CASTROL Cost Checks, Price Increase to Ease Margin Pressure

The marks of the ubiquitous inflation were quite visible on the March 2011 quarter results of India’s leading lubricant maker Castrol, which could hardly improve upon its profits at the operating level from the year-ago period.
The decent growth at the net profit level owed itself to a jump in other income, which included certain one-off items. With no relief in sight over soaring crude oil prices, the company’s woes are unlikely to go away in a short while. Castrol’s year-onyear revenue growth at 14.8% during the March 2011 quarter was better than what it had achieved during the second half of 2010. However, operating profit margins saw a 320-bp decline against the year-ago level. The resultant operating profit was just 1.2% higher.
The raw material cost as a proportion to net sales moved to a two-year high of 52.8%. During the quarter, base lube oil prices ruled nearly 20% higher against the year-ago period at $1,200 per tonne level. The cricket World Cup season may have increased the company’s advertising and other expenditures for the quarter.
In spite of all this, the company posted a decent 16.6% growth at the net profit level. The source of this growth was a three-fold jump in other income to . 27.8 crore. Higher cash balance and interest rates brought in higher interest income while the company chose to write back . 12 crore of provisions made earlier.
Battling the spiralling raw material prices is, perhaps, the only major challenge and it is doing whatever it can — improving efficiencies to bring down the remaining costs and increasing earnings through price hikes, new products launches and uptrading consumers to superior products. It should be noted that out of the March quarter’s revenue growth, just 2% came from volume growth while the remaining 12.8% growth came from abovementioned measures.
The scrip continues to trade at a premium valuation of 23.4 times its earnings for trailing 12 months. The company is expected to see base oil prices maintaining their current level for at least a couple of more quarters, if not move higher. This means the margin pressures are there to stay.

Domestic Gas Shortage, Higher Demand to Fuel Petronet Growth

Current earnings signal better utilisation of assets can ring in profits

India’s largest natural gas importer Petronet LNG reported a strong set of numbers for the March 2011 quarter, which were ahead of most analyst expectations. The stock’s fall on Wednesday had more to do with the overall market weakness. Domestic gas shortages maintain a strong positive outlook for the company, which means long-term investors should continue to hold.
Petronet’s volumes for the March 2011 quarter jumped 37% to 125 trillion British thermal units (TBTUs). In addition, the 5% increase in the regassification charges implemented every January helped the company boost its quarterly revenues 67% to . 3,986 crore. The positive effect of a minor increase in operating profit margin was offset by a fall in other income as the PBDIT stood 63% up year-on-year to . 382.7 crore. It was mainly the fall in interest and depreciation costs that boosted the company’s net profits. Since the company operates in capital-intensive industry, the interest and depreciation forms a large chunk of its expenses. During the March 2011 quarter, the interest costs came down 16% with a slight decrease in depreciation charge. The resultant pre-tax profit was more than twice the March 2010 quarter figure. With effective tax rate staying near 30% as last year, the jump in net profit stood 112% at . 206.3 crore.
The earnings give an idea as to how company’s assets can become more profitable on higher utilisation. The company operated its expanded 10 million tonne per annum (MTPA) capacity at 100% utilisation level during the March quarter. It already has 7.5 MTPA long-term supplies tied up with Qatar’s RasGas and is able to process a number of spot cargos.
One good thing that the company revealed was the tie-up for further 1.5 MTPA of LNG for FY12 and FY13, for which it has also entered into back-to-back sales agreements with its offtakers. This gives visibility to next couple of years of its volumes, which will be at least 90% of its capacity, plus whatever spot cargos it can import. Typically, the company’s plant can operate at 120-130% of its nominal capacity, which gives it the necessary flexibility in importing spot cargos. By December 2012, its 5-MTPA Kochi terminal is set to complete, which will cater to the hitherto untapped market in the South and add another growth driver to the company’s earnings.

Unlocking Value of ‘Realty’ Key Growth Driver for Supreme

Mumbai-based plastic goods maker Supreme Industries faced a temporary phase of margin pressure as raw material costs shot up during the March 2011 quarter. Overcoming this and a few other challenges, the company went on to post a respectable profit growth for the March 2011 quarter. The scrip, however, took little notice of the results and maintained its level.
It was mainly the strong sales growth that enabled Supreme Industries to post a 12.2% consolidated net profit growth to . 48.3 crore during the March 2011 quarter. The challenges that the company faced included margin pressure, no sales from its commercial building, a fall in other income and rising interest pressure. Still, the 29% revenue growth aided by a 32% volume growth and a 50% jump in its share in Supreme Petrochem’s profits propped up the bottomline.
Rising crude oil prices and the disaster in Japan led to a spurt in the company’s raw material prices, which it couldn’t immediately pass on. As a result, the operating profit margin shrank 180 basis points to 12.6%. With its . 275-crore capex plan for FY11 continuing and no revenues coming from property sales, the interest burden soared 60% to . 12.9 crore. The company’s debt-equity ratio rose to 0.93 by end-December 2010 from 0.72 in June 10.
Considering the strong demand for its products and a robust volume growth, the margins are expected to return to normal levels for the June 2011 quarter.
The company has constructed a 10-storey commercial complex with 2,75,000 sq ft saleable area on its land in Andheri. So far, it has sold around 40,000 sq ft for . 60 crore, which translates into an average price of . 15,000 per sq ft. The company expects to sell off the remaining property by end-2011 and realise . 350 crore.
Since the stock split in October 2010, the share price of Supreme Industries has remained in a tight range disregarding the strong bearish sentiments in the first couple of months of 2011. Between January and February 2011, when the Sensex lost over 13%, the Supreme scrip actually gained slightly. The scrip is trading at a price-to-earnings multiple (P/E) of 10.5, considering its consolidated net profit for trailing 12 months.
While the strong 20% plus volume growth continues to support the company’s steady growth, unlocking the value in commercial property remains a key growth driver for the company in coming quarters.

Aban Offshore: The Tide Is Turning

After a cloudy spell, the sky is finally clearing up for Aban Offshore. The debt load is lighter, interest costs leaner and earnings show, a lot peppier. But since loans run deep, investors should wait and watch till the company sails into steady waters

AFTER passing through a prolonged phase of high volatility, Aban Offshore is finally seeing some stability. It comfortably met its debt repayment obligations for FY11. It has $580-million debt repayment commitment in FY12 and is improving operational revenues, divesting assets, and diluting equity to bring down the burden.
Aban Offshore's highly-leveraged acquisition of Norway's Sinvest in FY08 at peak valuations created a huge debt burden on its balance sheet. The ensuing economic slowdown made matters worse, as the company's profitability suffered due to stiff interest costs. At the end of FY08, the company reported a debt-equity ratio of 18, which came down subsequently, but was still high at around 6 in mid-FY11. Aban's consolidated debt-burden stood at Rs 13,262 crore as on September 30, 2010.
The company has taken several measures to bring down its debt burden. In November 2009, the company had raised nearly Rs 700 crore through preferential equity allotment to qualified institutional investors. It also reduced its fleet size to bring down debt. During the March 2011 quarter, the company sold a 50% stake in Venture Drilling joint venture after it had to re-deliver a rig under management to its owners. The company earned nearly $100 million by way of these divestitures. Earlier in May 2010, the company had lost its semi-submersible Aban Pearl in Venezuela, resulting in insurance claims of $235 million. These events brought down Aban's fleet size to 18 from 21 a year ago. The recent spurt in crude oil prices across the globe has boosted the exploration industry's efforts to search for more oil. This has improved demand for drilling rigs and helped stabilise charter rates -- although they still remain 30-35% below their peak of FY08. After keeping some or the other assets idle through 2010, Aban Offshore now has all its 18 assets deployed on medium- to long-term contracts.
All these factors are bringing in a much-needed stability to the company's business, which is a high cash flow generating one. For FY09 and FY10, the company generated over Rs 2,000 crore of operating cash flows each year. Considering the long-term asset deployment with around 4-6 renewals every year, the trend of high cash flows is likely to continue in future.
Although the company doesn't intend to reduce its fleet any further, it has shareholders' approval to raise long-term funds up to Rs 2,500 crore by way of equity or quasi-equity. Once it meets the $580-million debt obligation for FY12, the annual repayments will fall to around $350 million per annum for FY13 and FY14 and further down to $250 million per annum from FY15 till FY19.
While it means the company will be unable to add any capacity in coming 2-3 years, its ability to bring down debt, rein in interest costs, and improve earnings from the current asset base should be the positives to watch for. The company is currently trading around 7.7 times its earnings for the 12-month period ended December 2010, adjusted for extraordinary items.

FUTURE VENTURES INDIA: Honey, Show Me The Money

The brands in its kitty may be alive and kicking, but Future Ventures India is still a long way off from the profit goalpost. The low-priced IPO comes as a whiff of fresh air, which can open up investment avenues for long-term investors hungry for taking more risks

IPO details
Company Name: Future Ventures India Issue Date: April 25-28,2011 Issue Size: 750 crore Price Band : 10-11 per share

FUTURE VENTURES INDIA (FVIL) is an unconventional Non-Banking Finance Company (NBFC) from the Kishore Biyaniled Future Group, which is tapping the primary market with an initial public offer to raise 750 crore. The price band has been fixed at 10-11 per share and the number of shares on sale will differ accordingly. The IPO will bring down promoters' stake to somewhere between 52.5% and 55%. The company plans to invest around 125 crore in its existing businesses while the rest will be used to create, build, invest, acquire and operate business ventures in growing "consumption-led" sectors and other corporate purposes.

BUSINESS: FVIL is classified as a nondeposit taking NBFC, but for all practical purposes operates in the space of fashion and food brands. It is sort of a venture capital, which mainly invests in equity capital of emerging businesses in consumptionled sectors. However, in most cases, the company doesn't have any predetermined exit strategy, quite unlike any venture capital. Again, it is into management control and operations of its investee companies, which is not customary for an NBFC.
Apart from capital investing, FVIL also operationally manages and strategically mentors these businesses with a view to building bigger and better brands leveraging Future Group's in-house knowledge of the Indian retail industry. FVIL has also tied up with Pantaloon Retail for mentoring services. Currently, FVIL has 14 business ventures in which it has picked up equities. Six of these — Adhaar Retailing, Future Consumer Enterprises, Future Consumer Products, Indus League, Indus Tree Craft and Lee Cooper — are classified as subsidiaries. Some of the prominent directly-held business ventures include AND Designs, BIBA Apparels and Holii Accessories.
Capital Foods is its investment in food processing industry with brands such as Smith & Jones, Mama Marie and the like.

FINANCIAL: At a consolidated level, FVIL is currently a loss-making company in spite of some of its subsidiaries making profits. Four of its businesses are currently loss making, which include FVIL's joint venture with Godrej Agrovet for rural marketing, Adhaar Retailing, Celio Future Fashions, Amar Chitra Katha and Holii Accessories.
The company has invested 742 crore till December 31, 2010 in its ventures predominantly in the form of equity. The company on a stand-alone basis doesn't have any borrowings, but borrowings of its arms make consolidated debt-equity ratio at 0.24. Its consolidated cash flows have turned positive in a 9-month period ended December 2010 after several years staying negative.

VALUATION: Considering it as a branded product company in the fashion industry, its post-IPO market capitalisation will be around 3.2 times its estimated net sales of FY11. Peers such as Kewal Kiran Clothing, Page Industries and Zodiac Clothing are trading in the range of 1.7 to 4.2 times their net sales.

CONCERN: Since the company has substantial exposure to equity financing, the risk is high and timeframe for earning returns is long. There appears to be neither a pre-determined exit strategy nor any assurance of returns.

India Inc Puts up a Stellar Q4 Show Despite Macro Woes

But rising rates, input costs may be a cause for worry, going forward

Indian companies could defy high inflation and rising costs to turn in stellar results for the three months ended March 31, if numbers from close to 100 companies are anything to go by. The first 97 firms to announce March quarter results — mostly from sectors such as IT, petroleum, chemicals, auto ancillaries and finance — posted a 27.2% growth in sales and a 28% increase in net profit.
The year-on-year net profit growth at 28% is certainly healthy and in line with the trend in the last few quarters. The net profit growing at a higher pace than topline is a trend visible through all the four quarters of FY11, which has consistently improved the PAT margin to 12.4% in the March ’11 quarter.
A closer look at the early results, however, throws up some worrying trends. Spiralling costs show that there are a couple of worrying trends — inflation and rising interest costs. While the data of just 97 companies cannot be considered a representative sample, investors need to be wary.
India Inc, which successfully batted inflation till the December 2010 quarter, appears to be losing ground now. A spurt in input prices in the March quarter has brought down the aggregate operating profit margin. Input costs as a proportion to net sales rose to 52.9% — the highest in two years. Input prices rising faster than sales, point to the impact of inflation on corporate margins.
RBI resorting to rate hikes to battle inflation also seems to have started hurting India Inc. The 34.4% year-on-year growth in aggregate interest costs during the quarter was the highest in two years, a trend visible in the last six quarters. Around 8.5% of the revenues were spent to service loans during the March ’11 quarter, compared with 8% in March ’10.
India Inc, however, maintained or improved its profit margins through better efficiencies and controlling depreciation charges. The growth rate of the group’s other expenditure and staff costs consistently remained below the sales growth. In other words, Indian firms are generating more sales while keeping staff and other costs constant, which is an encouraging sign.
The depreciation charges for March quarter was slightly below the year-ago level, which was the case in December ’10 quarter as well. While the stagnation in depreciation is good for the companies’ bottomlines, it indicates a pause in corporate investments. This is another worrying factor, since investments create assets and capacity within the economy.
Several important sectors such as power, pharma, metals, auto or real estate do not find much representation in the first lot of 97 companies to announce their results. There is a possibility of a reversal in the trend observed in early results.

RELIANCE INDUSTRIES: An Eventful FY11, But Margin Pressures Ahead

Reliance Industries signed off an eventful FY11 in style, as it posted a record quarterly net profit of . 5,376 crore in the March 2011 quarter.
The company’s net profit growth in the quarter slowed down to 14% Y-o-Y, from the average 30% in the first three quarters of FY11. The healthy growth during the whole financial year was mainly due to the increase in its overall volumes, thanks to the new refinery and KG basin gas, which were ramped up last year. The growth in the last quarter, however, was mainly due to higher oil prices and higher refining margins.
The company is unlikely to repeat its March 2011 quarter performance from the June quarter onwards, as all its three business verticals face headwinds. For the March ’11 quarter, the net-profit growth was mainly on account of the 26% jump in the refining segment’s profits at . 2,509 crore. Still, the $9.2 per barrel refining margin RIL reported for the quarter was much below market estimates, which averaged above $10.
The refining margins improved during the quarter due to factors like extended winter in some parts of the globe, supply disruptions in Libya and Japan, and shutting down of refineries for maintenance earlier in the year. But, from June quarter onwards, demand is expected to be low as more supply comes on stream. The company’s gas production is down to 52 million metric standard cubic metres per day (MMSCMD). The petrochemical segment is facing margin pressure due to capacities coming up in Middle East and China. Despite the strong margins in polypropylene, polyester and rubber segments during the March quarter, RIL could maintain margins only at the yearago level. In such a scenario, any slowdown in refinery margins could mean stagnancy in its quarterly profit growth.
In the March 2011 quarter, the company’s operating profit dropped 240 bps to 13.5%, mainly due to margin erosion in the oil & gas segment. For FY11, RIL’s turnover was up 29% at . 2,58,651 crore. The net profit was 25% higher at . 20,286 crore as against . 16,236 crore for the previous financial year. Ahead of the results, the stock was up 1.4% to . 1,040. The stock is unlikely to move up significantly till the company shows significant growth in its future earnings.

RIL May Post Record Net on its Refining Strength

Co expected to report net profit of . 5,650 cr, a 20% growth Y-o-Y

India’s largest private sector petroleum company, Reliance Industries (RIL), is expected to sign off FY11 on a strong note when it announces its last quarter results on Thursday.
Notwithstanding the dwindling gas production from its KG basin fields, analysts expect strong performance by RIL’s refining division to take its profits to a new high.
The company’s natural gas volumes stagnated during the quarter and is likely to average around 51-52 million standard cubic metres per day (MMSCMD). This was a cause of concern for the company, which saw its share price fall below . 900 in early February. However, the company’s deal with BP to sell 30% stake in 21 petroleum E&P fields boosted investor confidence, taking the share price beyond . 1,000.
The refining segment of RIL is likely to be the star performer in the March quarter. “Singapore complex GRMs have averaged around $7.5 per barrel in Q4FY11. Reliance, with its usual complexity premium, should be able to achieve around $10 per barrel in the quarter,” Elara Capital said in its research note.
The company had to shut down its fluidised catalytic cracking unit (FCCU) for six weeks for maintenance. The unit converts heavy lowvalue products into lighter, more valuable ones.
The shutdown will, to some extent, have a negative impact on the refinery margins.
Edelweiss Capital expects RIL’s refinery throughput at 16.9 million tonne for the quarter, “and GRMs to improve to $9.7 per barrel — low due to shutdown of FCCU for six weeks — on the back of improvement in diesel and gasoline cracks”.
The performance of RIL’s petrochemicals segment remains mixed with some sections gaining and others losing on margins.
Angel Broking’s report on results preview said: “Polymer margins are expected to dip slightly on account of the reduction in polymer demand due to higher prices although polyester margins continue to be higher because of the tighter global cotton market.”
The company’s net profit is expected to be between . 5400 crore and . 5650 crore, which will be a 15-20% growth over the corresponding quarter of last fiscal year. At this level, it will be the company’s highest ever quarterly profit from operations.
The scrip currently trades at around 16.2 times its expected net profit for the entire FY11.

Post Birla Deal, Debt-Free Kanoria will have 400 cr for its Other Biz

But shareholder gain will depend on how the company utilises the funds

The scrip of commodity chemical manufacturer Kanoria Chemicals hit the upper circuit of 20% on Monday in the wake of its decision to sell its chlor-alkali chemicals business for . 830 crore to Aditya Birla Chemicals.
The sum will not only retire its entire debt, but will leave it with around . 375-400 crore to invest in its other business for organic and inorganic growth.
The deal appears exceedingly positive for the company, but what the retail shareholders will derive out of it will depend on how the company utilises the funds.
Chlor-alkali and their derivatives have been a growing business for Kanoria Chemicals, contributing nearly three-fourth of total revenues during the 12-month period ended December 2010 from just about two-third in FY08. The deal will cover 115,000 tonnes per annum (TPA) caustic soda plant with associated chlorine derivatives, 50 MW captive power plants with coal linkage and salt works at Gandhidham, Gujarat.
The deal values the fully integrated chlor-alkali business at about 2.1 times its revenues for the 12-month period ended December 2010. However, considering the just 11.1% PBIT margins, the deal size is 18.8 times the profit before interest and tax, which appears expensive.
Post the deal, Kanoria Chemicals will be left with its alcohol derivatives business in Ankleshwar, which manufactures products such as acetic acid and pentaerythritol. During the 12-month period ended December 2010, this business generated revenues of . 140 crore with profit before interest and tax at . 6.1 crore.
The company recently set up a 105,000 TPA formaldehyde plant in Vizag based on imported methanol and is in the process of setting up a 5,600 TPA hexamine capacity as forward integration.
While the deal is set to complete by end of next month, Kanoria Chemicals is yet to decide on what to do with the money. In the earlier instances of companies selling chunks of their businesses on a slump sale basis, such as Gwalior Chemicals or Piramal Healthcare, retail investors did not benefit much.
It needs to be seen if Kanoria Chemicals will reward shareholders directly or by creating a larger asset-base for higher future profits. The last thing a shareholder would like to see is . 400 crore invested in liquid instruments earning just 8% a year.

OIL REFINING INDUSTRY: Low Supply, High Demand Likely to Ensure Good Q4 Earnings Show

The quarterly results of domestic refiners are likely to be excellent, notwithstanding the rising trend in the crude oil prices witnessed throughout the quarter ended March 2011.
An extended winter till January and the Japanese earthquake in March ensured a strong demand for refined products, while the early year refinery maintenance schedules of European refiners resulted in supply staying low. This, besides the inventory gains on rising prices, pushed up refining margins in Q4 to their best levels in FY11.
The refinery marker margin benchmarks, as published by global petroleum giant BP, soared to $11 per barrel in the March 2011 quarter from around $4-5 in the first three quarters of FY11. “The regional benchmark, Reuters Singapore GRM, increased 35% Q-o-Q and 51% Y-o-Y to $7.3/bbl in 4QFY11,” noted a research report by Motilal Oswal.
The margin improvement has been especially good for middle distillates, such as diesel or gasoil, but has been stagnant for lighter products such as gasoline. “Refining margins for Dubai crude oil in Singapore gained support from the record-high middle distillate crack spread, which was able to more than offset the loss in the weaker naphtha and fuel oil cracks, and allowed refinery margins to show a sharp rise of $0.8 per barrel in March,” wrote OPEC in its monthly report for April 2011. Essar Oil’s results earlier last week underlined this trend. The company reported its highest-ever quarterly net profit of . 321 crore – up 78% on a Y-o-Y basis – on the back of a gross refining margin (GRM) of $8.15 per barrel. The profit for the last quarter was almost equivalent to its profits in the previous three quarters. At . 654 crore for the entire FY11, the company’s net profit recorded a 23-fold jump over FY10. Its other domestic peers are also expected to post similarly exciting results for the March quarter.
The market performance of the standalone refiners reflects this optimism. The scrips of Essar Oil and MRPL have gained nearly 10% so far in April, as against a flat Sensex. Chennai Petroleum, which is the smallest of the lot, also performed better than the market by gaining 3%. Although it derives its largest chunk of revenues from refining, Reliance Industries underperformed the markets mainly due to worries over its KG-basin gas output.

HOW TO BUILD AN INFLATION-PROOF PORTFOLIO

In times of high inflation, equity could be the only way of earning a positive return on one’s investments. However, the clutches of inflation can squeeze margins of even robust companies. Ramkrishna Kashelkar presents a few themes that can potentially shield investors from the deadly fangs of inflation.

Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.
— Ronald Reagan, former president of USA

IF THERE is one thing that consumers, investors, companies, and governments fear alike, it is inflation. As it goes out of control, it can become the greatest value destroyers of all. Inflation is the phenomenon where prices rise and money’s worth declines. As inflation soars, long-term investing can end up being a fruitless exercise.
While it is clear that in an inflationary environment, bonds do poorly, the link between inflation and equity returns is not so straightforward. A number of experts propound investing in equities as a certain way of beating inflation. When inflation rises, equities also rise because a company’s revenue or asset value would go up, along with inflation.
However, this theory is only partially true as a lot actually depends on companies’ ability to pass on the cost of inflation to consumers and in ensuring that there is no demand destruction. Historical evidence is mixed with some periods of inflation showing corporate earnings growth while in others earnings suffered.
While high inflation is not new to India, it is now becoming a more global phenomenon. In India, the Reserve Bank of India has already raised policy rates eight times in the past 12 months in its efforts to rein in inflation, which continues to stay above the central bank’s comfort level. Experts expect the RBI to hike its repo and reverse repo rates by another 50-75 basis points before inflation can be tackled in the real sense.
Looking at commodity prices, particularly crude oil, global outlook on inflation doesn’t appear too benign for the near future.
It is also argued that it is not inflation per se that impacts corporate earnings growth, but tightening of money supply that follows. India has already done it and all over the world, be it China, Europe, or the US, we see central banks talking of interest rate hikes.
Against this background, it makes sense for retail investors to look for ways to make their portfolios inflation-proof. ET Intelligence Group presents eight key themes for equity investors that can potentially shield their assets from the deadly fangs of inflation. PRESENT AND FUTURE OPTIONS
To face the inflation woes, the intuitive reaction is always to invest in gold, which has become very easy now, thanks to gold ETFs. Silver ETFs, which are yet to be launched in domestic markets, could also be an extra option for the future. However, investments in precious metals are criticised as being unproductive and sufficient barely to compensate inflation. While a part of one’s portfolio can surely be invested in gold — physical or ETF — relying solely on it to beat inflation is inadvisable.
Mutual fund schemes designed to invest specifically in commodity companies could also be a good option to best the inflation. However, there aren’t many such Indian companies and the only alternatives available are a handful of MF schemes that invest in global markets — either directly or through foreign funds (fund-of-fund) route. The performance of these funds has been superior of late, in spite of their lack of popularity. Investors can take exposure, but only after considering the currency risks involved.

BEST TO AVOID
It is not what you bought, but what you didn’t buy that decides returns on your investments in turbulent times. Hence, one needs to beware of industries more susceptible to high inflation. Interest rate-sensitive industries such as banks and NBFCs, real estate and auto top the list. EPC contractors with lumpsum contracts also see their margins squeezed as commodity prices go up. Companies that don’t have pricing freedom such as IOC, BPCL, HPCL are best avoided. Industries depending on discretionary spending such as aviation and hospitality also won’t be favourites if inflation is high. Companies with low value-added products such as most chemical players will also face some margin pressure

All market prices and related data as on 31st March 2011 CMP: Current Market Price, M-Cap: Market Capitalisation, OPM: Operating Profit Margin for trailing 12 months, P/E: Price to earnings ratio