Indian stock markets extend losses

Fri, 11 May 01:30 pm

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Weak industrial production figures for the month of March continued to add to the negative sentiment pervading the Indian stock markets in the last two trading hours. All the sectoral indices are trading negative with pharma, FMCG and metal stocks being the biggest losers.

The BSE-Sensex is trading down 172 points and NSE-Nifty is trading down 52 points. Both BSE Mid cap index and BSE Small cap indices are trading down by 1.3% and 1.2%, respectively. The rupee is trading at 53.6 to the US dollar.

As per a leading financial daily, the Index of Industrial Production (IIP) in March 2012 contracted by 3.5% as compared to the corresponding year-ago level. The index had clocked a growth of 4% in the preceding month. The reduction has come on account of lower production in mining and manufacturing whose indices fell by 1.3% and 4.7%, respectively in March 2012. The production index for Capital goods slumped by 21.3%. However, electricity grew by 2.7% during the month. The economy is clearly showing signs of slowdown as reflected in the cumulative growth in IIP for 2011-12 that grew by a mere 2.8% vis-a-vis a growth of 8.2% last year.

SRF announced fourth quarter and full year results of financial year 2011-2012 (4QFY12 and FY12) recently. The company reported a revenue decline of about 3% YoY during the quarter. This was largely led by a 31% YoY decline in the company's packaging film business. The same forms nearly 19% of the company's revenues. The company's operating profits declined sharply by 38% YoY as operating costs increased by 11% YoY. SRF's profits declined in line with the decline in operating costs. Net profits during the quarter were lower by 26% YoY. Had it not been for the exchange gain of Rs 428 m, the company's profits would have plummeted even more on the back of higher interest and depreciation charges.

For the full year FY12, SRF reported a top line growth of 15% YoY, while profits declined by 20% YoY. Profits were largely impacted during to exchange fluctuations - losses in the current year, gains in the previous year. At company's performance at the operating level was relatively better (as compared to the quarter's performance), with operating profits declining by 4% YoY on the back of a higher increase in expenses. With two interim dividends paid in November 2011 and February 2012, the total dividend paid for the year stood at Rs 14 per share. The stock is down 1.4%.