The implications of WTI closing the price gap with Brent

The gap between West Texas Intermediate (WTI) and Brent crude, which was at about $20 a barrel a few years ago, has closed. In fact, WTI spot price closed higher than Brent on 15 December and 22 December (see chart). One reason for this is the potential for higher exports from the US. The US Congress has approved the removal ... Read More »

Green shoots in bank credit growth?

Bank credit growth seems to be finally picking up. As on 11 December, growth in bank credit from a year ago was 11%, well above the average rate of growth this fiscal year. The chart shows the sudden jump in credit. Of course, a fortnight’s data does not a trend make and the sudden spurt may well be a one-off ... Read More »

Falling crude oil prices offer comfort to lubricant makers

Crude oil prices have declined further and that is good news for lubricant makers—Castrol India Ltd and Gulf Oil Lubricants India Ltd (Golil). But the benefits of lower crude oil prices come with a lag. Priyank Chandra, an analyst at Dolat Capital Market Pvt. Ltd, points out that prices of base oil (key raw material for lubricant makers) reflect crude ... Read More »

Annus horribilis for L&T

The Larsen and Tourbo Ltd (L&T) stock has fallen by 25% since April. Worse, it has underperformed benchmark indices like the S&P BSE Sensex and S&P BSE Capital Goods, especially after the second quarter results. Obviously, all is not well at the country’s largest infrastructure firm. Since April, Bloomberg has drastically cut analyst consensus estimates of earnings per share (EPS) ... Read More »

The risks for the current account

While the current account deficit (CAD) for the July-September quarter, at 1.6% of gross domestic product (GDP), is well within control, could higher growth lead to a sharp rise in the deficit? First, there’s little doubt about the importance of oil prices. For example, the current account deficit for July-September was $8.2 billion, $2.7 billion less than the deficit during ... Read More »

R-Com investors may benefit if it merges with Aircel

Reliance Communications Ltd (R-Com) has had so many non-binding discussions and agreements in recent years that it’s easy to dismiss them as immaterial. Earlier this month, when the company said it had entered a non-binding agreement for the sale of its tower and optic fibre assets, one analyst said, “We’ll wait till the deal actually materializes.” But on Tuesday, when ... Read More »

Ramp-up of new production facilities key for PI Industries

PI Industries Ltd lost 3% after the promoters pared their stake in the company by 6% to 51.7%. With the recent loss, the stock is down 8% since the September quarter results announcement. In comparison, the S&P BSE 500 index lost 4% during the period. Note that the stock fell despite the company’s reiteration that its outlook remains robust. To ... Read More »

Debt quality deteriorates in November

CARE Ratings has constructed an index, the Debt Quality Index, which “captures, on a scale of 100 (index value for the base year FY12), whether the quality of debt is improving or declining. Intuitively an upward movement indicates improvement in quality of debt benchmarked against the base year. As it is contemporary with minimum time lags, the health of the ... Read More »

How should one interpret the acquisition of Indulekha by HUL?

How should one interpret the acquisition of a small regional brand by Hindustan Unilever Ltd (HUL)? Last week, it said it will pay Rs.330 crore to acquire the Indulekha and Vayodha ayurvedic personal care brands from the Mosons Group. This amount will be supplemented with a payment of 10% of annual revenues annually for five years starting FY18. At an ... Read More »

Will banks cut loan rates now?

New borrowers are likely to benefit from the Reserve Bank of India’s (RBI’s) policy rate cuts from April when Indian lenders start calculating their minimum loan rate or base rate on the marginal cost of deposits. The base rate replaced the seven-year-old system of prime lending rate in July 2010 to bring in more transparency. However, the purpose does not ... Read More »