McDonalds and Yum Foods/ Pizza Hut&KFC continue to strike daily success even as Dominos increases per store per person spend to INR 500 in 2011 or $25 in Mac PPP terms. Both Yum foods (from Pepsi) and Dominos roll into smaller towns in 2012 to keep growth growing at above 50% rates in a market where 30% annual revenue and profit growth is considered outstanding / mark of a successful business model

Even though Ramesh Sobti’s Indusind bank may be a bit early with its new market positioning on the Direct connect platform, its ad campaign “Kabaddi ki kya zaroorat hai” is likely to impress a few prospective customers and even industry thought leaders with a direct call to your Relationship Banker replacing all the mobile, internet and telecalling customer service modes that are so flailing around in terms of delivering any value to the banks’ service blueprints.

Even though Ramesh Sobti’s Indusind bank may be a bit early with its new market positioning on the Direct connect platform, its ad campaign “Kabaddi ki kya zaroorat hai” is likely to impress a few prospective customers and even industry thought leaders with a direct call to your Relationship Banker replacing all the mobile, internet and telecalling customer service modes that are so flailing around in terms of delivering any value to the banks’ service blueprints.

The two foreign brokerages working on the mandate to sell Temasek’s 3.5% or $600 mln stake for INR 30 bln, have to find buyers acceptable to ICICI Banka nd meeting Temasek’s terms for the sale. Otherwise Temasek could have used block/bulk deals on the exchange itself to transfer the stake by now to multiple buyers or apparently Temasek is not in a hurry to sell for India’s second  line of investments have drawn up a virtual blank for the Sovereign fund esp int he banking sector as new banks are far away. 

Is it just a coincidence that Sanctions continue to score at Rs 440 bln and disbursements at less than INR 180 bln for REC LTD for instance? I think the gap is ever widening andf th e orderbook for infracos has lost relevance, again the peculiar India context making it a matter of corporate governance

Transmission assets count to 45% of the Sanctions a very high number and only one or two activated yet, that pace shld pick up soon though as it is unaffected by the current infra slowdowwn in generation thru land acquisition and coal supply delays?

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REC’s revenues grew to INR 27 bln or $520mln in the current Q3 again building a 25% topline growth in rupee terms as a rupee lender, it will not face much losses from ECb/FCCB having finely priced QIPs as it reported a INR7.7 bln for the quarter or $ 154 mln

REC grew advances to INR 813 bln or $16.3 bln with Tier I&II Capital of INR 148 bln or $2.8 bln approx

3 month PAT is just $400 mln

Its NIMs are low but consistent at 3% and it has not been plagued by its SEB portfolio’s NPAs. REC would have been hedging its loans with SEBs as lease backs or to first lien but the rest is for a full day to the company later. My last quarter’s review should have been useful as well as last year’s NTPC/other PSE dealmaking coverage

PFC however is likely to be watched for NPAs and PTC facing other implementation troubles with its Hydro elec projects

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A lot more of the pizzazz has come back into Indian expert speak as commentators build on the value multiples in the Capital Marrkets. Now that the indices have journeyed into skyscraper Monday – Wednesday, one would wonder why investors bother with an India portfolio at all, as very few got in at 4700 and very few will now get out at 5100 , that the indices if ever will come down for further buying below 4700.

India’s premium also means it identifies the data series for inflation as too much scattered data on primary inflation and fuel inflation thus we now have to work with CCEA’s monthly week1 release of WPI alone.  

Luckily, the banks and infrastructure companies are back even if you count out the redundancies of 1200 at HSBC, 100 at Citi and a few at BNP. Trade Finance should be good for those considering hiring in their banks. Esp as Trade and Finance growth CAGR is likely too remain in the 20s despite the statistics and the infrastructure pad ups. 

StanC is hiring, Singapore and Dubai could probably open up to Indian hiring soon and the US gets rid of outsourcing bug we might even look at global companies getting more H1Bs for welcome immigration in other professions esp in Financial Services and other Travel/Transportation, Education and Healthcare, where we can compete with other diaspora from China and Mexico / LatAm as well for what is due to immigrants that make America’s 47% science jobs and 24% of all jobs. 

The Bank Nifty is pulling out though, If you bought a few puts before Tuesday you would be good for a few millions in the bank too.  And youmay need to book your trades more frequently as it is giving you an opportunity to do that because it mulls new upmoves midway , like probably tomorrow Puts could lose value when Bank Nifty spikes again, before the big move down. 

Post Modern India or whatever else you might want to name it, India has new institutions that you cannot forego now foreverwhatever be the origin of the food/ car/ industry/ and non profit effort.

1. Big cars with or without CSE’s new 160k duty to penalise their driving on India’s new roads, will eventually catch up in value sales with the small cars, esp in rural india with no tenacity in the urban mouse based alto and santro(i10) or Beat. Also, the SUV has to succeed before the hybrid

2. Half a dozen efforts on the UIDAI will not do. And I mean the six different agencies that ar epublishing biometric ids rather than agree to the NIDAI bill. Similar infighting over the DTC, GST s only likely to make the next governance layer antd the next set of reforms much more harder and the government much further from current “nearer ground” / open practices

3. India needs the welfare economy, and welfare institutions that guarantee employment or social favor will haev to perform wth the pizza huts in the cities

4. India’s urban cuisine will continue to certify more global fast food decor and franchise from McDonalds and Au bon pain to KFC, Pizza hut and even the Cafe Coffee Day despite questionable finance, redoubtable governance and lack of foresight and vision, but based on strict process adherence and global franchise maps which s also a key difference why we are not China or McDonalds’ that big market at the beginning. That also means entertainment spends on Malls, food courts and Multiplexes are the fastest growing and probably the largest salary expense head in a few years if we play a good urban housing infrastructure card

5. Indian Sports will continue to struggle without Infrastructure,. The recent influx of money could only create another Cricket institution in IPL and the other sports will continue to find bigger, better sponsors but not endearing institutions. The 2012 London Olympics unfortunately have other important issues forcing India’s hand

6. India’s Banking will reach the rural billions but not only thru technology and payment platforms. Thus the blueprint for Rural services led by banking nad finance has to include more push factors encouraged by planning blueprnts. Why don’t ewe try a $3 bln contribution from the governemnt to a $100 bln global bank that will set up these service centers throughout , esp to make NMZ instruments and projects such ads the DMIC a reality and ntot just policy notes without FDI interest

India’s 63rd Republic Day with a mega parade in New Delhi is on. Here’s wishing another year of a Great Indian Republic in all its majesty

As usual, in the defensive batch of the last line of Indian markets, the company / midcap disappointed the markets bang in the middle of the bull run to underline its Capital market go to strategy! Her protestations of 28% growth in research services notwithstanding the market too it in disfavor like Axis and continued on even as Airtel and Hindustan Unilever, ITC wait for the bulls to subside.

Biocon’s nine-month revenues driven by growth in Branded Formulations, Emerging Markets and Research Services

Revenues at Rs 1,511 Crores; EBITDA at Rs 425 Crores; PAT at Rs 241 Crores

That’s $300 mln in Topline, $85 mln EBITDA and $48mln in Profits 

We are not clear if periodic data is available on variability of Licensing Income which flatlined the earnings engine accordng to the management speak again

New research in Psriasis antibody research and INSUpen launch again does not reflect in material positive sales forecasts yet but the company’s branded formulations grew 40% on the year in December Optimer is introducing a new CDI/CDAD drug in Europe on new licenses in Dec 2011 thru Asteller Pharma

Profit growth without licensing income at 30% should have been great for the comppany’s prospects but it remains vary of the Capital Markets

The company subscribes to the 22% CAGR view on Indian Pharma in branded drugs to $55 bln by 2020

Apart from its new leadership efforts in Diabetology, it is already the new #3 in immunology and it is backing its Atorvastatin drug in Cardio (grown at 55%) Oncology is the second most strongest suit of the company aith BIOMAb and Ataraxene acceptance

 In comprehensive care and Nephrology, the company seems to be in the specialised drugs segment with niche brands at best

Yes Bank was one of the few to outpace the Rupee without export earnings this quarter, with Banks generally choosing a 20% mark as high growth in the quarter. Yes Bank grew NII to an even $75 mln or INR 42.72 bln, a small request for favors to analysst believing inthe Indiabull story and even the midcap story some might say in this run. Though the growth was inked decades ago by the DNA the bank chose when it was founded out of Rabo Finance, its profitability is no flash in the pan as it has chosen at times in its clients, and at a few times in its expansion like the KPO plans it had to scale back. Non Interest Income is almost one third of the bank’s total income at INR 21 bln

The Total Income grew to INR 64 bln even as the low CASA base grew witht he aid of unregulated interest rates at 100% growth in Savings (99.2%) Nine month profit is a consolidated INR 7.05 bln and the profit INR 2.55 bln for the quarter. CASA added 1.6% to the last quarter’s ratio

Gross and Net NPAs remain negligible at 0.2% and 0.04% HDFC BAnk is also outside the NPA storm keeping Axis Bank and ICICI Bank hostage to the PSE banks systemidsation driven spike in visible and systemic NPA books

Yes Bank Tier I common is however barely adequate at 9.2% showing management expectations are not too rosy on the increase in credit despite the increase in Advances to INR 359 bln ahead of ING and Indusind with high CASA ratios. YES CASA stands at12.6% The CASA block is $1.2 bln now from $1 bln on last years dolla r fX benchmark (INR 40 at this blog)

Thus ROE is a high 23%. Yes chooses the QIP route to grow Tier I & II Capital which is together 16%+. EPS remains above 7 Loan loss cover 375% and Prov cover of 80% (PCR is now back to 56% reqt at RBI)

Stride sold its Australasian units for a 20X REBITDA with the cash to be used for repaying non-redeeming FCCBs in June 2012 of $250 mln. Topline impact was played down by the management. Americas business in injectibles is profitable and globally injectibles is the focus. The company reports a Jan to December calendar. The total sales on the Indo china/Aussie business were $150 mln and the sale at $300 mln

(ETNow caught the managment speak on the sale)

Jet’s Q3 losses came at a low INR 1 bln as it saved up from asset sales of INR 1.7 bln and kep itself in operating profits. The jet order for 17 boeings will also help india’s Capital goods indices this month

Jet Airways ordered 737-400s and 500s for its fleet, probably exchanging out older Jet lite planes though it was its fourth straight loss since September /December 2010 conditions worsened in fuel cost overheads, wiping out gains from Jet Konect saving plans and this being their first of many sale and lease backs adopted by the Industry at Indigo and Jet Airways

On sales of INR 3437 Crs in December 2010, the airline flew 13% higher year on year and expects to keep growing sales if hikes are passed by AAAI and if no further costs imposed by DGCA action, the airline will keep posting cash profits

According to mint, CAPA revealed a loss of $30 per passenger in domestic flights in India. Kingfisher and Spicejet may not be able to hold their bottomlines to a sane number as they allow losses to reflect their financial uncertainty, demanding policy action/handouts

Godrej Properties purchase of INR 1.06 bln from the BKC premises and FX gains of INR 1.76 bln also stopped out losses but the airline bucked expectations of INR 3.5 bln in losses

• Sale and Lease back allows it to keep Debt constant and it cana lso start paying the INR 14 0 bln debt from the SLB proceeds. The 17 aircraft are on options thus guaranteed at a good price.

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Banks might pull back on the liquidity window, Apparently RBI was not worried on the missuse of the additional liquidity  in the constrained liquidity conditions. India’s CRR is now less than 6% at 5.5% and is likely to stay at the lower rates

FY12 GDP forecast cut to 7%. Inflation target of 7% likely to be met but fuel and imported inflation remains high

NDTL Values are nearer $1.2 Tln or INR 64 lakh crores, releasng 32,000 crores

RBI ofcourse still talks abt Manufactured pdts inflatn as area of concern

PMEAC may have bridged MOF expectations to RBI despite a clear mandate to RBI on the subject. We have advocated CRR/SLR cuts to lower levels and many banks have even asked for abolition of CRR to a  lower global Reserve requirements ratio of less than 20% against the now 29.5% incl 24% SLR which has however been denied by the PMEAC , MOF and RBI and banks themselves keep more than the required in Central Baank securities over and aboe the 30%. As and when these securities are actually released, much more can be fed into liquidity which the Centrsal Bank attempts thru NIBD status for these securities with it.

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SEBI Action

To contain IPO manipulations

Auction process to put merchant bankers on high alert at boutique banks

The Action

First Trading session to start with 45 min pre open for price discovery. The closing price from this session would be the opening price for regular trading in the morning session

Smaller IPOs i.e. all <250 Crs (or INR 2.5 bln), will on listing, trade in the Trade to Trade segment

Large IPOs with size > 250 Crs ( INR 2.5 bln) will trade within upper and lower limits of +/- 20% thru the circuit breaker deployed for 100 scrips 

Image by Colin ZHU via Flickr

Smaller IPOs i.e. <250 Crs (INR 2.5 bln) will trade within upper and lower limits of +/- 5% thru the circuit breaker for 10 days

According to new rules this week, SEBI has limited listed IPOs to the Trade to Trade segment which will allow orders against delivery only, not allowing trading of scrips and limiting the IPO market , FIs probably in agreement with SEBI ina  fee less market dominated bby vanishing fly by night operators in its last stages throughout H2 2010 and all of 2011

Thence the pre open session for price discovery(further..we speculate..) has lesser meaning but yet it encourages more effective price discovery in the new market which can later consider IPOs hopefully for regular trading instead of T2T segment to be reserved for indiscriminate promoters with a bland due diligence from vanishing trading houses

All seven promoters’ issues hotlisted with merchant bankers last month had issue sizes of <250 Crs and were prenalised variously for the act of price manipulation.

In other discussions, SEBI is still considering Merchant Bankers’ certifying end use of IPO  funds on a regular basis ( monitoring)

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Policy today is likely to disappoint market pressures on the central bank in just an hour while the mood could have been upbeat otherwise, it is now driven by policy expectations and a sharp ‘inhuman ‘ touch on unchanged policy pronouncements can catch market business operators bys urprise.

Policy is likely unchanged even for CRR and even though Sajid Chinoy and Tushar Poddar from GS have been very clearin the coming forecast, the lack of forebearance and the incapabilities of global brands to withstand pressures and lack of trust in institutions at this time added with an avoidance of private bank economists like ICICI Bank and HDFC Bank, markets would negatively dip as FII interest in Indian markets is lower by 13% in 2012 till date over 2010 data and though the buying is on, 5050 is too high a level for serious buyers at this time

Policy likely without changes in interest rates, CRR and Liquidity regime though overextended (thru SLR collateral in MSF, blah..blah)

Image via Wikipedia

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Going forward Fitch reports on better days in light of the growth returning to the economy and seets position would not worsen for the larger banks esp not in agricultural sector but others where stressed assets have already fructified.

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Image via CrunchBase

After Amazon opened in Spain last year and a rumor of Lipkart getting into the supply business for Amazon hit the circuits last, the talk of their first local fulfilment center show that while the talk of interested shoppers with Amazon was a fact unsubstantiated by country sales break down, the wishes for a local Amazon store may no longer be lost in getting their IT software to recruit here in as It happened one night in 2006

This warehouse is a critical piec eof the Amazon logistics chain promising delivery from US to far flung international destinations in as less as a week and probably includes ready shipping plans that can be tied

into Amazon Prime sooner than later. If it really turns into an independent India based website with Indian product ranges and a couple of expat managers, it could be that much bigger for Amazon and a bite back for Apple which has horrendously latched on to super premium pricing for its hot iPad and iPhone lines in the country

Image by Tom Harwood via Flickr

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Bond yields have cut to less than 8.2% on the 2021 and 2022 10 year bonds and less than 8.5% on the 2032 20 year bond while markets are in a tizzy running commentary on RBI cutting rates ahead of the policy announcement tomorrow. However the bond markets per se have a lot of mature buyers who are pretty confident of no cut in rates and an early start will take yields down much faster from here tomorrow in pure volatility speak if the Guv’nor does change gears on his stated policy early. However our outlook with rating agencies being stable we have definitely grown into a bigger more liquid bond market esp with good returns for gilt investors in the last quarter.

Yields should firm up at slightly higher after the policy announcement tomorrow either immediately or int he next one month before the March announcements of rate cuts hit the wires.

RBI has also repeatedly clarified that no CRR cuts are likely and it has allowed the use of the MSF with SLR collateral , the same may be reitereated tomorrow

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The used car market in India has matured in the last two decades with ready company owned used car operations  from Hyundai, local franschised multi store (warehouse) operators like Classic Cars and even multi brand all purpose car repair chains from Carnation.

Image via Wikipedia

The current story in the papers of course is the DNA money story on Diesel car demand landing an unusual bonanza for petrol models, as used car sellers are almost holding mass clearance sales int heir own way for their inventories of petrol models. Diesel models have hostorically enjoyed premiums to ensure basic availability and noww with Diesel car demand growing that premium has shot up enough for that neighbourhood ‘s tore’ to give away petrol cars for cmore losses esp where he owns the inventory. Individual sellers will have to hold on to their crs longer to get the price they want for their favourite ride.

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Sanjay Kapoor’s move from food forays to luxury chain Genesis has worked well from him. After the failed multi brand FDI proposal,  LVMH brands operate under a single brand luxury store model in India while Genesis operates Canali, Just Cavalli, Paul Smith and Jimmy Choo stores. The current round of funding had competition from Reliance and Parcos.

Genesis is already sitting on funding from new to the field L Capital which owns 25.5% of Sanjay Kapoor’s luxury lifestyle investment. L Capital is also a LVMH venture in luxury PE with Arnault of France The new investment will be routed thru Sephora another Moet Hennessey Louis Vuitton subsidiary

Genesis Luxury Fashions will operate the new Sephora stores operating cosmetics under a multi brand portfolio of skin care, fashion, bath care, perfumes and hair care Groupe Arnault is LVMH owner Bernie Arnaulte’s personal vehicle for funding and control over global luxury investments

Image via Wikipedia

Genesis brands Paul Smith and Jimmy Choo are still likely targets for Bernie Arnault for investments. It licenses Just Cavalli lines globally. Jimmy Choo PE Towerbrook put it up for sale thru Goldman Sachs and Morgan Stanley in early 2011

Sephora’s multi brand selll model is duplicated by another Bernia Arnault operation in DFS which is bdding for a new airport project mall in India India’s Luxury market was estimated at $280 mln and growing at 22% by AT Kearney in 2010

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Baytree’s investment into Godrej consumer underlines the long pending second line of investments to be made by the Asian SWF in India and other growing economies of the region.

Godrej is issuing 10% equity or 16.7 mln shares in a preferential allotment to the Baytree arm of Temasek at a good $8.2 price or less than $6.30 if you consider Indian rupeee’s expected levels of INR 65 to the Dollar $$) The equity makes Temasek a 4.9% investor in GCPL, Godrej Consumer. The new Rupee 1.00 par value shares will help the company fund and stablise their acquisitions in hair dye maker Cosmetica in Chile and last year’s acquisition of African hair care firm Darling.

Cosmetica for example cost GCPL a hefty INR 10.8 bln for its $36 mln turnover but will add INR 2 bln in profits

Image via Wikipedia

every year after the acquisition is completed. African Darling is thru one phase of marger integration as per Adi Godrej and likely to complete integration by 2013. GCPL grew revenues at 36% from December 2010 profit growing faster to INR 1.67 bln for the entire company growin g12% volumes in the Indian business

Adi Godrej’s interview in today’s DNA is available here

The company has acquired domestic brands like Genteel and Swastik, haiir color Rapidol and accesories Kiny in South Africa as well as Tura in Nigeria and an insecticide company, Megasari in Indonesia

Image via Wikipedia

The company has made a comeback with its pure soaps in India, growing volumes in soaps at 18% in the latest quarter and Magasari’s innovation will likely be introduced to compete with Good Knight in India. Godrej also likes to talk about its 1-2% R&SD spend and may want to grow the advertising on its brands in line its new mores , probably for its proefessional hair brands in which it has increased spends and M&A purchases.

While Malaysian Khazanah has just changed its charter from a Energy rich SWF to a diversified fund and may be more interested in smaller/monopoly plays in smaller Indo China economies, Temasek continues to farm the big money in China, Singapore and India.

Korea will probably make its own surplus SWF investments but still needs some inward interest from other SWF funds while india’s Top 20 in the Private Sector have been a matter of considerable Interest for Temasek since 1999.

The use of so many subsidiary vehicles for Temasek however incl Cedar , Baytree and directly as well as the bigger sibling in GIC is likely to make governance complex however for the coming generations of investment from Temasek as well.

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Baytree’s investment into Godrej consumer underlines the long pending second line of investments to be made by the Asian SWF in India and other growing economies of the region.

While Malaysian Khazanah has just changed its charter from a Energy rich SWF to a diversified fund and may be more interested in smaller/monopoly plays in smaller Indo China economies, Temasek continues to farm the big money in China, Singapore and India.

Korea will probably make its own surplus SWF investments but still needs some inward interest from other SWF funds while india’s Top 20 in the Private Sector have been a matter of considerable Interest for Temasek since 1999.

Image via Wikipedia

The use of so many subsidiary vehicles for Temasek however incl Cedar , Baytree and directly as well as the bigger sibling in GIC is likely to make governance complex however for the coming generations of investment from Temasek as well.

As more non staple entertainment products like Hollywood blockbusters have noted india’s liberalised market offers extreme challenges for inflation sensitive products and upsizing/super sizing of SKUs and price realisations there on. In such conditions, Godrej’s new structures are a tentative experiment and an early vote of confidence from Temasek must have been a long standing argument for the country managers and the Godrej management per se.

Neither Dabur nor Godrej are guaranteed any success, Airtel branded soaps and agarbattis may have a better chance even in africa ina few years as Proctor & Gamble with global brand recognition stays in consumer discretionary spends in its predominantly staples portfolio and remaining counted in super premium brands in their value Tide portfolios

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L’Oreal’s Body Shop chains and super premium men’s range have a better chance from the sheer profitability of their ‘slower’ product lines in the luxury market as India’ s penchant for super brands and luxury hotels translates into a supersized lifestyle premium “for those who can afford it” and thus its $1.4 bln JV with Lotus is a much more sizeable investment as Jawad Habib’s and Bounce like salons grow into the mindset of the new salaried executive hungering for a sumptuous weekend fare outside just dining experiences and mall entertainment.

Can’t read these men, Can’t read what us indians want women will probably welcome Oprah’s OWN on indian territory as these second line of FDI investors from global organised consumer industries from retail and media to consumer aviation and luxury automobiles are much better positioned to make real efforts to break into the India n market, their first line having blamed everything fromt he unhygenic Mumbai to government babus yet not really having the policies to blame and having turned around villages with a few dollars of investment .

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Consumer Staples have been in the less than 20% branded category and probably retail supply chains will take more of the branded yet wholesale share in biscuits, candy and soap in modern retail . However the growing consumption boom has always left the Hindustan Unilevers, The P&Gs and even the ITCs in the cold.

Despite category development and brands worth INR 750 mln in quarterly sales as also a gross $1 bln brand value in Consumer staples, ITC itself has seen a need to bleed in the sector and the growth of the unorganised sector is yet not capped keeping a 85% market share in all Foods and personal products as well as home care products for well over two decades that India set otut on the reform path. A critical bridge between Food security and Luxury spends on lifestyle foods at the top of the brand value chain, the unorganised sector , even importers from the middle east may not thrive but manage most of the volumes in the industry.

The question of course comes from the happy developments for Dabur and Godrej, with forays in Africa underlining India’s outward thrust, but the challenges that remain int he emerging markets and in India and China for branded or aspirational categories of atta, soap and dye are limited for indian brands, P&G and even the body Shop or L’Oreals of the world. The challenge may well serve them in 5 out of 40 such proucers and 5 out of 40 such product categories, but India and China have time and again proved they are not in a hurry to go anywhere domestically, unlike cellphone plans for example, like dishes and Television which are a priority for most of india’s domestic 220 mln household s and mby corollary more so in other underdeveloped markets.

Governance structures and mandatory NGO participation with development aid in Africa may change it for Healthcare or Green farming categories but other infrastructure will fall prey to military / energy coups and cheap imported Chinese goods..just first thoughts for our foray into the dark continent outside and the unbranded continent within, which needs a Cadbury;’s name to sell some Oreos in the confectioanry sector a brand of $1 bln for us being the final pinnacle in most product lines in food, personal and home care as HUL has found in the last two decades.

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Somehow ITC’s profit growth to INR 17.01 bln inspired the market to invest in its stable model causing a sell of fnear the usual 210-215 mark even though results growth is on call

FMCG business grew 25% while overall sales grew 14% and Net Profits 22.5% Growth in Agri and Hotels remains weak from management expectations Cigarettes also grew at 25%. Hotels revenue is 5% at 311 crs and profits at a 34% margin at 101 crs (1.01 bln)

Net Sales for the 9 months are at INR 181.71 bln or ($3.6 bln) with FMCG sales at INR39.1 bln or $800 mln up

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25% and Tobacco/Cigarettes at INR 90.74 bln or $1.80 bln up 15% only. Agri and Paper have grown to INR 60 bln in nine months or $1.2 bln

PBT margins on Capital in hotels is just 6% and Branded FMCG goods in the Foods, Apparel, accessories and stationery have not reached breakeven losing INR2.29 bln in nine months (PBT/Equity(Seg Capital) = -15%) Return on Agri in terms of Capital employed is higher at 30% and that on Paper business is a good 15%, leaving Cigarettes to be the mainstay of the company with a 20% return on Capital.

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As usual the NPAs of 687 cr or 6.87 bln would be marked to high growth in some long term analysis with NIMs still 3.75% and gross NPAs still 1.10%

CAR also seems ok-ish and not too great at 11.78% Can’t match the growth in NPAs to a PCR of 87.7%, harddly management attempt at efficiency, likely an anachronism. Write offs as expected never went near

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even 2-3% of net worth with a NPAT of 11.5 bln above expectations. NII is 21.4 bln and growth in sales is 23% (incl other income) Asset book must have grown largely in retail

I am ready to short every fin stock at 5050, probably results season is good but the marks have been reached

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Hero Moto Corp, HDFC Bank and Bajaj Auto all hit expectations right and made merry of the third quarter encompassing a giant Festival run for India from Dusshera, Diwali nad Id to end with Christmas and the new year celebrations.

Quarter on Quarter comparisons showed up great daredevil performances by industry leaders even as food

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inflation, negative for the third week in succession, for the new year’s week ended Jan 7 at -0.42% and Primary Articles at 2.47%, fuel still 14.45% and onions still down 75% on the same week last year. the 52 week average for the jan 7 week (nasdaq/rttnews.com) is 9.96% and this number considerably lower near the 7.41% number for December 2011 Fuel weightage is 31%, and non food articles at 20% weight scored a low 2%. Primary Articles were less than 0.5% for te weeek ended Dec 31 last week

The Nifty stayed above 5018 and you should be buying puts now, (check our choice FAO strategy) as the index may not climb further to 5100 from here without a plateau and thence the breakdown. The remaining optimism will remain on call from today’s results however.

IPL auctions come back in February, with the entire South African team and the choice speedsters including Peter Siddle and Mitchell Johnson on the block from down under.

Back in financial results only 47% of the last two months results announcements were above par in the US incl Citi and JP Morgan below the line and headed for more pain in 2012.

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In the next few hours Bajaj Auto’s 20% growth will be compared to Hero Motocorp having already beaten its own profit expected with a 22% growth expanding margins to 21.3%

Hero had the largest volume gains in the latest quarter bringing market share back to 40% even as erstwhile partner Honda caught up to a formidable #3 with a 200k per month sales

Bajaj Sales still compare at 68% of Hero’s INR 61 bln for the quarter after Hero grew 16.86% y-0-y, Hero’s profits grew 43% Quarterly volumes were the highest at 1.6 mln units in three months with Bajaj trailing at 1 mln

Its Operating profit margins on adjusted basis counted as low as 12.7% while unadjusted basis still compares at 15.7% against 17.6% for Bajaj Auto strictly on business expenses at both companies

Hero’s sales are higher by 14% over September 2011 but its not known if its shares in the higher margin >125 cc has increased from the low 6% last quarter Bajaj sells 18% in the higher CC categories for its profit margins and has also included growing CV (Auto sales) in these data

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Headline results at Gross NPAs up to INR 22.02 bln from below 20 bln last quarter and a NIM of 4.1% with Gross NPAs down to 1.03% vs 1.11%

December 2011 gross income topline has come to INR 86.22 bln or 7.5% up on quarter. September 2011 had grown income to $1.6 bln by Indian GAAP or nearly INR 79.5 bln up 37% from September 2010 despite the bad credit conditions that actually meant INR 30 bln in NII and INR 12 bln in Other income ( Fee  and non interest income) at 4.1%.

October saw a marginal pullback in credit figures as well NII growth should be closer to 20% as the bank has grown assets in the new quarter and NIM is good at 4.1% As I expected, Cost income ratio has come down from 48.7% with Loan income at two thirds, of the total topline, branch costs should be controlled to lower 40% levels

Net interest income at INR 31.16 bln and Other income at INR 14.20 bln are also thus higher on September but NII has a yoy growth of 12% down from 16% in September  YOY growth in total income (Indian GAAP) and profits is nearly 35%

Net Profits increased to INR 14.29 bln up 19% on quarter reflecting the seasonal growth in October, year on year growth close to 40% while growing Provision Coverage Ratio to 80% against the required 56% improving Cost Income to 46.7% despite 420 new branches from last year December and 340 were new cities in the bank’s distribution network. ATMs grew from 5000 to 7110.

Deposit growth of 21% on the year despite a CASA of 47.7% and interest rates having plateaued at a peak of around 9.5% and 11% (less than 1 year lending) CASA deposits are now INR 700 bln maintaining the Sept 30 figure of INR 690 bln. Tier I ratio is 11.2% before 3Q profits CASA and other deposits had grown 6.5% and 13% from the June quarter and have not gone down since

Provisions are lower by 50% at INR 3.29 bln Retail is 51% of the book and wholesale 49% with retail loans having grown in the latest quarter at 29% yoy against 15% in wholesale as the bank shuts down ipon its short and medium term lending to reduce risk

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