For the quarter ended September 2015, Asian Paints posted a consolidated net profit of Rs 399 crore, up 14.89 per cent against Rs 347.30 crore in the corresponding quarter a year ago.. (Image: AsianPaints)

Asian Paints share price slid as much as 5.16 per cent on Monday after the company posted lower-than-expected September quarter results. For the quarter ended September 2015, the company posted a consolidated net profit of Rs 399 crore, up 14.89 per cent against Rs 347.30 crore in the corresponding quarter a year ago.

At 12.07 pm, Asian Paints shares were trading 4.49 per cent down at Rs 818.95. The scrip opened at Rs 834 and had touched a high and low of Rs 844.05 and Rs 812.50, respectively, in trade so far.

According to Religare Capital Market Institutional Research, Asian Paints posted a weak Q2 earnings with 4 per cent, 16.7 per cent and 14.9 per cent YoY growth in consolidated net sales, EBITDA and net profit, even as domestic volume growth came in line at around 8-9 per cent. EBITDA margins too disappointed (15.3 per cent vs. 16 per cent expected) on an adverse product mix.

Total income from operations on consolidated basis was Rs 3,779.36 crore during the quarter under review. It was Rs 3,632.95 crore for the July-September quarter last fiscal.

Religare Capital in a research note said, “While we pare our FY16/FY17/FY18 earnings by 5.8 per cent, 4.8 per cent and 3.7 per cent, respectively, to build in lower revenue growth, we expect demand to recover from H2FY16 onwards. We Maintain ‘Buy’ with a September 2016 target price of Rs 935 (Rs 950 earlier).”

The BSE Sensex and Nifty opened on a positive note on Monday tracking firm global cues. (Photo: Reuters)

9.32 am: The rupee depreciated by 16 paise to 64.99 against the US currency in early trade on Monday due to strong demand for the dollar from importers. Sensex was up 96 points at 27,566.

The BSE Sensex and Nifty opened on a positive note on Monday tracking firm global cues. Sensex opened 104.23 points up at 27,575.04. Nifty opened 38.20 points up at 8,333.65.

Bharti Airtel announced its Q2 results on Monday before market hours. Bharti Airtel Ltd, India’s top mobile carrier by subscribers, posted a 10 per cent rise in quarterly net profit that beat estimates, helped by a surge in data usage by customers. The telecom major reported a consolidated net profit of Rs 1,522.70 crore against Rs 1,383.2 crore in the corresponding quarter a year ago. Bharti Airtel reported a fall of 54.96 per cent yoy at Rs 2,223.7 crore in its standalone net profit. Share price of Bharti Airtel was up around 1.6 per cent in the early trade.

Analysts on average expected Bharti Airtel to post a net profit of Rs 1,150 crore, according to Thomson Reuters data.

Sensex and Nifty gained 183.15 points and 43.75 points at 27,470.81 and 8,295.45 on Friday.

Global Markets

Asian stocks on Monday were close to wiping out all their losses since China’s shock currency devaluation in August, as global equities rallied after the Chinese central bank cut rates and US tech giants provided upbeat earning guidance.

Japan: Japan’s Nikkei share average rose to a fresh two-month high on Monday after China’s surprising rate cut lifted risk sentiment, while bellwethers Hitachi Ltd and Panasonic Corp surged on stronger earnings expectations.

New York: A tech share rally drove US stocks up sharply for a second day on Friday as earnings from companies including Microsoft beat analysts’ expectations, while healthcare shares rebounded from recent losses.

London: Britain’s top share index touched a two-month high on Friday, spurred by international monetary stimulus after China cut interest rates and as investors bet on further easing from the European Central Bank.

Asian Paints stocks will be in focus after the company reported a consolidated net profit of Rs 399 crore for the second quarter ended September 30, on account of increase in net sales. (Photo: PTI)

The BSE Sensex and NSE Nifty opened higher on Monday tracking strong global cues. At 9.29 am, Sensex was up 84.97 points at 27,555.78. Similarly, Nifty was up 21.85 points at 8,317.30 during the same time.

Below are the stocks that are likely to be in focus today

Asian Paints: The company on Friday (after market hours) reported a consolidated net profit of Rs 399 crore for the second quarter ended September 30, on account of increase in net sales.

Bharti Airtel: Bharti Airtel on Monday reported a rise of 10 per cent in consolidated net profit (year-on-year) to Rs 1,522.7 cr  for the second quarter as against Rs 1,383.2 cr in the corresponding quarter a year ago. The stocks of the company were trading 1.11 per cent up at Rs 362.75 at 9.27 am.

L&T Finance Holdings: The company’s consolidated net profit rose by 18.6 per cent year-on-year to Rs 215.41 crore during the second quarter ended September 2015.

Jet Airways: A British judge has dismissed Indian private carrier Jet Airways’ appeal against a 15,000 euro fine for failure to comply with the European Union’s emissions targets.

Tata Motors: Fitch has reaffirmed the long-term foreign currency issuer default rating and senior unsecured ratings of Tata Motors-owned Jaguar Land Rover at ‘BB-‘ with positive outlook.

Force Motors: Force Motors on Saturday posted a 65.35 per cent rise in its net profit at Rs 42.48 crore for the second quarter ended September 30, 2015.

Arvind Ltd: The textile firm on Sunday said that workers at its Santej plant have unconditionally called off strike and the plant is now working normally.

The BSE Sensex and NSE Nifty are likely to open positive on Monday tracking SGX Nifty and firm global markets. (Photo: Reuters)

The BSE Sensex and NSE Nifty are likely to open positive on Monday tracking SGX Nifty and firm global markets. At 8.29 am (IST), SGX Nifty was up 40 points, or 0.48 per cent, at 8,355.

Asian stocks on Monday were close to wiping out all their losses since China’s shock currency devaluation in August, as global equities rallied after the Chinese central bank cut rates to shore up faltering growth in the world’s second-largest economy.

Nikkei, Hang Seng and Shanghai were up 1.21 per cent, 0.33 per cent and 0.64 per cent at 19.052.73, 23229.12 and 3,434.20.

Markets are looking to Chinese Communist party’s central committee meeting from Monday to Thursday to set out a five-year plan. Ahead of the meeting, Premier Li Keqiang said that China has never stated the economy must grow seven per cent this year, coinciding with remarks by a top central bank official on Saturday that China would be able to keep annual economic growth at around 6-7 per cent over that period.

On Wall Street, S&P 500 index rose 1.1 per cent on Friday to turn positive on the year, while the tech-heavy Nasdaq jumped 2.3 per cent.

Back home, the BSE Sensex and NSE Nifty gained 183.15 points and 43.75 points at 27,470.81 and 8,295.45 on Friday.

Stocks of Asian Paints will be in focus as the company on Friday reported a consolidated net profit of Rs 399 crore for the second quarter ended September 30, on account of increase in net sales.

On Monday companies like Blue Starco, Asian Tiles, Taj GVK, Hitachi Home, Bharti Airtel, HIL, StrTech, Wonderla, Advanta, UPL, Man Infra, Good Luck, Orient Bell, Somany Ceramics and InoxWind may announce their earnings.

RIL (Reliance Industries) reported consolidated net profit of Rs 67.5 bn (up 8% q-o-q; up 13% y-o-y), ahead of street estimates. Consolidated Ebitda (earnings before interest taxes depreciation and amortisation) was Rs 107 bn (up 5% q-o-q; up 9% y-o-y) The company delivered higher-than-expected refining margins ($10.6/bbl – at multi-year highs), taking advantage of flexibility in its crude and product slate, while also benefitting from risk management.

The company continues to build towards the roll-out of Jio’s services, with the imminent launch of a range of 4G smartphones under the ‘Lyf’ brand aimed at helping build an ecosystem of handsets compatible with the full range of Jio’s services.

Refining margins surprise on the upside: RIL reported GRMs (gross refining margins) of $10.6/bbl (at six-year highs), that were higher q-o-q (quarter on quarter) despite lower regional benchmark margins (RIL GRMs $4.3/bbl higher than Singapore benchmarks), with advantaged crude sourcing, a flexible product slate allowing maximising of gasoline production, and weaker fuel oil cracks and robust risk management. Refining Ebit (consol) was at R54.6 bn (up 4% q-o-q; up 42% y-o-y).

Product slate flexibility sees gasoline output rise: RIL maximised gasoline output, highlighting the flexibility of the refinery’s product slate. RIL produced c.4MMT of gasoline and alkylates during the quarter, to take advantage of elevated gasoline cracks. RIL stated that demand in the US was the highest since 2007, with unplanned refinery outages and low prices. The company was also able to export additional volumes (particularly alkylates) to the US as a result. The company also switched seamlessly to producing larger quantities of ULSD (ultra low sulphur diesel), with the market for 500ppm diesel more muted.

Advantaged crude sourcing, falling fuel oil cracks aid margins and premiums vs benchmarks: RIL continues to retain flexibility on the crude diet as well, becoming the first major refiner to utilise Basra Heavy crude. As a result, RIL was able to take advantage of significant discounts to OSPs. In addition, with the Brent-Dubai spread compressing during the quarter, RIL sourced additional Brent linked crudes, allowing for a higher premium vs Singapore benchmarks (Singapore benchmarks are calculated vs Dubai crude).

Risk management helps refining earnings: RIL highlighted that robust and proactive risk management aided margin performance—we see a likely usage of forward selling, particularly on middle distillates which could have aided margins.

Domestic marketing aid margins, while inventories are a drag: In addition, domestic marketing margins also contributed (albeit a small quantum) to GRMs, with RIL also capturing market share in the bulk diesel sales segment. Bulk and own marketing sales stood at 3.3MMT (own marketing at c1.6MMT). The company stated that inventory losses (due to a fall in commodity prices during the quarter) were a drag on margins.

Petcoke gasification project operational by end CY16, profitability remains attractive: The company stated that it would begin a phased start-up of the gasification units in early CY16, and while the company did not specify firm timelines, the company expects the project to be fully operational towards the end of CY16.

‘Lyf’ 4G smartphones to be launched shortly, aim to create handset ecosystem for Jio: RIL will shortly launch a range of 4G smartphones under the ‘Lyf’ brand. The price will range from entry level for 4G (R400-6000) to c.R20,000+. The smartphones will be VoLTE and VoWiFi enabled, and are part of RIL’s attempt to create a handset ecosystem that is fully compatible with Jio services .

Jio network tests continue, launch dates still to be announced: Network tests on Jio continue, with initial results positive. The company and RCOM have filed intimation with the DoT for sharing of 800MHz spectrum in seven cities. The company reiterated that it intends to launch services, without elaborating an exact timeframe.

Petrochemicals performance improves q-o-q with strength in polymers: Polymer demand remains strong, as per the company, with PE deltas remaining above five-year averages due to robust buying (Indian demand has been higher than anticipated as well). PP spreads remain elevated due to soft feedstock prices. With low commodity prices, the company expects CTO/MTO projects in Asia to potentially see delays. Polyester remains softer, with volatile prices driving cautious downstream buying. RIL stated that it sees inventories at Asian polyester producers being at low levels, with Chinese demand remaining weak.

D6 production remains muted, with additional testing underway; CBM start up by end Q3FY16: D6 production for the quarter was subdued, at 11.4mmscmd (flat q-o-q). Two workovers/sidetracks in the D1-D3 area were put on production in July, and are now yielding c.1mmscmd. The DSTs on the D29 and D30 discoveries have been completed, with appraisal activities also under way in the MJ-1 discovery. The company expects first gas from the CBM project by end 3QFY16, with the Shahdol-Phulpur evacuation pipeline almost complete as well.

Cost management a key focus in shale: With falling commodity prices impacting shale earnings adversely, the company reiterated that it is looking to aggressively manage costs, while taking advantage of falling services costs as well. Production has been curtailed in the Carrizo JV to preserve value, while the company has increased rig efficiency in the Pioneer venture, thereby reducing costs.

Balance sheet items: The company incurred capex of c.Rs 200 bn during the quarter, with Rs 80 bn spent on Jio, and a similar amount on the downstream businesses. Consolidated net debt rose to Rs 870 bn, from Rs 834 bn last quarter.