Improved returns from businesses like hotels and paper and firm control in the FMCG business amidst stagnating tobacco revenue enabled ITC post a 15.8% rise in net profit at Rs 831 crore during the third quarter ended December 31, 2007 on the back of 11% growth in turnover at Rs 3,458 crore.
Analysts said non-cigarette FMCG revenues grew nearly 50%, thanks to growth in business of new FMCG businesses like foods, lifestyle retailing and stationery to Rs 655 crore from Rs 436 crore in Q3FY07, losses were restricted to Rs 64 crore as against Rs 46 crore in Q3 of the last fiscal.
The tobacco division, reeling under a high taxation regime, reported sales of Rs 1,693 crore and segment profit of Rs 961 crore as against net sales of Rs 1,520 crore and segment profit of Rs 828 crore in Q3FY07.
The company attributed this to significant increases in taxation but said significant investments in product design, innovation and manufacturing technology, and improved marketing and distribution processes had fortified the market standing of its brands.
ITC said that with cigarettes facing the full impact of VAT in most states, central sales tax and trade taxes in UP along with the increase in excise duties on cigarettes in excess of 6% led to indirect taxes during the quarter growing by Rs 513 crore, thanks to increase in taxes of 29% per pack over the corresponding quarter of the previous fiscal.
This meant taxation was at nearly 132% of the value of the product (ex-factory price net of taxes), and this would drive consumers to switch to cheaper and inferior forms of tobacco, resulting in lower revenue from the sector.
Hotels revenue moved up to Rs 313 crore and segment profit to Rs 137 crore in Q3 as against revenue of Rs 281 crore and profit of Rs 118 crore in Q3FY07.
Paperboards and packaging revenue increased to Rs 603 crore and segment profit to Rs 118 crore as against revenue of Rs 543 crore and profit of Rs 104 crore in Q3FY07.
The agribusiness, despite success of the e-choupal and Choupal Sagar model, saw revenue drop to Rs 662 crore from Rs 731 crore in Q3FY07, but segment profit increased to Rs 27 crore from Rs 21 crore in the third quarter of the last fiscal.
Earnings per share stood at Rs. 2.21 against Rs 1.91 in Q3FY07.
While packaged foods sales rose 60% led by the success of the Bingo snacks range, biscuits sales moved up 58% thanks to excise relief announced in Budget 2007 for low- and mid-priced biscuits.
Understanding Short Term Trading
Before I begin, this blog is not for intraday traders. My definition of short term implies duration of around 2 to 3 months.
Short Term stock picking is no rocket science, but rather a visual interpretation of technical charts. A basic moving average on a time frame chart will show the direction of the securities movement.
Moving averages is a mathematical results calculated by averaging a number of past data points. Moving averages (MA) in it's basic form is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. Once the value of MA has been calculated, they are plotted onto a chart and then connected to create a moving average line. Typical moving averages used for short term trading are 50 MA and 100 MA.
Types of Moving Averages
1) Simple Moving Average (SMA)
SMA is calculated by taking the arithmetic mean of a given set of values on a rolling window of timeframe. The usefulness of the SMA is limited because each point in the data series is weighted the same, regardless of where it occurs in the sequence. Critics argue that the most recent data is more significant than the older data and should have a greater influence on the final result.
2) Exponential Moving Average (EMA)
EMA overcomes the limits of SMA, where more weight is given to the recent prices in an attempt to make it more responsive to new information. When calculating the first point of the EMA, we may notice that there is no value available to use as the previous EMA. This small problem can be solved by starting the calculation with a simple moving average and continuing on with calculating the EMA.
The primary functions of a moving average is to identify trends and reversals, measure the strength of an asset's momentum and determine potential areas where an asset will find support or resistance. Moving averages are lagging indicator, which means they do not predict new trend, but confirm trends once they have been established.
A stock is deemed to be in an uptrend when the price is above a moving average and the average is sloping upward. Conversely, a trader will use a price below a downward sloping average to confirm a downtrend. Many traders will only consider holding a long position in an asset when the price is trading above a moving average.
In general, short-term momentum can be gauged by looking at moving averages that focus on time periods of 50 days or less. Looking at moving averages that are created with a period of 50 to 100 days is generally regarded as a good measure of medium-term momentum. Finally, any moving average that uses 100 days or more in the calculation can be used as a measure of long-term momentum.
Support, resistence and stoploss can be infered by referring the closet MA below or above the market price. The other factor that is used in short term momentum is the trading volume. The moving averages along with the trading volume can provide a better insight to short term movement.
Markets are moved by their largest participants - I believe this is the single most important principle in short-term trading. Accordingly, I track the presence of large traders by determining how much volume is in the market and how that compares to average. Because volume correlates very highly with volatility, the market's relative volume helps you determine the amount of movement likely at any given time frame--and it helps you handicap the odds of trending vs. remaining slow and range bound.
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