India Morning Report: HUL reports, buys back 22.5% equity, market establishing upward tilt for orbit

HUL beat its own topline score of INR 260 Bln and an expansion of 0.60% in margins despite increased marketing spends of a little over INR 9 bln across its India portfolio of brands with a INR 290 B buyback at INR 600 per share, skewing its weighting in most fund portfolios as a defensive though consumption as always on the verge of comeback implies the company along with midcap peers will again be looking at cost efficiencies in the coming two quarters before another above the line splurge and correcting their placement in increasing modern retail share. As a defensive, the stock is not the only one going for a mega buy back in the global Apple context with Glaxo having started off celebrations in November looking to beat the SEBI June deadline for limiting promoter contributions to 75%. MNC pharma will also be reporting results globally and looking at their pricing/patent cost/EM distribution skew again with quarterly results from Pfizer and Merck due this week, Pfizerr reporting towards mid day in the US. Nestle and P&G may not follow in the same vein with a 26% premium above the minimum recommended price adopted by HUL if they do follo the buyback ith their required offer to limit promoter stakes

HUL apart, the market has also been showing good offtake on optimism with FII flows exceeding $7 B in the first two months and after the flagging of interest remained net buyers in March and April with $3 Bln in inflows and the numbers are much larger than the normal inflows into India keeping markets higher at 5950 today. While the jump in indices may not be steep it could well be that extended consolidation around these levels could bring up the bottom of the range for the nifty to 5750 if not 5800 than the 5600 levels still seen as likely before a reversal of trend is signaled.

That also means that index ETFs would want more inflows into India while Chinese banks get downgraded and monetary stimulus impact fades in big brother China keeping Asian funds on the edge but Korean HK and Japanese equities respond well to a renewed optimism of a US led recovery

ING NIMs seemed stolid at 3.4% and despite the optimism one could look at the almost ata standstill book with deposits moving up in double digits at INR 400 Bln and advances still around INR 300 Bln while LIC Housing well on way to an asset book of INR 1 T, still tries to restructure for better margins and claims to be rid of all legacy baggage . Developer exposure is INR 25 Bln and new disbursals as big as INR115 bln this quarter reported and is looking at keeping margins at 2.4-2.5% after reducing its loan package costs by 25 bp

Power NBFCs report next after a good jump on earnings from Maruti and Hero moto and except for IT which provides the switch rationale and space for strategic funding of the India investments, only metals and mining aait bullish results expected due in FY14 and the markets could well never look back from these levels. As of no of course the ride is expected to be smooth till results peter out by the end of May and it does seem that good companies have enough incentive to perform and deliver value to shareholders while Gold has already started moving up from $1400 allowing bulls to come back to Titan
jewelry, ttk and the M&Ms in Mannapuram and Muthoot

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