Description
This is a PPT explaining Impact of Industry Specific Events.
IMPACT OF INDUSTRY-SPECIFIC EVENTS ON MARKET PERFORMANCE
Group 9 Nikhil Paratwar | Jimmy Dalal | Priyanka Kathuria | Shrinath Kini
METHODOLOGY
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Examine a scenario where maximum policy changes occur Evaluate the market reaction and performance Policy’s continuing impact Match the same scenario at a different time period
Analysis of Budget 2008 and 2009
BUDGETARY SECTORAL IMPACT – 2008 V/S 2009
Sector Auto components & Tyres Automobiles Banking and Finance Budget 2008-09 ? ? ? Budget 2009-10 ? ? ?
Cement
Construction Fertilisers Hotels Household Applicances Housing
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? ? ? ?? ?
?
? ? ? ? ?
Information Technology
Media and Entertainment
?
?
?
?
BUDGETARY SECTORAL IMPACT – 2008 V/S 2009
Sector Non-ferrous Metals Oil and Gas Paper Budget 2008-09 ? ? ? Budget 2009-10 ? ? ?
Petrochemicals
Pharmaceuticals Power Roads Steel Sugar
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?
? ? ? ? ?
Telecom
Textiles
?
??
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The CEMENT Sector : PRE-BUDGET
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JAN: Announcement of capacity expansion and marketing drives FEB: Shree Cements, Madras Cements, Gujarat Ambuja, Barak Valley Cement Ltd (BVCL), etc all announcing expansion plans BVCL and Burnpur Cements Ltd. IPOs for expansion Cement capacity rose from 165.7 million tonnes at the beginning of 2007-08 to 173.23 million tonnes in December 2007. 32 million tonnes of new cement capacity is expected to come on stream in 2008-09 Requirement of reducing import duty on coal by 5% and lowering excise duty on MRP by 35% among the main expectations
The CEMENT Sector : POST-BUDGET
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“The excise duty on bulk cement has been revised from Rs 400 per tonne in 2007-08 to Rs 400 per tonne or 14 per cent ad-valorem, whichever is higher” Proposal is expected to increase the cost of cement for bulk consumers, who account for an estimated 10-15 per cent of total cement consumption Government intervention to keep prices under control, despite rising input costs, plays havoc MAY: Cement stocks hit a 52-week low The capacity utilization falls to 81% from 87% in September 2007 on a YoY basis NOV: Cement companies’ Q2 profit down by 24%
BASIC RATIOS – Cement Sector
ULTRATECH
PARTICULARS Operating margin (%) Gross profit margin (%) Net profit margin (%) 2007 29 24.39 15.75 2008 31.33 27.03 17.99 2009 27.29 22.24 15.06 PARTICULARS Operating margin (%) Gross profit margin (%) Net profit margin (%)
BINANI CEMENT
2007 34.48 28.07 14.03 2008 35.38 29.6 18.12 2009 21.43 16.06 7.22
GRASIM INDUSTRIES
PARTICULARS Operating margin (%) Gross profit margin (%) Net profit margin (%) 2007 27.54 23.86 17.44 2008 30.11 26.66 19.57 2009 23.54 19.34 14.85 PARTICULARS
MADRAS CEMENTS
2007 35.25 30.66 19.48 32.61 20.21 2008 37.26 2009 30.75 25.31 14.27
Operating margin (%) Gross profit margin (%) Net profit margin (%)
GRAPH – Cement Sector
The AUTO Sector
Budget 2008-2009 ? Minimum tax slab for individuals has been increased from Rs 1,10,000 to Rs1,50,000 ? Strong focus on increasing agricultural growth ? Excise duty reduced to 12% from 16% on two-wheeler manufacturer companies.
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GRAPH – Auto Sector
Auto Sector – Basic Ratios
TVS
Particulars Operating margin (%) Gross profit margin (%) Net profit margin (%) 2007 3.63 1.35 1.69 2008 1.4 -1.53 0.96 2009 3.29 0.49 0.82 Particulars Operating margin (%) Gross profit margin (%) Net profit margin (%)
Hero Honda
2007 11.7 12.85 8.58 2008 13.1 11.67 9.27 2009 14.2 12.75 10.3
Bajaj Motors
Particulars Operating margin (%) Gross profit margin (%) Net profit margin (%) 2007 14.11 17.2 12.66 2008 12.29 10.32 8.32 2009 12.55 11.06 7.4
FACTORS FAVOURING HERO HONDA
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Strong Foothold in Rural Sector Market leadership with 59 % market share Optimum mix of products Lower tax provision from the commencement of Hardwar plant Operating margin better than competitors (largely due to decrease of raw material price)
The SUGAR industry
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Through a pre-budget notification on 25 February 2008, the excise duty on sugar was increased from Rs 875.5 per tonne to Rs 978.5 per tonne.
? ? ? ?
The Cess component of the excise duty on sugar was hiked from Rs 140 per tonne to Rs 240 per tonne. Basic excise duty on sugar was left unchanged at Rs 710 per tonne. Proceeds collected from the imposition of the cess will be transferred to the Sugar Development Fund Margins of sugar companies expected to be under pressure will not be able to pass on the increase in the excise duty to consumers
GRAPH – Sugar Industry
Company: Balrampur Chini
Company: Shree Renuka Sugars Ltd
CONCLUSION
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?
?
Policies do not act on a solitary basis Emphasis has to be given to macro factors as well Simultaneous comparison of policy impacts on other sectors is necessary Policy impact on different companies depends on fundamentals as well
doc_862476534.ppt
This is a PPT explaining Impact of Industry Specific Events.
IMPACT OF INDUSTRY-SPECIFIC EVENTS ON MARKET PERFORMANCE
Group 9 Nikhil Paratwar | Jimmy Dalal | Priyanka Kathuria | Shrinath Kini
METHODOLOGY
? ?
?
?
Examine a scenario where maximum policy changes occur Evaluate the market reaction and performance Policy’s continuing impact Match the same scenario at a different time period
Analysis of Budget 2008 and 2009
BUDGETARY SECTORAL IMPACT – 2008 V/S 2009
Sector Auto components & Tyres Automobiles Banking and Finance Budget 2008-09 ? ? ? Budget 2009-10 ? ? ?
Cement
Construction Fertilisers Hotels Household Applicances Housing
?
? ? ? ?? ?
?
? ? ? ? ?
Information Technology
Media and Entertainment
?
?
?
?
BUDGETARY SECTORAL IMPACT – 2008 V/S 2009
Sector Non-ferrous Metals Oil and Gas Paper Budget 2008-09 ? ? ? Budget 2009-10 ? ? ?
Petrochemicals
Pharmaceuticals Power Roads Steel Sugar
?
? ? ? ? ?
?
? ? ? ? ?
Telecom
Textiles
?
??
?
?
The CEMENT Sector : PRE-BUDGET
? ? ? ?
?
?
JAN: Announcement of capacity expansion and marketing drives FEB: Shree Cements, Madras Cements, Gujarat Ambuja, Barak Valley Cement Ltd (BVCL), etc all announcing expansion plans BVCL and Burnpur Cements Ltd. IPOs for expansion Cement capacity rose from 165.7 million tonnes at the beginning of 2007-08 to 173.23 million tonnes in December 2007. 32 million tonnes of new cement capacity is expected to come on stream in 2008-09 Requirement of reducing import duty on coal by 5% and lowering excise duty on MRP by 35% among the main expectations
The CEMENT Sector : POST-BUDGET
?
?
?
? ? ?
“The excise duty on bulk cement has been revised from Rs 400 per tonne in 2007-08 to Rs 400 per tonne or 14 per cent ad-valorem, whichever is higher” Proposal is expected to increase the cost of cement for bulk consumers, who account for an estimated 10-15 per cent of total cement consumption Government intervention to keep prices under control, despite rising input costs, plays havoc MAY: Cement stocks hit a 52-week low The capacity utilization falls to 81% from 87% in September 2007 on a YoY basis NOV: Cement companies’ Q2 profit down by 24%
BASIC RATIOS – Cement Sector
ULTRATECH
PARTICULARS Operating margin (%) Gross profit margin (%) Net profit margin (%) 2007 29 24.39 15.75 2008 31.33 27.03 17.99 2009 27.29 22.24 15.06 PARTICULARS Operating margin (%) Gross profit margin (%) Net profit margin (%)
BINANI CEMENT
2007 34.48 28.07 14.03 2008 35.38 29.6 18.12 2009 21.43 16.06 7.22
GRASIM INDUSTRIES
PARTICULARS Operating margin (%) Gross profit margin (%) Net profit margin (%) 2007 27.54 23.86 17.44 2008 30.11 26.66 19.57 2009 23.54 19.34 14.85 PARTICULARS
MADRAS CEMENTS
2007 35.25 30.66 19.48 32.61 20.21 2008 37.26 2009 30.75 25.31 14.27
Operating margin (%) Gross profit margin (%) Net profit margin (%)
GRAPH – Cement Sector
The AUTO Sector
Budget 2008-2009 ? Minimum tax slab for individuals has been increased from Rs 1,10,000 to Rs1,50,000 ? Strong focus on increasing agricultural growth ? Excise duty reduced to 12% from 16% on two-wheeler manufacturer companies.
?
GRAPH – Auto Sector
Auto Sector – Basic Ratios
TVS
Particulars Operating margin (%) Gross profit margin (%) Net profit margin (%) 2007 3.63 1.35 1.69 2008 1.4 -1.53 0.96 2009 3.29 0.49 0.82 Particulars Operating margin (%) Gross profit margin (%) Net profit margin (%)
Hero Honda
2007 11.7 12.85 8.58 2008 13.1 11.67 9.27 2009 14.2 12.75 10.3
Bajaj Motors
Particulars Operating margin (%) Gross profit margin (%) Net profit margin (%) 2007 14.11 17.2 12.66 2008 12.29 10.32 8.32 2009 12.55 11.06 7.4
FACTORS FAVOURING HERO HONDA
? ?
?
?
?
Strong Foothold in Rural Sector Market leadership with 59 % market share Optimum mix of products Lower tax provision from the commencement of Hardwar plant Operating margin better than competitors (largely due to decrease of raw material price)
The SUGAR industry
?
Through a pre-budget notification on 25 February 2008, the excise duty on sugar was increased from Rs 875.5 per tonne to Rs 978.5 per tonne.
? ? ? ?
The Cess component of the excise duty on sugar was hiked from Rs 140 per tonne to Rs 240 per tonne. Basic excise duty on sugar was left unchanged at Rs 710 per tonne. Proceeds collected from the imposition of the cess will be transferred to the Sugar Development Fund Margins of sugar companies expected to be under pressure will not be able to pass on the increase in the excise duty to consumers
GRAPH – Sugar Industry
Company: Balrampur Chini
Company: Shree Renuka Sugars Ltd
CONCLUSION
? ?
?
?
Policies do not act on a solitary basis Emphasis has to be given to macro factors as well Simultaneous comparison of policy impacts on other sectors is necessary Policy impact on different companies depends on fundamentals as well
doc_862476534.ppt