ICICI Bank continues strong growth momentum in Q3, change is working

ICICI Bank has reported strong jump in its consolidated net profit during the third quarter of financial year 2010-11. The largest private sector bank in the country notched up consolidated PAT growth of 77.5% Y-o-Y to Rs. 2,039 crore (US$ 456 million) in Q3FY11 from Rs. 1,149 crore (US$ 257 million) in the corresponding quarter of the previous financial year i.e., Q3FY10.

ICICI Bank is India's second-largest bank, after the state-owned SBI, with total assets of Rs. 3,634.00 billion (US$ 81 billion) at March 31, 2010.

The Mumbai-headquartered bank’s standalone net profit was up 30.50% at Rs 1,437 crore versus Rs 1,101.1 crore, during the said period.

The bank’s standalone net interest income grew 12.34% y-o-y to Rs. 2,312 crore in Q3FY11 from Rs. 2,058 crore in Q3FY10.

In another positive, its Current and Savings Account (CASA) ratio increased to 44.2% at December 31, 2010 from 39.6% at December 31, 2009.

Advances too grew by 15.3% Y-o-Y to Rs. 206,692 crore (US$ 46.2 billion) at December 31, 2010 from Rs. 179,269 crore (US$ 40.1 billion) at December 31, 2009.

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However, the bank’s Operating expenses (including direct marketing agency expenses) increased 27.2% to Rs. 1,707 crore (US$ 382 million) in Q3FY11 from Rs. 1,342 crore (US$ 300 million) in Q3FY10, primarily due to costs relating to new branches added over the last year and full impact of cost of erstwhile Bank of Rajasthan, during the quarter.

Provisions decreased 53.6% to Rs. 465 crore (US$ 104 million) in Q3-2011 from Rs. 1,002 crore (US$ 224 million) in Q3-2010.

The bank’s Net Non-Performing Asset (NPA) ratio also declined to 1.16% at December 31, 2010 from 2.19% at December 31, 2009.

In absolute terms, the bank’s Net NPA decreased by 34.9% to Rs. 2,873 crore (US$ 643 million) at December 31, 2010 from Rs. 4,416 crore (US$ 988 million) at December 31, 2009.

Its Provision coverage ratio increased to 71.8% at December 31, 2010 from 69.0% at September 30, 2010 (51.2% at December 31, 2009).

The bank’s CAR (capital adequacy ratio) stood at a solid 19.98%, with Tier-1 capital adequacy of 13.72%, as per Basel II norms. This is well above RBI’s requirement of total capital adequacy of 9.0% and Tier-1 capital adequacy of 6.0%.

Performance in the 9-Month period of FY 2010-11

The bank’s standalone Profit after tax for the 9-month period of FY 2010-11 grew by 22.5% to Rs. 3,699 crore (US$ 827 million) compared to Rs. 3,019 crore (US$ 675 million) during the same period of the previous fiscal year;

Consolidated PAT for the 9-month period increased by 36.0% to R 4,525 crore (US$ 1.0 billion) for 9M-2011 compared to Rs. 3,328 crore (US$ 744 million) for 9M-2010.

Change@work

According to a statement by the country’s largest private sector lender, it has continued with its strategy of pursuing profitable credit growth by leveraging on its improved fund mix, lower credit costs and efficiency improvement, and cost rationalization. In this direction, the Bank continues to leverage its expanded branch network to enhance its deposit franchise and create an integrated distribution network for both asset and liability products. 

ICICI Bank has 2,512 branches, the largest branch network among private sector banks in the country, as on December 31, 2010.

(To read another of our story on ICICI Bank, click here)

PNB’s net profit grows nearly 8% in Q3FY11

The New Delhi-headquartered Punjab National Bank has posted a growth of a mere 7.8%, on a Y-o-Y basis, in its PAT in the third quarter ending December 31, 2010. The bank’s net profit during Q3FY11 rose to Rs. 1,089.77 crore from Rs. 1,011.31 crore in the same quarter a year ago.

Its total income, however, grew at a healthy 28% to Rs 7,976.35 crore against Rs 6,236.55 crore, during the said period.

On the negative side, the bank’s Capital Adequacy Ratio, as per Basel II norms, fell substantially to 11.9% in the third quarter of FY 2010-11 from 14.56 % in the corresponding quarter a year ago. Further, its ROA (Return on Assets) too declined to 1.27% from 1.46%, during the same period.

 The bank’s EPS stood at Rs. 34.56, as on December 31, 2010, up from Rs. 32.07 in Q3FY10.

 Source: PNB

BHEL’s PAT rises 31% in Q3FY11

India’s state-owned power equipment major, BHEL, today reported 31% rise in its net profit to Rs 1,403 crore during Q3FY11 (vs. 1,072 crore in Q3FY10), led by strong sales which rose nearly 26% to Rs 9,280 crore (vs. 7,386 crore in Q3FY10). The company’s PBIT too rose at almost identical rate to Rs. 2,080 crore from Rs. 1651.2 crore, during the said period.

However, it’s total expenditure too jumped substantially, by 23%, to Rs. 7,096 crore, on a Y-o-Y basis.

The company’s EPS stood at Rs. 28.7 during the third quarter ending December 31, 2010, up from Rs. 21.9 recorded in the corresponding quarter of the previous fiscal year.

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The New Delhi-headquartered company has an outstanding order book position of about Rs. 1,58,000 crore at the end of the just concluded December quarter.

BHEL is India’s largest engineering and manufacturing enterprise in the energy-related/infrastructure sector. It caters to the core sectors of the Indian Economy, viz. Power, Transmission, Industry, Transportation, Renewable Energy, Oil & Gas and Defence.

 Source: BHEL

Wipro Q3 PAT rises 10%, y-o-y, IT's CEOs resign

The much-awaited financial results of Wipro’s Q3 FY’11 result were announced early morning today which have more or less met analysts’ forecasts.

Results of IT Services

The Bangalore-headquartered technology major while releasing its financial results under International Financial Reporting Standards (IFRS) has said that its IT Services Revenues, in dollar, terms were $1,344 million, a sequential increase of 5.6% and YoY increase of 19.3%. When translated into Indian rupees, the IT Services Revenues were up 15% Y-o-Y to Rs. 59.49 billion ($1,328 million).

Wipro’s IT Services Earnings Before Interest and Tax (EBIT) rose 8% y-o-y to Rs 13.21 billion ($295 million*).

However, the company’s margins at 22.8% was flat during the quarter over the immediate preceding September’10 quarter but was significantly lower than 23.7% reported a year ago. “The operating margins for IT Services business was flat, despite lower working days and drop in utilization,” said Suresh Senapaty, Executive Director & Chief Financial Officer, Wipro.

Also, price realization related to onsite projects was down by 3.6% Y-o-Y.

Further, Net Utilization (Excluding Trainees) was lower at 79.9% (Q3FY11) vs. 84.5% (Q3FY10), Y-o-Y.

Higher attrition rate (Voluntary TTM at 21.6% vs. 9.9%, Y-o-Y) too is a concern for the company.

In terms of verticals, Technology and Healthcare & Services saw de-growth of almost identical level of 3.5%

See Growth Metrics below:

Wipro Technologies Q3 2011 Analysis

In terms of Geography, APAC and Other Emerging Markets grew the highest at 37.8% Y-o-Y. India & Middle East business saw a growth of 18.9% Y-o-Y.

In terms of Practices, Consulting business saw edged higher, clocking a growth of nearly 60% Y-o-Y, as compared to others.

The company’s IT Services business added 36 new clients during the third quarter ending December 31, 2010. There was also a net addition of 3,591 employees during the same quarter. The company also said that its Consumer Care and Lighting Revenues grew 21% while the EBIT grew 14%, y-o-y.

Wipro is a $6bn enterprise (based on consolidated revenues of FY'10) with major interests in Software Services Computer Hardware, Consumer Products, and Lighting Solutions. Wipro’s IT Services businesses accounted for 76% of its consolidated revenues during the just concluded third quarter (i.e., Q3FY11). The Bangalore-based firm is India’s third largest software exporter behind TCS and Infosys.

Results of Wipro Ltd. (Consolidated)

The company also said that its Consolidated Revenues (which include other businesses such as soaps and bulbs) were up 12% y-o-y to Rs. 78.29 billion ($1.75 billion*) while Consolidated PAT grew 10% y-o-y to 13.19 billion ($294 million*).

The company’s results were almost in line with analysts’ expectations. A CNBC-TV18 poll of brokerages had estimated consolidated net profit of Rs 13.18 billion and consolidated revenues of Rs 80.02 billion. However, some analysts felt that results were disappointing. “Wipro's third quarter results are below our expectation. Revenue growth was lower-than-expected, whereas PAT was in-line with our estimates. We expect the stock to see correction as results lack any positive surprise,” said a report from brokerage house.

Analysts have also expressed surprise at the change of guard at the firm’s IT Services. “The management rejig has made the investors cautious, as it is now a big responsibility for Kurien, who will alone handle the position held by two people earlier,” NDTV Profit quoted Geojit BNP Paribas Financial Services’ AVP Gaurang Shah as saying.

Highlights of the Results:

Results for the Quarter ended December 31, 2010

• IT Services Revenue in dollar terms was $1,344 million, a sequential increase of 5.6% and YoY
• Increase of 19.3%. Non-GAAP constant currency revenue was $1325 million.
• IT Services Revenues were Rs. 59.49 billion ($1,328 million1), representing an increase of 15% over the same period last year.
• Total Revenues were Rs. 78.29 billion ($1.75 billion1), representing an increase of 12% over the same period last year.
• Net Income was Rs. 13.19 billion ($294 million1), representing an increase of 10% over the same period last year.
• Non-GAAP Adjusted Net Income (excluding impact of accelerated amortization of stock based compensation) was Rs. 13.09 billion ($292 million1), representing an increase of 9% over the same period last year.
• IT Services Earnings Before Interest and Tax (EBIT) was Rs. 13.21 billion ($295 million1), representing an increase of 8% over the same period last year.
• IT Services added 36 new clients in the quarter.
• Net addition of 3,591 employees in the current quarter.
• Consumer Care and Lighting Revenue grew 21% over the same period last year and EBIT grew 14%.
• Wipro declares an interim dividend of `2 ($0.041) per share /ADS.

(Source: Wipro)

(*For the convenience of the reader, the amounts in Indian rupees in this release have been translated into United States dollars at the noon buying rate in New York City on December 30, 2010, for cable transfers in Indian rupees, as certified by the Federal Reserve Board of New York, which was US $1=Rs.44.80. However, the realized exchange rate in our IT Services business segment for the quarter ended December 31, 2010 was US$1=Rs.44.27)

However, the company surprised market by saying that Suresh Vaswani and Girish Paranjpe, the joint CEOs of IT Services, are stepping down and in place TK Kurien will be the new CEO of Wipro. Making the announcement Azim Premji, Wipro’s Chairman said, “The Joint CEO structure was one of the key factors that successfully helped us navigate the worst economic crisis of our times. With the change in environment, there is a need for a simpler organization structure. Kurien’s track record makes him uniquely positioned to lead Wipro through the next phase of growth.”

Wipro’s Q3FY11 performance lags bigger rivals TCS and Infosys. Earlier, TCS came out with better-than-expected Q3 numbers, bettering market estimates, and Infosys’ numbers although good yet disappointed the street.

In its Outlook for the Quarter ending March 31, 2011, the company said, “We expect Revenues from our IT Services business to be in the range of $1,384 million to $1,411 million, a sequential increase of 3% to 5%( based on the constant currency exchange rates: GBP/USD at 1.58, Euro/USD at 1.35, AUD/USD at 1.01, USD/INR at 44.98).

The shares of Wipro fell 4% in the morning trade after the announcement of the result.

Kotak Bank’s PAT up by 16% in Q3 2010-11

Kotak Mahindra Bank posted a robust Q3 2010-11 results with net profit of Rs 384 cr up by 16%, against Rs 331 cr, on year-on-year basis. The Bank's total income rose to 11.62% to Rs 2,668.47 cr for the quarter ended December 31, 2010 against Rs 2,390.48 cr on y-o-y basis.

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TVS Motors Q3 net profit zooms @ 137%

Venu Srinivasan led TVS Motor recorded a whopping 137% rise in its net profit for the third quarter with Rs. 55.7 cr against Rs. 23.5 cr, on a Y-o-Y basis. Third largest two-wheeler manufacturer’s net sales were up by 50.19% to Rs 1,613 crore against Rs 1,072.6 cr last year.

The impressive performance was due to rise in two wheeler segment which clocked 39% by volume base, while three wheeler sales crossed 10,000 units for the first time, the press release stated. 

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Says ‘Yes’ to Growth: Bank posts 52% rise in Q3 PAT

Yes Bank, India’s leading private sector bank, has said that its net profit during the third quarter of FY 2010-11 grew 51.6% to Rs. Rs 191 crore compared to Rs 126 crore, on year-on-year basis. The bank’s Net Interest Income (NII) rose 53.2% to Rs 323.2 crore against Rs 211 crore, during the same period. Further, its total advances surged 66.3% to Rs 31,112.2 crore during Q3FY11 from Rs 18,710.4 crore in Q3FY10, while total deposits grew by 79% to Rs 39,452.8 crore from Rs 22,038.6 crore, during the same period.

Its NIM (Net Interest Margin), however, was lower at 2.8%, as on December 31, 2010, vis-à-vis 3.0% in the preceding quarter ending September 30, 2010.

The bank’s capital adequacy ratio, a key metric for a bank, stood at 18.22%, as on December 31, 2010.

The bank's net NPAs as a proportion of net advances fell to 0.06% from 0.09%, during the comparative quarters.

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Further analysis shows that the bank’s growth during the third quarter of the current fiscal year slowed a bit as compared to its performance during the immediate preceding quarter i.e., Q2FY11 when its net profit recorded a jump of 58% while NII grew at a much higher rate of 78%.

             

Yes Bank’s Comparative Performances: Q3 vs. Q2, FY’11
Change, Y-o-Y	NII	NIM (%)	Total Advances	Total Deposits	CAR (%)	PAT
Q3 FY’11	53.2	2.8	66.3	79	NA	52
Q2 FY’11	77.9%	3.0	86.3	107	19.4	58
(All figures in % except NIM and CAR)

However, going ahead, analysts expect growth momentum to come down. “Surging interest rates may weigh on the growth momentum of India's top banks in 2011, after rising loan demand and fee income in Asia's third-largest economy likely boosted their profits in the final quarter of last year,” warns a report in Reuters. As the runaway inflation remains a key worry before RBI, India’s central bank, likelihood of a (interest) rate hikes looks very much possible, which could, however, pressure banks’ margin, it cautions.

Biocon booster, bottom line scores a perfect 100!

Biocon's product portfolio includes enzymes, small molecules, recombinant proteins, antibodies etc.

Bangalore-based Biocon has reported a jump of 24.85% in its consolidated net profit to Rs. 100 crore (Rs. 100.75 crore, to be precise) in the Q3FY11, from Rs 80.9 crore in the same quarter of the previous financial year i.e., Q3FY10. 

Its consolidated net sales jumped 14.65% to Rs 728 crore from Rs 635 crore (y-o-y), while EBIDTA surged 34 per cent to Rs 178 crore, during the same period. The company’s EBIDTA margins stood at 24 per cent, during the quarter, reflecting improved quality of earnings. The company said that the strong growth momentum was led by strong showings in its branded formulations and statins businesses.

Commenting on the company’s results, Kiran Mazumdar Shaw, Chairman and Managing Director, said, “This marks an important growth milestone which will enable us to invest in advancing our research programs and expand our manufacturing and marketing partnerships, which we believe, are catalysts of growth for the future.”

Established in 1978, Biocon has risen to emerge as India's largest biotechnology company and amongst top 10 biotech firms, internationally.

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NIIT Tech Q3 PAT surges 35%

Tech major, NIIT Technologies has said that its consolidated net profit surged 35.41% y-o-y to Rs 48 crore for the quarter ending December 31, 2010 from Rs. 35.3 crore a year ago. Its consolidated revenues too grew impressively by 30.63% to Rs 300.6 crore compared to Rs 230.1 crore, during the same period. “Our balanced revenue mix de-risks the business from uncertainties in any particular region,” said Rajendra S Pawar, Chairman, NIIT Technologies, while releasing the results. 

The company, however, reported a fall in operating margins to 20.7% from 22%, during this period. It added 364 employees during Q3FY11, taking its headcount to 5358 at the end of the said quarter.

NIIT Technologies was spun off from parent NIIT, a pioneer in computer education in India, in 2004.  

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Orchid Chemicals turns profitable

Pharmaceutical company, Orchid Chemicals has said that it has turned profitable in the recently concluded quarter ending December 31, 2010. The company attributed the turnaround to its steady growth across segments. It reported consolidated PAT of Rs 56.62 crore for the Q3FY11 against a net loss of Rs 18.91 crore in the corresponding period of the previous fiscal. Expressing hope to continue the growth momentum, K Raghavendra Rao, CMD of Orchid Chemicals said, “Our business has arrived at a strong earnings platform that will see sustainable robust growth from here on.” “This is despite transferring our injectable formulations business to Hospira,” he added further.

The Chennai-based drug maker’s net sales rose to Rs 427.14 crore from Rs 308.83 crore, during the same period. In another positive, the company's Active Pharmaceutical Ingredients business revenues grew more than tripled to Rs 339.27 crore from Rs 111.8 crore, during the period under review. However, the firm’s formulations revenues declined to Rs 91.85 crore from Rs 198.86 crore, during the said period. “We are confident of registering strong double digit growth couped with more than proportionate profitability year-on-year going forward,” the company’s CMD said in a statement.

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LIC Housing Finance bottom line grows 38% to Rs. 213 crore in Q3FY11

LIC Housing Finance, India’s leading housing finance company, has reported a jump of 38.31% in its net profit to Rs 213 crore in Q3FY11 as against Rs 154 crore it recorded in the same quarter of the previous year. The firm’s total income rose even more sharply by 53.82% to Rs 1354.42 crore from Rs 880.49 crore, during the said period.

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Onion Shocks: Food Inflation and India’s Choices

Soaring food prices-led inflation is creating worries for India’s policy makers.

The consumer in India is caught at Winter 65. Don’t get confused! It is the prices of onions, petrol and beer that have all increased beyond Rs 65. Perhaps for the first time in the post-independence era, the prices of onion, a basic necessity, have moved on a par with the prices of petrol and beer. The rising onion prices have forced policy makers and economists focus on what has led to this sudden spike in what is an essential part of daily vegetable basket of every Indian family. They’ve discovered that onion traders were hoarding up on supplies as unseasonal rains in October destroyed crops in Maharashtra, the biggest onion producing state. This resulted in a severe drop in yield per acre of land and this, in turn, prompted onion farmers to treble the prices at which they sell to the traders.

Reports indicate that the country’s economic growth will be relatively strong in India this year, around 8.1% growth. But the worry is that growing inflation is being driven by supply bottlenecks and rising incomes. Expressing concerns over high inflation, Reserve Bank of India (RBI) Deputy Governor Dr KC Chakraborty said that “Inflation is a difficult situation but manageable.” Owing to the rising food prices, the wholesale price index — India’s inflation indicator —rose to 8.43% in December’10 as against 7.48% over the previous month. Food inflation remains at high levels, with an annual increase of 16.91% in the week ended-January 1, 2011. Economists forecast that the inflation at the end of this financial year is estimated to be at 7%, revised upward from 6.5% earlier.

Another view is that the rising inflation has more to do with credit growth in the economy and less with food prices. Nevertheless, the economy faces a choice between diverting government money to subsidize fuel prices or letting inflation continue to rise. India is a heavy importer of fuel and is particularly vulnerable to the rise in oil prices. Sanjaya Panth, a representative for the IMF’s Asia and Pacific department in India, praised the nation’s efforts to free fuel prices by cutting subsidies. He says the government is diverting the savings to more productive areas such as infrastructure investment. However, he warns that lower subsidies will boost inflation and that interest rates will have to rise.

Measures to tame food inflation

Industry body, Confederation of Indian Industry (CII) said that India and its neighboring countries should sign a special accord for import and export of perishables to tide over the demand-supply mismatch. It has prescribed a 10-point recommendation to tackle inflation. These include –

1.     In Short Term, Lower import duty, especially on fruit & vegetables and allow imports: Looking at the rising prices of fruit and vegetables, the Government should react fast on lowering the existing tariffs (hovering around 30% to 50%) and allow import of these commodities.

2.     State Governments should take stern enforcement measures to curb hoarding and speculations.

3.     The Government should invite and Incentivise private sector (both domestic and foreign), cooperatives and NGOs to come up with business models that directly link the growers with processors and retailers.

4.     In Medium to Long Term, all the fruits, vegetables and other perishables including fisheries having very short shelf-life should be fully exempted from the provisions of the APMC Act. Processors and organized retailers should be incentivised to procure directly from the farmer groups (growers’ companies or cooperatives) for building infrastructure in rural areas for aggregating the fresh produce, cleaning it, grading, packaging, and storing in cold storages before bringing it for retail distribution. This will create not only employment in rural areas but also build much needed infrastructure. 

5.     The Centre should also encourage the States to help build this infrastructure, especially cold storages, to save on wastages which will boost supply side and help in price moderation.

6.     The Government should move towards a unified national market and allow free movement of fresh produce across the country without any taxes whatsoever. 

7.     Most importantly, it is time to usher in market reforms by compressing the value chain of Agri-commodities. The model of creating a marketing platform at the village level needs to be promoted where the buyers will come to the producer groups directly rather than farmers going outside to sell their produce.  

8.     Investments in organized retail (both domestic can foreign) to shore up the entire supply chain and ensure good prices to farmers as well as consumers.

9.     Strong and urgent focus is needed to enhance farm productivity by way of adequate inputs usage and by extension for enhancement of the supply side to meet the growing demand on a sustainable basis.

10.  .A special agreement should be signed between India and the neighboring countries - for import – export of perishables.  This will be a confidence building measure and will ease demand supply challenges of similar commodities between India and the neighboring countries.

Source: CII 

Monthly trends in Wholesale price index- monthly average (% change)