12th July 2010

Oil and Gas

Oil cos are back in lime light thanks to the deregulation in prices by the government. Because of various developments in the public as well as private sector companies, the petroleum industry’s future prospects appear bright.

The industry will still end up losing nearly Rs 18,000 crore in the June Quarter because of the subsidy sharing regime for FY 11.

Stocks to Watch:

Cairn India : Commissioning of oil pipeline from Rajasthan fields is to boost its net sales and profits for the June 10 quarter.

ONGC : Profit  for June quarter may fall below last June's if its subsidy burden increases.

Reliance Industries Limited : RIL is on the move with new plans since it won the case in the SC,

Metals

There has been a fall in steel prices and rise in iron ore prices in the last quarter but steel firms are expected to report growth because of the low base of last years June quarter.

Non-ferrous metal firms are expected to perform better than the steel cos due to their more integrated nature. The high growth momentum of non-ferrous metal stocks might be affected due to drop in base metal.

Stocks to Watch:

Tata Steel : As Corus steel turns profitable the consolidated profit in June 2010 quarter are expected to rise.

SAIL : Because of the rising cost of ore and coal profit growth during the quarter is expected to be moderate.

Banks

Banks are expected to do well in June 2010 quarter on the back of improvement in credit growth. The credit growth improved to 20% at the end of June 2010 quarter. At the same time, deposit growth was lower at 14%. This shows that the interest income is expected to grow at a higher rate than interest expense. This bodes well for the net profit of Indian banks. There are certain factors, which can have a negative impact on the performance too.

Stocks to Watch:

HDFC Bank, PNB : They are expected to lead the pack with an estimated 34% and 38% growth respectively in net profit in June 2010 quarter.

Cement:

Input costs like diesel have gone up increasing the freight cost and operating costs are rising and realizations per tonne are sluggish. This would impact the performance of cement manufacturers in the first quarter.

Ambuja Cement : There is not much of a slowdown in the South. Net profit may increase by 64% due to firm demand in other regions.

ACC : Profits  may dip by 1-2% year-on-year due to sluggish price realizations in south and western regions.

Capital Goods

 Industrial production numbers show that capital goods companies are will perform well in the first quarter.  Because of higher industrial demand the topline for the four capital goods companies in the Nifty is expected to grow by nearly 20%.

Stocks to Watch:

BHEL : BHEL would probably double its profit in near term based on its strong  order book and performance.

Siemens : Siemens has had a dismal growth in sales and its net profit may halve.

Auto

There has been strong volume growth in auto segment and the operating margins in the June quarter have been great.

There will be a shuffling and re ranking of companies with Tata Motors and M& M reporting better numbers than industry leaders Maruti Suzuki and Her