Date: 24.01.2019

To,

The Secretary

BSE Limited

Corporate Relationship Dept,

1st Floor, New Trading Ring,

PJ Towers, Dalal Street,

Fort Mumbai – 400001, Maharashtra.

Sir:

Ref : Scrip Code :531234

Sub: Newspaper Advertisement of Published Financial Results.

Please find enclosed a copy of the newspaper publication of the Financial results

for the Quarter and Nine Months ended December 31, 2018 published today on January

24, 2018 in English in Business Standard and in Malayalam in Mangalam.

The same is for your information and record.

Yours’ faithfully

For Victory Paper & Boards (India) Limited

Josmin Jose

Company Secretary

1

WWW.SMARTINVESTOR.IN.FOR INFORMED DECISION MAKING <

The SmartInvestorKOCHI |

THURSDAY, 24 JANUARY 2019

Markets tumble most in 3 weeksSUNDAR SETHURAMAN

Mumbai, 23 January

The benchmark indices postedtheir biggest decline in threeweeks as concerns surrounding

global growth dampened investor sen-timent towards risky assets. In addition,earnings disappointment by ITCweighed on market performance.

The Sensex on Wednesday fell 336points or 0.92 per cent to end at 36,108,while the Nifty fell 0.84 per cent or 91points to close at 10,832. Both indicessaw the biggest single-day drop sinceJanuary 3. Shares of FMCG major ITCdeclined 4.2 per cent and accounted fornearly a third of Sensex and Nifty losses.

Overseas investors have been pullingout from riskier assets on account ofdeteriorating global growth outlookamid the US-China trade tussle.

Earlier this week, the InternationalMonetary Fund (IMF) had cut its fore-cast for global growth in 2019. The IMFexpects 3.5 per cent growth in 2019,down 0.2 percentage points from its pre-vious estimates in October. Trade ten-sions between China and the US, andweakness in the German auto industry,are among the reasons for the lower fore-cast. Investors have also been concernedover the economic slowdown in China— the global engine of growth. TheChinese economy grew 6.6 per cent in2018, the slowest pace since 1990.

Foreign portfolio investors (FPIs) soldshares worth ~776 crore, while domesticinvestors provided buying support to the

tune of ~584 crore. So far this year, FPIshave pulled out more than $500 millionfrom the domestic equity market.

“I think earnings are going to be cutacross the US, China, Europe and theUK. A lot of downgrades are coming,which will affect global equity markets.The next three months will be hugelyvolatile because of global data,” saidAndrew Holland, CEO of AvendusCapital Public Markets AlternateStrategies.

The markets fluctuated betweengains and losses for majority of the day.However, they saw sharp correctionbarely an hour before close of trade afterannouncement of ITC’s result.

“Selling intensified in the afternoonsession even as mild weakness in glob-al equity markets reflected risk aversionon the part of investors, in the face of theUS-China standoff and its impact onglobal growth,” said Deepak Jasani, headof retail research at HDFC Securities. Hesaid the Nifty could see a steeper fall ifthe immediate support of 10,780-10,800was broken. The company’s profits andsales were in line with estimates.However, its margin dipped to 38.5 percent against 39.8 per cent a year ago.

Barring two, all the 19 sectoral indicesof the BSE ended with losses, led by theFMCG index. Besides global growth,investors were also concerned about fis-

cal prudence taking a back seat ahead ofthe general elections. Further, the lat-est downgrades of special purpose vehi-cles (SPVs) owned by IL&FS have stokedfresh liquidity concerns.

“People are nervous about IL&FSsubsidiaries being downgraded, whichhas put pressure on debt funds that hadexposure to SPV companies associatedwith IL&FS. There is a fear amonginvestors that the liquidity crunch mayreturn. There are a host of SPVs that arerelated; if one gets downgraded otherscould follow suit and all could take abeating,” said Siddhartha Rastogi, man-aging director of Ambit AssetManagement.

Global growth concerns, earnings disappointment by ITC spoil sentiment

THE COMPASS

RAM PRASAD SAHU

IndiGo’s financials have beenunder pressure over the lastfew quarters on account ofpricing pressures, higher fuelcosts and a weak rupee.

While the latter two haveimpacted the financials in theDecember quarter, trends inpassenger fares over the lastcouple of months have beenpositive. The festival seasonsaw uptick in pricing — espe-cially in the 0-15 days bookingperiod — sustain inNovember and December,which has since continued to

the current month. It was the higher passen-

ger fares per kilometer, oryields, which helped IndiGopost revenue growth of 28 percent over the year-ago quar-ter. Overall growth wouldhave been higher but for aweak October, and the factthat the company has beenadding capacity much fasterat 33 per cent. As a conse-quence, load factors fell 320basis points to 85.3 per cent.

There was no relief, how-ever, on the costs front. Whilefuel costs per litre were up 31per cent, the rupee weakened

9 per cent over the year-agoperiod. Dollar-denominatedpayments, be it on account ofengine rentals or mainte-nance, have led to incremen-tal cost increases.

Fuel and engine rentalsaccount for 60 per cent of thecompany’s costs. If not for thecost increases from these twoheads as well as weakness ofthe rupee, unit costs wouldhave been flat over the year-ago quarter.

Given the cost headwinds,operating profit marginsbefore rental costs fell over1,100 bps to 21.2 per cent.

However, lower fuel pricesand some recovery in therupee should help the avia-tion market leader make the

most of the strong revenuegrowth and lower costs.

With the companyexpected to add capacityaggressively (March quarterYoY growth of 34 per cent),expect load factors to beunder pressure. However,the key positive continues tobe the pricing discipline,which seems to be holdingup as of now.

The other worry is regard-ing the slowing down of over-

all demand, given that in thelast couple of months, pas-senger growth has beenaround 12 per cent.

SHREEPAD S AUTE

Though ITC’s December quar-ter (Q3) numbers were broad-ly in line with the Street’s esti-mates, investors weredisappointed with the marginperformance, caused by thelack of price hikes. The stocktumbled 4.2 per cent onWednesday to ~277.7 apiece,after announcement of theresults.

ITC’s top line grew 15.1 percent year-on-year (YoY) to~11,136 crore, and net profit(excluding exceptional itemsof ~413 crore in December 2017quarter) rose 20 per cent to~3,209 crore.

Analysts were expectingrevenues and net profit of thecigarette maker to be ~10,881.2crore and ~3,128 crore, respec-tively. A healthy rise in top linewas on account of the 8 per

cent volume growth in ciga-rette business, which accountsfor 40-42 per cent of overallrevenues. No major pricingaction led to volume growthacross the cigarette portfolio.

However, this draggeddown margins in Q3 onaccount of high raw materialcosts (consumption of high-cost tobacco leafs), and a risein revenue share of importedcigarette capsules that fetchlower margins. ITC has notpassed on the higher cost toconsumers.

ITC’s operating profit mar-gin from the cigarettes seg-ment, accounting for around85 per cent of its overall oper-

ating profit, declined around50 basis points (bps) YoY to70.1 per cent. Thus, ITC’s grossprofit margin and Ebitda(earnings before interest, tax,depreciation and amortisa-tion) margin contracted 143bps to 61.4 per cent and 127bps to 38.5 per cent YoY,respectively.

The performance of itsFMCG business (includingpackaged foods, personal careproducts, etc) and hotels wassatisfactory.

ITC now needs to take upprice hikes to improve its mar-gin profile, which otherwisecould take away the sheen offits stock in brokerage buy lists

on account of attractive valu-ation (24 times its FY20 esti-mated earnings, at an over 50per cent discount to FMCGleader HUL), and an expectedearnings-accretive growth ofthe non-cigarette businesses.

Analysts foresee the non-cigarette businesses of ITC tocontinue rising by 14-15 percent. “Limited pricing so farhas been concerning, and weexpect ITC to take some pricehikes in the March 2019 quar-ter to pass on the effect ofinflation in raw material costs.Without pricing, we expectmargin pressure to remain,”says Nitin Gupta, analyst atSBICAP Securities.

Load factors to remain under stress amid aggressive capacity addition

Improving yield a positive for IndiGo amid higher pricing pressure

Non-cigarette businesses may continue to rise by 14-15%, say analysts

Undertaking price hikes critical for ITC’s margins

SAMIE MODAK

Mumbai, 23 January

Britannia Industries couldsoon make its way into thebenchmark Nifty 50 index.According to an analysis byICICI Direct, oil marketerHindustan PetroleumCorporation (HPCL) or tele-com tower company BhartiInfratel could be excludedfrom the index to make wayfor the Wadia group flag-ship firm.

The free-float marketcapitalisation of Britannia,a key criterion for inclusionin the index, is much higherthan HPCL and BhartiInfratel.

A review of the Niftyindices is slated for nextmonth.

In the past six months,the average free-float mar-ket cap of Britannia hasbeen ~35,748 crore, whilethat of HPCL and BhartiInfratel has been ~18,060crore and ~22,615 crore,respectively.

“Considering the aver-

age free-float market capi-talisation since August 1,2018, Britannia is most like-ly to replace HPCL in theNifty 50 index. The otherstock coming close to beingexcluded from the Nifty isBharti Infratel. HPCL wasinducted into the Nifty justabove a year ago, inSeptember 2017.

Therefore, if HPCL isnot excluded, Bharti

Infratel may have to beremoved for the inclusionof Britannia in the Nifty,”said ICICI Direct in a noteon Tuesday.

Shares of Britannia rose1.7 per cent on Wednesday,even as the benchmarkindices slipped more than a per cent.

Inclusion in Nifty orSensex leads to buyinginterest in the stock from

exchange traded funds(ETFs) that track theseindices.

The Nifty index is recon-stituted semi-annually.Data for the six-monthperiod ending January andJuly is taken into consider-ation for the review. Whilethe changes come intoeffect from April, theannouncement is made inadvance, typically inFebruary, for derivativetrading related adjust-ments.

ICICI Direct says a stockto be included in the Niftyneeds to have at least 1.5times the free-float marketcapitalisation of the stockto be excluded.

Britannia’s average free-float market cap for thepast six months is over 1.5times higher than bothHPCL and Bharti Infratel,shows data provided by thebrokerage.

During a previousreview in August 2012, JSWSteel had replaced Lupin inthe Nifty index.

FIIs turn pessimistic onPSU banks, capex revival

Britannia may dislodge HPCL from Nifty

JASH KRIPLANI

Mumbai, 23 January

Foreign institutionalinvestors (FIIs) are see-ing little value in state-

owned banks and capitalgoods companies. The share-holding pattern for theDecember quarter of BSE-500companies shows that FIIshave pared stake in a dozenstate-owned banks listed onthe exchanges.

FIIs also don’t seem to bebuying the capex cycle revivalstory as they have cut stake inat least 17 capital goods com-panies.

Their bearish stance onPSU banks and the capitalgoods sector seems to be incontrast with the domesticmutual fund’s (MF’s) outlookon these segments. While FIIshave cut stake in 17 of the 26capital goods firms, MFs haveraised stake in 16 such com-panies. Also, MFs have raisedstake in 10 of the 13 PSU banks,whereas FIIs have trimmedtheir stake in 12 PSU banks,shows data analysed byCapitaline.

Surprisingly, the PSUbanks where FIIs have takenthe largest cut in their stakeare State Bank of India (SBI)and Bank of Baroda (BoB).Analysts tracking the sectorconsider the two banks rela-

tively better-placed amongPSU banks. FII stake in BoB isdown 97 basis points (bps)from the previous quarterwhile FIIs stake in SBI is down84 bps. In contrast, MFs’ stakehas seen the largest jump inBoB (134 bps) and SBI (96 bps).

While the ongoing resolu-tion process under theInsolvency and BankruptcyCode or IBC and signs ofgrowth recovery are positives,analysts say PSU banks arelikely to see a tougher road torecovery.

“While growth is returningto the banking system alongwith some signs of pricingpower, asset quality pressuresare not completely behind usand credit costs are likely to

remain elevated. This willexert pressure on the returnon assets (ROAs), especially forPSU banks,” said analysts atICICI Securities in a note.

PSU banks have cededmarket share to their privatepeers over the years, and thishas dampened investor senti-ment. For example, in case ofmicro-small and medium-enterprises segment, privatebanks’ market share has risenfrom 26.4 per cent to 32.6 percent over Q2FY17-Q2FY19,while PSU banks’ sharedeclined by over 10 per cent— from 58.6 per cent to 48.1per cent — over the same peri-od, said analysts.

More on business-standard.com

Britannia’s average free-float market cap for last six months isover 1.5 times higher than both HPCL and Bharti Infratel

QUICK TAKE: MARGIN BEAT AIDS SHREE CEMENT Shree Cement has risen more than 3 per centin the last two trading sessions on better-than-expected realisations and lowerexpenses in the December quarter. Withoutlook expected to be steady, upgrades forthe stock will depend on price hikes

Sebi providesclarity on normsfor depositoryparticipantsEmployees of public financialinstitutions as well as thosewithout any identifiable ulti-mate promoters will not beconsidered as depository par-ticipants under Sebi norms,according to a circular.

The markets regulator onWednesday issued a circularproviding clarity on certainprovisions of regulations relat-ed to depository participants.

The development comesafter stock exchanges, depos-itories, public financial insti-tutions and public sectorbanks had sought certainclarifications from theSecurities and ExchangeBoard of India (Sebi).

According to the regulator,a person will not be consid-ered depository participant orits associate, if the same is onthe board of a public financialinstitution or public sectorbank, or which has no identi-fiable ultimate promoter.

PTI

36,600

36,400

36,200

36,000Jan 22,’19 Jan 21,’19

36,445

36,108

Sensex (Intra-dayChart)

10,960

10,920

10880

10,840

10,800Jan 22,’19 Jan 21,’19

10,923

10,832

Nifty 50 (Intra-dayChart)

GAINERS Jan 23,’19 Change 1D (%)

Sun Pharma 430.8 3.0YES Bank 197.3 2.7Tata Steel 463.8 1.5HUL 1765.7 0.9Vedanta 192.9 0.7

LOSERS

ITC 277.7 -4.2PowerGrid 186.1 -1.8Infosys 731.5 -1.7M&M 696.4 -1.6NTPC 140.6 -1.6Source: Exchanges Compiled by BS Research Bureau

SCOREBOARDTop 5 Sensexgainers and losers (price in ~)

CUTTING LOOSEPSU banks, cap goods companies where FIIs have cut their stake (%)

December quarter September quarter QoQ change (bps)

Bank of State Bank Punjab KEC Siemens Cummins Baroda of India National International India

Bank Source: Capitaline

-97 -84 -65 -211 -184 -103

9.3

7 11.3

5

3.07

3.72

7.64

2.74

4.5

8

10.2

1

9.7

5 12.3

8

10.3

5

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