knowledge plus series i 220613

KNOWLEDGE PLUSFor Wealth …..

VALUE PLUS- The Family Office

FromResearch Desk

Last week at the Financial Markets!!!

• SENSEX fell by 403.69 points (2.10%) and closed to 18774 at end of the week

• (FIIs) were net sellers in equity segment leading to net outflow of Rs. 3571.20 Crore

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News Impact• US Fed announced that it will start

tapering down its $85 billion of monthly bond purchases.

• Liquidity will be reduced• Liquidity driven inflation will be reduced,

majorly negative impact on Japan• Price correction will be seen in asset class

like bullion, equity.

• Trade deficit for the month of May widened to $20.1 billion from $17.8 billion in April.

• Current account deficit will widen further.• Rupee will depreciate.

• Rupee fell to its all time low and touched near to 60 mark against dollar.

• Imports are getting costlier.• Indian exporters will get a competitive edge

over international competitors.

Last week at the Financial Markets!!!


Price Performance of Different Asset Class

High volatility seen in all financial markets

after FED’s announcement

Next Week in the Financial Markets...?

• Expiry of derivatives contracts on June 27,2013.

• CCEA’s meeting on natural gas price hike.

• Governments‘ action on reforms.


Hot Topic of the Week

Corporate Performance


PERFORMANCE OF NON-FINANCIAL COMPANIES


Table 1 : Summary of 1297 Non-Financial CompaniesIn FY 13, Net

sales increased by 12.60% as

against 21.10% in previous year.

Net profit in FY13 increased by 11.70% as

compared to -5.70% in FY12.

Source: CARE

Growth in Depreciation

shows companies has incurred capex

• Major decline in international commodity prices

• Lower interest rates and lower take in credit has reduced the interest expenses

Company Distribution Based on Sales


Source: CARE

• Above table shows that, 262 companies has more than Rs.1000 Crore of turnover with highest growth in sales of 13.60%.• However, growth in net profit of 326 companies having turnover between Rs. 100-500 Crore has registered highest growth in net profit of 36.8%• Companies with turnover of less than 50 Crore has negative growth in profit and sales.

Company Size based

on sales

PERFORMANCE OF FINANCIAL COMPANIES


Growth (%) FY 12 FY13Net Interest Income 33.80% 16.30%

Interest Expenses 44.00% 19.00%

Net Profit 15.20% 10.60%

Average Gross NPAs 2.36% 2.90%

Average Net NPAs 1.09% 1.54%

Gross NPA (Rs. In Crore) 63,897 123,705

Source: CARE

• Higher NPAs may lead to lower growth in industry.• Impact of economic slowdown is getting reflected in increased NPAs.• On the positive side, all the banks have maintained capital adequacy ratio of above 10%

Table 2 : Summary of 40 Banks

Conclusion

• Corporate performance has shown improvement in terms of profit even after decline in growth of sales.

• The better performance is seen in large size companies.

• Impact of interest costs has reduced due to lower credit growth.

• Banks net profit margin has declined. However, high concern is on the growth in NPAs.

• Banks have well maintained their capital adequacy ratio which is one of the comforting factor.



Research Desk

@VALUE PLUS - The Family Office

Office: (0265 -2324600,6629800)Email: [email protected]: www.valueplusinv.com

knowledge plus series i 220613

Economy & Finance