09 July 2012

WIN-dow to the week that was Week in a Nutshell (WIN): Motilal Oswal



More Talk + No Action = Flat Markets. The PM again spoke in detail about the challenges at hand but we are yet to get any concrete decisions and actions. Meanwhile Central Banks in various parts of the world have been busy creating an enabling environment for growth to accelerate. The ECB, PBOC and BoE all acted this week taking various diverse measures all aimed at putting their economies on a growth path. Will our own Reserve Bank wait till the next policy meet on July 31st or taking a cue from global counterparts act sooner? RAY OF HOPE – Our just released 1QFY13 Strategy piece shares our studied basis for a 11% EPS CAGR over FY12-14 with upside potential. Please read further to find details of our 3 pillars of turnaround that will sling Our Economy and Our Markets from the year and half long period of falling growth, worsening internal and external deficits and rising inflation. ITC ANOTHER VAT INCREASE This week saw the largest Indian state impose a whopping ~4x increase in VAT from 13.5% to 50%. While UP accounts for only 4% of sales for ITC, the hikes translates into 150bps increase in average VAT. 8 states have so far effected VAT increase, these account for 37% of cigarette sales. SHARP CUT IN EPS FOR BHARTI – 23% cut in FY13 EPS to Rs. 14 on the back of lower RPM/margins in India mobile operations, lower net adds/margin assumptions for Africa business and net impact of currency on finance costs. The recent positive sound bytes from Delhi helped the sector post smart gains this week, while not changing any of the factors that forced our cut. We would remain cautious on this space. AUTO COMPANIES NUMBERS FOR JUNE, which came in largely on expected lines, and the slowdown visible in passenger cars is now evident in 2W as well, with 3.2% m-o-m decline in volumes across segment.. Some of the highlights of this edition:
 India Strategy – Ray of Hope - 2Q FY13 Preview
 MOBIZ- Motilal Oswal Business Insights Takeaways
 NMDC Initiating Coverage report


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