Reliance Industries is to announce its Q@ FY 08 results today. According to the CNBC TV 18 estimates, the Q2 FY08 Net Sales are seen at Rs 33,230 crore vs Rs 31522 crore. The numbers are not comparable due to the IPCL merger. The EBITDA is seen at Rs 5442 crore vs Rs 5202 crore and the net profit is seen at Rs 3420 crore vs Rs 3060 crore.

Reliance results are not comparable due to merger with IPCL and the consolidated results are likely to include subsidiaries including retail. The jump in revenues is expected to be led by higher petchem revenues. Improvement in EBITDA will be led by higher refining margins. Gross refining margins are expected to be around $ 12.5-13/bbl Vs $ 9.1/bbl on a YoY basis ($ 15.4/bbl in Q1 FY 08). Singapore GRMs have declined in Q2 FY08 to $ 8-9/bbl. Polyester margins are expected to improve further in Q2. Higher Petchem volumes are expected to provide a surprise.

India's largest private company and index heavy weight Reliance posted higher than expected profit & sales in results decalred late Saturday evening. Both net profit and sales were above expectations. While the bottom line was up 28%. Reliance industries Q1 FY08 Net profit is up 28% at Rs 3,264 crore while Net sales are up 14.4% at Rs 28,056 crore.

Reliance industries Q1 Gross Refining margin stood at .40/bbl vs. /bbl (QoQ).Its refining margin is at 11.2% vs. 9.8%, petro chemical margin at 13.7% vs. 11.1%. Revenues were driven by 3% price hike, 10% volume growth; it has completed 65% of RPL project.

Mukesh Ambani, CMD of Reliance Industries says our world-class manufacturing facilities have demonstrated a high operating leverage. We continue to make rapid strides in our new initiatives including oil & gas, organized retailing and the new refinery at RPL. Our new initiatives provide us a platform to deliver superior shareholder returns in the future.

Meanwhile the FE reports that Reliance Industries may consider abandoning its $ 5.2 billion project for producing gas from the D6 block in the Krishna Godavari basin if the government does not approve the price formula by August end. The company had submitted the price formula to the petroleum and natural gas ministry on May 16. With no signs of any immediate decision on the issue, RIL has decided to do some tough talking with the government in the coming days.

Government officials said Mukesh Ambani, chairman, Reliance Industries Limited, was scheduled to meet petroleum minister Murli Deora on Monday to seek a specific timeline for approving the pricing formula for the D6 project. While the petroleum and natural gas ministry had cleared the formula, some other sections within the government including the department of fertilisers and the power ministry had raised objections demanding a much lower price for the user industries. As per RIL’s pricing formula, while the base gas price works out to $ 4.33 per million British thermal units (mmbtu), the delivered price ranges between $ 6 and $ 6.2 mmbtu.

A committee of secretaries (CoS) has been discussing the issue for over a month. The officials said the government was now planning to put in place a gas utilisation and a gas allocation policy (for fertiliser and power sectors) before the pricing formula is approved. This, they said, may take anywhere between four and six months. RIL plans to start gas production from the D6 block by June 2008. A delay in the approval of the pricing formula would definitely force the company to postpone its production plans. This, according to RIL was being perceived as a major risk by its international vendors and suppliers and lenders to the D6 project. The company has already communicated to the government that it was not correct to frame new policies at this stage of the contract.

When contacted, CEO and President (Oil and Gas) PMS Prasad said, “The government can raise any number of questions on the cost estimates, appoint external auditors or even ask CAG but it cannot hold back our sale price formula.”

"Our vendors and suppliers, who have committed their manufacturing facilities to us, doubt if the project would be implemented as per schedule," Prasad added. Unfortunately for RIL, there is no timeline specified for the government to approve the pricing formula since its production sharing contract is of NELP-I vintage. From NELP-2 round onwards, the government is required to clear the formula within 60 days.

Contribution of other businesses must accompany improved cigarette margins.

Hotels-to-tobacco major ITC’s cigarettes business brought about a positive surprise in the June 2007 quarter. Segment margin in cigarettes improved by nearly 150 basis points to 27.3 per cent, on the back of a 20 per cent price hike.

As a result, the stock was up 2.8 per cent on the bourses while the Sensex tumbled 3.4 per cent. The ITC stock has been an underperformer over the past year; it is at about the same levels, while the Sensex is up 42 per cent.

This was because analysts have been factoring a decline in cigarette volumes by 7-8 per cent this year because of the price hike to offset VAT, which would reduce demand.

In the June quarter, ITC’s net sales grew 16.7 per cent y-o-y, which is much lower than the 26.3 per cent growth in FY07.

However, the operating profit margin which had dipped 200 basis points y-o-y in the March 2007 quarter, improved by 700 basis points sequentially to 33.9 per cent and was marginally lower on a y-o-y basis. Net profit also improved 20 per cent y-o-y in the first quarter (Q1).

However, considering that ITC is aggressively pushing its non-cigarettes businesses, its growth at 18 per cent in Q1 is half of what it was in FY07.

Its paper revenues grew slowly by 5 per cent as one of its paperboard machine at Bhadrachalam was under planned shutdown for upgrade, but paper is not a high-growth business and revenues had grown 11.8 per cent last year.

Top line growth in hotels, FMCG-others and agri business was slower in Q1 than it was last year. Nor are these businesses turning hugely profitable - FMCG-others, which includes branded foods, lifestyle retailing, stationery & cards and safety matches, continue to be loss making.

The segment margin in hotels went up just 10 basis points y-o-y despite higher revenue per room and better F&B performance. The margin in agri business declined 40 basis points y-o-y to 3.8 per cent in Q1.

Analysts have now revised the cigarette volume decline to be lower at around 4 per cent this year. The turnaround in cigarettes margins may indicate that the worst is over for ITC, but its other businesses need to improve profitability. The stock trades at 21 times estimated FY08 earnings and 19 times FY09 earnings, and is unlikely to be an outperformer.

Net profit for the quarter ended June 30, 2007 up 28% to Rs 3,264cr.

Reliance Industries, India’s largest company by market value, today announced a 28.2 per cent rise in its net profit in the first quarter due to robust refining margins and higher exports.

The net profit for the quarter ended June 30, 2007, went up to Rs 3,264 crore against Rs 2,547 crore in the corresponding period a year ago. The company’s gross margins on refining, which contribute 77 per cent to its total revenues, increased to $15.4 a barrel, the highest ever. The figure was $13 a barrel in the preceding quarter and $12.4 a year ago.

Analysts said the better margin was a result of the company’s ability to buy cheap and sell premium products. Its highly complex refinery also allows the company to buy and process some of the heaviest and sour crude oil in the world.

The company’s exports in the first quarter rose 30 per cent to over Rs 16,000 crore.

Reliance, which produces polyester fibre, yarn and paraxylene as well, posted a 12.7 per cent rise in turnover at Rs 29,493 crore (Rs 26,166 crore). The rise in revenue was due to 3 per cent growth in prices and a 10 per cent hike in volume.

Aanalysts said rising cotton prices may lead to even better profitability in the near future. “Polyester margins are likely to go up as high cotton prices will divert demand to synthetic fibres. Reliance, being the world’s largest yarn producer, will stand to gain from this,” they added.

Cash profit increased by 23.7 per cent to Rs 4,527 crore while operating profit went up by 22 per cent to Rs 5,177 crore. Net operating margin was 18.5 per cent against 17.3 per cent a year ago. Earnings per share stood at Rs 23.4 against Rs 18.3 a year ago.

Interest costs were higher by 8 per cent to Rs 288 crore due to increased borrowings. The company capitalised Rs 163 crore on interest against Rs 149 crore a year ago. Interest cost included Rs 23 crore on account of exchange rate difference.

Reliance Industries reported an impressive performance in April-June 2007 helped by strong growth in its two main divisions -- refining and petrochemicals.

As a result, the company’s operating profit grew 22.2 per cent to Rs 5,177 crore in the last quarter, compared with the previous corresponding quarter, while its net turnover grew 14.4 per cent to Rs 28,056 crore. Its operating profit margin also improved 115 basis points to 18.45 per cent in Q1 FY 08.

In its key refinery division, the company processed 8.01 million tonnes in the April-June this year, a growth of 6.7 per cent. Of crucial importance is that RIL’s gross refining margin (GRMs) was $15.4 per barrel in the last quarter as compared to $ 12.4 per barrel in the same quarter a year ago.

RIL’s GRM was $13 per barrel in January-March 2007. The regional benchmark, the Singapore refining margin, was $ 9.5 per barrel in the June 2007 quarter, a rise of 7 per cent.

Clearly, Reliance has once again been able to do better than the growth in the regional benchmark in the last quarter, thanks to its ability to process heavy and sour crude, coupled with average international crude oil prices that were lower on a y-o-y basis in the first quarter of this financial year. As a result, segment profit of the refining division grew 25.7 per cent to Rs 2,558 crore.

In RIL’s petrochemical division, production was 3.64 million tonnes, growth of 15.3 per cent. The company highlighted higher product prices for its petrochemical product chain, coupled with enhanced production which led to a 36.2 per cent growth in segment profit of petrochemicals division to Rs 1481 crore in Q1 FY08.

Reliance had earlier acquired IPCL and it is still subject to completion of the necessary legal facilities to enable consolidation of quarterly results with itself. In the interim, IPCL has reported a 7.6 per cent y-o-y growth in its operating profit (including other income) in Q1 FY08.

Going forward, Reliance is expected to continue leveraging strong GRMs on a y-o-y basis, given signs of a global shortage of refining capacity.

Hindustan Unilever has posted a net profit of Rs 493.08 crore for the second quarter ended June 30, 2007 (Q2FY07) when compared with Rs 380.60 crore in Q2FY06.

According to a release issued by HUL to the BSE today, the results for the quarter are not comparable year-on-year to the extent of amalgamation of Modern Foods (India) and its subsidiary with the company.

Total income for the quarter stood at Rs 3,587.72 crore while it was Rs 3,164.630 crore in Q2FY06.

The board of directors of the company, at its meeting today, announced an interim dividend of 300% i.e Rs 3 per share of Re 1 each for the year ending December 31, 2007.



Hindustan Unilever buyback at Rs 230/shr

Consumer goods major Hindustan Unilever (HUL) today announced that it would buyback equity shares at a price of Rs 230 per share and up to an aggregate amount of Rs 630 crore.

The price is at a premium of 17% over the closing price of the HUL scrip (Rs 196.45) as on 27th July 2007. HUL's average closing share price on BSE for the last six months is Rs 196.

According to a company statement, the total amount proposed for buyback is within 25% of the total paid-up capital and free reserves as per the audited balance sheet as on 31 December, 2006. HUL has Rs 2,723.48 crore as free reserves and paid-up capital. That means, the company could spend a maximum of Rs 680.86 crore on the buyback. The Securities and Exchange Board of India (Sebi) guidelines say a company can buy back shares only up to 25% of its net worth.

The buy back will see HUL’s parent, Anglo-Dutch consumer goods giant Unilever, buying 27.31 million shares, thus increasing its stake in the company by 1.24%. Unilever currently holds 51.42% equity in HUL, while 17.50% of the company’s shares are owned by the general public.

“The buyback is proposed to effectively utilise the surplus cash, and make the balance sheet leaner and more efficient to improve returns,” the statement said. Post buyback, Unilever’s stake in HUL will be 52.66%.

The company proposes to buyback shares at a price not exceeding Rs 230.00 per share on the Bombay Stock Exchange Limited and National Stock Exchange through open market purchases from time to time.

As specified in the SEBI guidelines (buyback of securities) Regulation 1998, the promoters (Unilever) and the directors of the company shall not sell in the proposed buyback process."

State Bank of India (SBI), the country’s largest lender, has reported a 78.5 per cent rise in net profit for the first quarter of 2007-08, largely on account of write-back of provisions made for depreciation in investment portfolio earlier. The bank’s net profit was at Rs 1,425.81 crore for the quarter ended June 2007, up from Rs 798.57 crore a year earlier.

This is the second highest profit posted by the bank for a single quarter. The bank had reported its highest quarterly profit of Rs 1,493.19 crore in the preceding quarter.

“There were write-backs to the tune of Rs 376 crore on the provisions made for investments in the available for sale (AFS) category. During the last 90 days, the yields on 1-5 year securities have moved down. The average duration of the bank’s investments held in the AFS category has also come down from 1.8 years to 1.25 years,” said an SBI official.

The write-back of provisions helped SBI soften the impact of 191 per cent rise in provisions for non-performing assets (NPAs) to Rs 506.32 crore from Rs 173.82 crore a year earlier. Its net NPAs increased by Rs 672 crore to Rs 5,504.61 crore at the end of June 2007 from a year earlier.

The provision cover fell to 48.83 per cent from 50.29 per cent a year earlier, though up from 47.41 per cent at the end of March 2007. The net provisioning including write-backs, however, reduced by 36 per cent to Rs 159.37 crore at the end of June 2007, down from Rs 251.14 crore a year earlier.

The bank’s net interest income grew 15 per cent to Rs 4,497 crore from Rs 3,910 crore a year earlier. Its net interest margin was maintained at 3.31 per cent from the preceding quarter.

The bank’s cost of deposits at 5.35 per cent was 56 basis points up from the preceding quarter and 72 basis points from a year earlier, while the yield on advances at 9.8 per cent increased by 113 basis points over the previous quarter and 132 basis points from a year earlier.

The bank’s non-interest income grew 18.74 per cent to Rs 842.58 crore from Rs 709.59 crore a year earlier boosted by 16.28 per cent rise in fee income to Rs 885.86 crore. The bank’s deposits increased by 19.04 per cent to Rs 4,49,660 crore from Rs 3,77,742 crore a year earlier.

Low cost deposits (current account and savings account deposits) formed 41.06 per cent of total deposits, down from 42.67 per cent a year earlier. The bank’s advances increased by 28.89 per cent to Rs 3,44,087 crore from Rs 2,66,963 crore a year earlier.

“The bank added Rs 2,012 crore of advances in the quarter. While domestic advances fell by around Rs 2,000 crore, the international loan book grew by close to Rs 4,000 crore,” said the official.

Advances in personal segment grew 19.33 per cent to Rs 75,138 crore at the end of June 2007. Housing loans increased by 18.22 per cent to Rs 39,241 crore, constituting 52.22 per cent of the bank’s retail advances.

The ratio of gross non-performing assets (NPA) fell to 3.13 per cent in the June quarter from 3.64 per cent a year earlier. The net NPA ratio also declined from to 1.62 per cent from 1.84 per cent a year earlier.

The bank’s capital adequacy ratio (CAR) stood at 13.13 per cent at the end of June 2007 up from 11.97 per cent a year earlier. Tier I capital was at 8.32 per cent.

Nitin Shah, CMD of Allied Digital says that the company is seeing good growth. He sees a 80% bottomline growth in FY09 and a bottomline CAGR of 60% till 2010. They are targetting a mix of 30% revenue from IT services and 70% from IT solutions. The IT services margins are at 55% and the IT solutions at 12%.

For FY08, the sales are seen at Rs 270 crore and PAT at Rs 42 crore.

The stock listed on the bourses today at Rs 332.50 vs issue price of Rs 190. The objects of the issue includes setting up a Global Service Delivery Centre in Mumbai, strategic acquisitions, upgradation and expansion of existing infrastructure, setting up new Strategic Business Units and financing working capital requirements.

Allied Digital operates in diversified segments both in Solutions viz. IT solutions, Networking and Communication solutions, Integrated solutions and Software solutions and in Services viz. IT Infrastructure Management Services, T-BPO and Remote Management Services to its customers pan India. Recently, the company had a strategic tie-up with Echelon Corporation to foray into Intelligent Building Management and Energy Management Solutions.

The sole book running lead manager to the issue is Anand Rathi Securities, Advisors to the issue is Religare Securities and Syndicate Members to the issue is ENAM Securities Pvt. Ltd. and Anand Rathi Securities and Intime Spectrum Registry is the registrar to the issue.

HDFC has once again surpassed analysts expectations in its June 2007 quarter results. If there were concerns of a slowdown in home buying owing to expensive real estate and high interest rates, then with a 29 per cent y-o-y rise in both loan approvals and sanctions, HDFC was not affected. Even its non-performing loans are lower compared with the June 2006 quarter. The fully diluted earnings grew by 24 per cent y-o-y in Q1 FY08.

Its loan portfolio increased by 23 per cent y-o-y in Q1 FY08. HDFC was able to improve its net interest margin by 5 basis points sequentially and 8 basis points y-o-y, with net interest income growing 40.7 per cent. This indicates that HDFC has been able to pass on higher interest costs to borrowers. If interest costs have gone up 55 per cent y-o-y, that s because of growth in business as well as higher interest rates.

With its preferential allotment to Carlyle and Citigroup, HDFC has collected Rs 3100 crore to fund its investments in HDFC Bank and HDFC Standard Life Insurance, which is book accretive. While banks are going slow on home loans, it is an opportunity for HDFC to improve its market share.

In FY07, analysts say HDFC s market share improved by 250 basis points y-o-y to 25.2 per cent. The outlook on interest rates for the short term is benign and HDFC should continue growing its loan book by over 25 per cent, say analysts. After adjusting for its holdings in its subsidiaries and associate companies, HDFC trades at less than 4 times its estimated FY09 book value, which is attractive.

Dr Reddy’s Laboratories, the top line was adversely affected by the absence of authorised generics sales coupled with a dip in its custom pharmaceutical division revenues in the June 2007 quarter.

However, as authorised generics sales are typically low-margin, the company was able to improve its operating margin on a y-o-y basis in the last quarter.

As a result, operating profit (excluding other income) grew merely 2.8 per cent y-o-y to Rs 259.35 crore in the last quarter, while total operational income fell 11.1 per cent to Rs 1,199 crore.

A drop in its operational income was due to a 37 per cent reduction in its generics revenues in the last quarter, coupled with a 28 per cent fall in its custom pharmaceutical division revenues. However, its operating profit margin went up 290 basis points y-o-y to 21.6 per cent in Q1 FY08.

Meanwhile, in its generics division, sales in the key US market amounted to Rs 180 crore in Q1 FY08 compared with Rs 430 crore a year earlier owing to the absence of authorised generics sales in the last quarter. Dr Reddy’s generics sales in Europe amounted to Rs 250 crore in the last quarter compared with Rs 240 crore a year earlier.

In addition, in its custom pharmaceuticals division, the company highlighted that it had to grapple with a shortfall in supplies of one of the key raw materials in its Mexican operations. To the company’s credit, it has grown its total API sales by 13 per cent y-o-y in the last quarter, helped by improved sales in Europe.

Going forward, Dr Reddy’s is understood to be planning several product launches across different product segments over the next few quarters. The stock is fairly valued at 15 times estimated FY08 earnings.

JSW Steel Q1 Net Profit is at Rs 428 crore vs Rs 170.3 crore. CNBC-TV18 Poll saw Net Profit at Rs 350.3 crore. The Q1 Net Sales are at Rs 2,191 crore vs Rs 1,569.4 crore. The CNBC-TV18 Poll saw Net Sales at Rs 2,374.9 crore. Q1 Other Income is at Rs 136 crore vs Rs 1.6 crore.

Sajjan Jindal, MD of the company says that the company's EBITDA margin was at 37.72%. Global Steel Industry grew 8.4% in H1CY07, led by China, while US Steel Industry saw degrowth. The company has seen a 26% volume growth, and they are buying 300 MW power plant from group company.

Talking about the outlook, the company says that the global crude steel production grew at 8.4% during H1, 2007 mainly led by 17.8% growth in China. Chinese exports are higher in first six months at 35 Mn Mt. US had a marginal positive GDP growth in Q1, 2007 due to slowing economy, lower auto production and decelerating construction. However, rising demand for Pipes & Plates is noticed in the US driven by booming Oil & Gas Industry. Monsoon in Asia has slowed down construction activities.

The international prices of steel products as a consequence of above factors, has come down by around 7-10%. The appreciating Rupee against the Dollar and the lower international steel prices led to an adjustment of the prices in the domestic market by around Rs 600-800 per tonne from July 01, 2007.

The recent policy announcements by Chinese Government to restrict steel exports by introducing licensing procedures, reducing export rebates and introducing taxes on exports are expected to slow down the export of steel products from China. It is reported that the inventories at various service centers are coming down and the demand continues to be buoyant. Indian economy has shown robust growth in the current financial year backed by a growth of 11.7% in the industrial production in April/May 2007. Lower inflation reported recently is expected to result in lower interest rate regime, which will spur growth in Automobile and Retail sector, a big positive for steel industry. In this scenario, the steel prices are expected to remain stable and may pick-up from third quarter.

Dr. Reddy’s Q1 FY08 revenues stood at Rs 1201.8 crore vs Rs 1404.9 crore (Cons, US GAAP)and net profit stood at Rs 182.5 crore vs Rs 139.8 crore. Forex gains were of Rs 28.5 crore vs loss of Rs 7.4 crore. Revenues from international market is at Rs 940 crore vs Rs 1,170 crore. The Q1 Revenues from Betapharm are at Rs 210 crore vs Rs 190 crore. Revenues from Zofran is at Rs 6.6 crore.As per INSIGHT May 2007, betapharm recorded a 36% growth in pharmacy volumes.

Revenues from Allegra stood at Rs 51.7 crore. Market share was at 25%. Dr Reddy's Labs has filed 8 ANDAs including 3 which it was first to file.

Revenues in the API business increased by 13% to Rs 260 crores ($ 64 mln) in Q1 FY08 from Rs 230 crores ($ 57 mln) in Q1 FY07 primarily driven by growth in international markets. Revenues from custom pharmaceuticals services declined to Rs 100 crores ($ 25 mln) in Q1 FY08 from Rs 140 crore ($ 35 mln) in Q1 FY07. This decrease was due to the decline in revenues from Mexico resulting from supply shortages of one of the key raw materials.

Sale of Zofran has been affected by adjustment of Retail inventory. Zofran's exclusivity sales are Rs 6.6 crore on account of self stock adjustment. Dr Reddy's getting into private label in to OTC and is expecting the EPS to be EPS in the 1st year. Private OTC label is expected to Contribute $ 25 million to topline this year. CPS business impacted on account of lack of raw material availability in Mexico.

ICICI Bank has reported a higher than expected net profit on treasury gains of Rs 195 crore. But rest of the numbers clearly showed the impact of rising rates and a large base. ICICI's fiery pace of growth has clearly mellowed with the onslaught of higher rates and its growing base.

Profit growth has been still maintained at a higher than expected 25%. But net interest income has risen by a less impressive 18% to Rs 1741 crore from Rs 1475 crore year ago. In FY07, the NII had grown consistently by over 40%. Net NPAs also continued to show pressure rising to 1.3% of net assets from 0.98% as on march 31 2007. Gross NPAs also rose a whopping 25% to Rs 6000 crore from Rs 4,800 crore year ago.

After the results Chief Financial Officer for the group, Vishkaha Muley said that the bank was impacted by the slowdown in credit that hurt the industry.

Vishakha Mulye said, “If you compare it with the March quarter there has been more or less flat but this is after discounting for almost Rs 4000 crore of sell down that we did in this quarter. If you look at the industry, there is a slowdown in the industry on credit particularly on the retail side. The retail side has grown around 35-40% is expected to grow around 20-25%.”

Thanks to higher cost of deposits, ICICI's net interest margins has also fallen to 2.3% from 2.4% last year. Muley said that while much of the higher costs could be passed on, there was also the burden of a higher CRR for which banks now earn nothing.

“If we were to adjust it for CRR increase and of course the interest on the CRR for the last year because it was there in the income lat year and then they are comparable and they almost looked flat,” Vishakha said.

Muley clearly expects interest rates to soften from here on. Though she was unwilling to say how soon the bank will cut rates or by how much rates will fall.

Vishakha further said, “The expectation is of course that one would see softening. At the lower end of the curve it has already started seeing that but the bucket of one year where the maximum in deposit inflows are we have not seen softening in April levels.”

ICICI's advances grew by 35%, a far cry from the over 40% that the bank maintained for many quarters. Deposits grew by 26% to Rs 2.3 trillion. Muley said that she expects the banking industry to enjoy a better growth when the busy season starts from the second quarter.

ICICI Bank has posted its Q1 from NSE (YoY) Standalone NII up at Rs 1,714.25 crore from Rs 1,475.28 crore. Its net profit has been up at Rs 775.08 crore from Rs 620.01 crore.

Net Interest Margins for Q1 is at 2.3% vs 2.5% (YoY). NIMs is 2.3% in Q1 FY08 vs 2.5%. Margins remained flat, after accounting for CRR changes. Advances have grown by 35% to Rs 1.98 Lakhs Crore, Deposit grows by 26% to Rs 2.3 Lk Crore. Retail growth is about 30% (YoY), Flat (QoQ),

Management said Balance sheet size is Rs 3.56 trillion up by over 30% in first quarter of FY07. Bank witnessed advances growth of 30% to Rs 1.98 trillion and Deposit growth to Rs 2.3 trillion.

Bank witnessed a slowdown on credit growth in retail side in the industry. Retail sector is expecetd to grow by 25% due to property price rise & interest rate scenario.

Home loans growth has been lower, however, non-collateralised port side yields are attractive on risk adjusted within Retail sector. Management says it also witnesed a slowdown in Home loan growth but sees credit pick up on corporate & international borrowing side.

Net NPA's is at 1.3% while gross NPA's stood at Rs 6000 crore vs Rs 4800 crore

Satyam Management said there has been 10% growth in Dollar terms and 3% in Rupee terms for Q1. Our EPS guidance is conservative. Guidance reduction is driven by Rupee appreciation.

They further said Rupee appreciation accounted for 230 bps in margins while Visa costs hit margins by 100 bps, RSU charges by 40 bps & Subsidiary by 30 bps. Overall cost impact on margins is 400 bps. Blended pricing improved by 110 bps QoQ and offshore utilisation and mix has also increased. Capped margin cut to 64 bps via higher pricing and utilization.

Market sentiment is positive which was reflected in both volumes and pricing dynamics. We are seeing good traction in large deals. We see growth across sectors especially retail, financial services, telecom, healthcare, the company said.

The company is factoring 125 bps decline in Operating Profit Margin in Q2 (YoY). About hedging practices, management said that the company covered 50% of expected US dollar inflows and the current hedge is of $ 750 million and the company has gained Rs 90 crore in Q1 on account of that. Forex gains of Rs 90 crore has been offset by translation loss of Rs 96 crore.

There has been 15% increase in enterprise solution business. There is an opportunity to ask for better pricing. We are confident of 2-3% improvement in billing rates in FY08, we have already seen 1% improvement in Q1.

There was differential pricing for consulting and enterprise. Prices will need to go up in line with market trends. We see higher ability to re negotiate for higher value added products. Our offshore utilization was at 52% up 135 bps, the company added.

Management believes that ERP, Engineering and Manufacturing are strong in deal pipeline. The company has signed a deal with Nestle and is looking for traction from industrial BPO. The impact of appreciating rupee was more severe on Nipuna, BPO of Satyam.

The company has factored salary hike in guidance and it is planning to recover some of the margin losses due to salary hikes in Q2 in second half. Attrition rate of Satyam is at about 13.6% on annualized basis.

Management said that the largest customer of the company contributes less than 6% to overall revenue of the company. Asia Pacific contributes to 18% of the revenue while Europe contributes just under 20%.

TV Ramanathan, MD & CEO, Exide Industries said on net sales, the sales growth is 52%, on a year-on-year basis, and after tax profit, the PAT, shows a growth of 84% and for the quarter ended 30th June, the after tax profit is Rs 70 crore as against Rs 38 crore for the same period last year.

Lead constitutes about 70% of your overall raw material costs. Even in the current quarter, definitely the high lead prices are an area of concern. But we also have got the benefit of most of our OEM sale or the contract is linked through the LME prices. So, when the price goes up, automatically the selling price is also getting adjusted in line with LME price, and this year we are fortunate for the industrial sector, because as against last year, only 15% of the industrial sales, where the price variation was there. Now this year, 85% of the sales of industrial institutional customers are also linked to LME prices. So we are able to adjust the price change in line with the LME prices, Ramanathan added.

And as for the replacement rate, we had made two price increases in the last quarter and if the price continues like this, we will be making at least one more price increase this quarter. We had about Rs 8-9 crore benefit from exchange gain because of the Rupee appreciation. On 31st March 2007, we had valued all foreign currency liabilities, including the liability for lead suppliers at the March ’07 rate. And you know that the rate of March ’07 was much higher than what was at 30th June. So we got the benefit of the exchange rate, he said.

Ramanathan further said luckily for us we are catering to various sectors of the economy. We are no longer an auto component company and we expect significant growth from telecom, power sector and UPS for industrial and as far as auto is concerned the replacement market is very buoyant, even though there is slight, I will not say de-growth, buoyant growth in the auto sector for the OEM suppliers.

As against 80.4% for same period last year, despite the high lead prices, we were able to improve the operating margin by 140 basis points. We will achieve our budgeted growth even for the remaining three quarters. I can make that much commitment, Ramanathan concluded.

Wipro: Rupee rise impacted margins by 3.4%, able to cap it at 2.4%; Increasing fixed price contracts for better realisations

Wipro has announced its numbers today. The Q1 Net Profit is down 15.2% at Rs 726 crore from Rs 856 crore (QoQ). The Q1 revenue is down 3% at Rs 4,203 crore from Rs 4,333 crore (QoQ).

Q1 Global IT revenues are at $ 726.1 million vs guidance of $ 711 million. They have guided Q2 Global IT revenues at $ 777 million. The company says that the margins have dropped by 250 bps sequentially.

The Wipro management in reaction to its numbers said that the rupee rise impacted the margins by 3.4%, but they have been able to cap it at 2.4%. Among the deals won during the quarter included a $ 130 million multi-year Total Outsourcing engagement from a utility company in Europe. The company says that the $ 130 million order from Europe will contribute from Q2 and is factored in the guidance.

The company is increasing its fixed price contracts for better realisations. They will recover some damage on the forex front via hedges. Most of the growth in Q2 will be volume driven. Global IT revenue growth is seen at 7% (QoQ) in Q2. The Q2 growth is expected to come from BFSI, Telecom, Tech & Media services and BPO. The margins are also expected to be sustainable at current levels for now.

Wipro has a forex cover of $ 400 million as on June 30, 2007. The utilisation improved by 4%, and helped restrict fall in OPM to 2.5%. They see BPO OPM at current levels, attrition down and utilisations up. Wage hike for offshore employee will impact margins by 140-150 bps.

Global IT Services & Products added 39 new clients in the quarter. Wipro's India, Middle East & Asia Pac business recorded 61% growth in PBIT YoY. Revenue grew 64% YoY. Wipro Consumer Care and Lighting business Revenue grew 33% YoY and PBIT grew 32% YoY.



Wipro Q1 Net Profit down 15.2% at Rs 726 Cr; Revenue down 3% at Rs 4,203 Cr

Wipro has announced its numbers. The Q1 Net Profit is down 15.2% at Rs 726 crore from Rs 856 crore (QoQ). The Q1 revenue is down 3% at Rs 4,203 crore from Rs 4,333 crore (QoQ).

Q1 Global IT revenues are at $ 726.1 million vs guidance of $ 711 million. They have guided Q2 Global IT revenues at $ 777 million. The company says that the margins have dropped by 250 bps sequentially.

Global IT Services & Products added 39 new clients in the quarter. Deals won during the quarter included a $ 130 million multi-year Total Outsourcing engagement from a utility company in Europe. Wipro's India, Middle East & Asia Pac business recorded 61% growth in PBIT YoY. Revenue grew 64% YoY.

Wipro Consumer Care and Lighting business Revenue grew 33% YoY and PBIT grew 32% YoY. Also, Wipro signed a definitive agreement to acquire Unza, a leading Personal Care Company based in Singapore.

Azim Premji, Chairman of Wipro, commenting on the results said, “The results for the quarter are satisfying considering the strong headwinds faced by us in the form of an appreciating rupee. Our IT Services Business continued to witness broad based growth, across Verticals, Geographies and Service lines. Our growth in Revenues was primarily driven by strong volume growth across our business units. Our differentiated services, Technology Infrastructure Services and Package Implementation grew by over 50% YoY, while our Business Process Outsourcing (BPO) & Testing Services delivered growth in excess of 40% YoY."

"Amongst our Verticals we saw strong growth in Finance Solutions, Telecom Service Providers, Manufacturing and Technology, Media, Transportation & Services Verticals. Our new client additions continues to be robust and we have had a good set of wins during the quarter in our BPO, Package Implementation and Technology Infrastructure
Services, including a multi year deal of $ 130 million. Looking ahead, for the quarter ending September 2007, we expect our Revenue from our Global IT services business to be approximately $ 777 million," Premji adds.

Infosys Technologies has announced the Business Outlook. Its outlook (consolidated) for the quarter ending September 30, 2007 and the fiscal year ending March 31, 2008, under Indian GAAP and US GAAP, is as follows:

Outlook under Indian GAAP consolidated:

Quarter ending September 30, 2007:

Income is expected to be in the range of Rs 39,520 million and Rs 39,930 million; YoY growth of 14.5% 15.7%. Earnings per share is expected to be Rs 18.88; YoY growth of 12.7%.

Fiscal year ending March 31, 2008:

Income is expected to be in the range of Rs 162,380 million and Rs 164,330 million; YoY growth of 16.9% 18.3%. Earnings per share are expected to be between Rs 78.20 and Rs 79; YoY growth of 13.0% 14.1%; including tax reversal of Rs 510 million and Rs 1240 million in fiscal 2008 and 2007 respectively. Excluding the tax reversal the Earnings per share are expected to be between Rs 77.31 and Rs 78.11; YoY growth of 15.6% to 16.8%.

Conversion 1 US$ = Rs 40.58


Outlook under US GAAP:

Quarter ending September 30, 2007:

Consolidated revenues are expected to be in the range of $ 974 million and $ 984 million; YoY growth of 30.6% 31.9%. Consolidated earnings per American Depositary Share are expected to be $ 0.46; YoY growth of 27.8%.

Fiscal year ending March 31, 2008:

Consolidated revenues are expected to be in the range of $ 4.00 billion and $ 4.05 billion; YoY growth of 29% 31%. Consolidated earnings per American Depositary Share are expected to be between $ 1.92 and $ 1.94; YoY growth of 25.5% 26.8% including tax reversal of US$ 13 million and US$ 29 million in fiscal 2008 and 2007 respectively. Excluding the tax reversals the consolidated Earnings per American Depositary Shares are expected to be between $ 1.90 to $ 1.92; YoY growth of 28.4% to 29.7%.

As clients recognize the strategic imperative of global sourcing in an increasingly flat business world, the demand for large end-to-end players like Infosys continues to be strong, said S. Gopalakrishnan, CEO and Managing Director. We continue to focus on being a partner of choice to our customers.

Infosys guidance for FY08: Revenue growth is seen at Rs 16,238-16,433 crore, up 16.9-18.3%. FY08 EPS (Excl Tax Write Back) is seen at Rs 77.31-78.11. FY08 Revenue Outlook is based on rupee rate of 40.58/$. FY08 Rupee Guidance has been revised downwards. The Q2 revenues are seen at Rs 3952-3993 crore.Q2 EPS is seen at Rs 18.88.

Today Infosys announced its results. The Q1FY08 (QoQ) Net Profit is down 5.68% to Rs 1079 crore from Rs 1144# crore. CNBC-TV18 Estimates saw the figure at Rs 974.48 crore.
# including tax write back

The Q1FY08 (QoQ) revenues are up 0.02% to Rs 3773 crore from Rs 3772 crore. CNBC-TV18 estimates saw the figure at Rs 3813 crore. Infosys had given Q1 revenue guidance of Rs 3,896-3,913 crore. It had given Q1 Net Profit guidance of Rs 1,005.37 crore.

In Q1, the company added 35 New Clients and added 3,730 employees. Infosys CEO Says demand for large end-to-end players like Infy is still strong. Q1 Other Income is at Rs 253 crore vs Rs 119 crore (QoQ). Q1 OPM was at 28.7% vs 31.7% (QoQ. CNBC-TV18 poll saw the OPMs at 28.3%. They plan to add 26,000 employees in FY08

The company said that the Q1 blended pricing is up 1% and the volumes were up 6.9% (QoQ). The company added that they had forex hedges of $ 925 million in Q1. US operations contributed 62.6% of revenues, Europe 26.8%.

Q1 Highlights
* Added 35 new clients vs 34 new clients in Q4
* Added 3730 employees vs 2809 employees in Q4
* Other income of Rs 253 cr vs other income of Rs 119 cr in Q4
* Infosys BPO Q1 Revenues at Rs 200 cr & net profit of Rs 36 cr
* Onsite price up 1.41%; offshore up by 1.05%
* Forex gains of $ 18 mln
* Onsite Revenues at 49.7% of total
* Onsite billing rates up 1.4%, Offshore up 1.05%
* Revenue from top clients grew by 1.2% (QoQ)
* Revenue from top 10 clients declined 3.26%
* Employee utilisation incl trainees at 70.5%
* Employee utilisation incl trainees up 260 bps to 70.5%
* June-end cash reserves at $ 1.6 bln
* Attrition rate at 13.7%

Vertical growth (QoQ)
* Banking : -1.66%
* Insurance: -5.38%
* Manufacturing: 5.45%
* Telecom: 0.48%
*Transportation: 27.81%

“The sharp appreciation of the rupee against all major currencies impacted our operating margins during the quarter,” said V. Balakrishnan, Chief Financial Officer. “However, our robust and flexible operating and financial model enabled us to maintain our net margins while absorbing the impact of appreciating currency, higher wages and visa costs. Liquidity has been further strengthened with cash and cash equivalents reaching US$ 1.6 billion.”

Infosys management said due to Rupee rise impacted revenues to the extent of Rs 287 crore. Growth in North America has been at 7.5% while in Europe it has been at 8.5%. The Rupee appreciation impact was on EPS as well as on margins. We absorbed 7% cost increases and margins were impacted by only 3.5%. Visa cost was up 1% while wages were up 2.5%. Volume growth of 6.9% witnessed in Q1.

OPMs could be impacted by 100-200 bps in FY08. The company has factored in Rs 40.58 on the exchange rate. They are seeing 9.3% growth in non top-10 clients. 26000 employees will be added in FY08. The company has added 10 $ 1 million clients in Q1.

The offshore wages were up 12-15% and onsite was up 5-6%. Almost 73% of the company's revenues come in Dollar terms, 13% in Pound and 5% in Euro terms.

All round growth is seen in all geographies. We are seeing 3-4% improvement in billing in new contracts. We mitigated 4.5% from 7.3% hit on the margin. We have $ 4 billion target in FY08 for revenues. Pricing has been stable with an upward bias. Utilization increased by 1.5% for Q1, the compan says. There will be no price rise assumed in guidance. BPO business could be significantly impacted by Rupee rally. Consulting grew by 22% which forms 4.9% of revenue. Subprime exposure is less than 1%.

Infosys said that the company is comfortable with high of 70% and low of 80% utilisation. Meanwhile the Infosys management declined to comment on Capgemini acquisition. The company is actively looking at US, Europe for inorganic growth.

The company is hedging for short-term to cover 2 quarters. Company has hedged $ 925 million as of June end agianst $ 470 million QoQ. The Rupee is likely to move between 39-41/ $ in the short-term.

Margins from BPO business are down from 21-22% to 16-17%. Tax sops for BPOs should be continued for next 5 years. Price of renegotiated financial deals seen 1.5 % higher.