Monday, May 28, 2018

Crude Oil Dropped As Saudi Arabia And Russia Said They May Increase Supplies

Crudeoil on MCX settled down -1.94% at 4508 extended losses as Saudi Arabia and Russia said they may increase supplies while U.S. production gains showed no sign of slowing. Yesterday trading volumes were light due to public holidays in the US and UK. Sentiments remained weak after the news that the OPEC and other producers led by Russia began withholding 1.8mbpd of supplies in 2017 to tighten the market and prop up prices that in 2016 fell to their lowest in more than a decade at less than $30 a barrel. Prices have soared since the start of the cuts last year, with Brent breaking through $80 this month, triggering concerns that high prices could crimp economic growth and stoke inflation.
To address potential supply shortfalls Saudi and top producer Russia have been in talks about easing the cuts and raising oil production by 1mbpd, sources said last week. Meanwhile, surging U.S. crude production showed no sign of abating as drillers continued to expand their search for new oilfields to exploit. Also US energy companies added 15 rigs looking for new oil in the week ending May 25, bringing the rig count to 859, its highest since 2015, in a strong indication that American crude production will continue to rise. Traders will be eyeing on fresh weekly data on U.S. commercial crude inventories on Wednesday and Thursday to gauge the strength of demand in the world’s largest oil consumer and how fast output levels will continue to rise will capture the market's attention. The reports come out one day later than usual due to Monday's Memorial Day holiday.
Technically now Crudeoil is getting support at 4456 and below same could see a test of 4403 level, And resistance is now likely to be seen at 4571, a move above could see prices testing 4633.
Trading Ideas:
  • Crudeoil trading range for the day is 4403-4633.
  • Crude oil prices extended losses as Saudi Arabia and Russia said they may increase supplies while U.S. production gains show no signs of slowing.
  • OPEC and other producers withholding 1.8mbpd of supplies in 2017 to tighten the market and prop up prices that in 2016 fell to their lowest in more than a decade
  • U.S. crude production showed no sign of abating as drillers continued to expand their search for new oilfields to exploit.

Term of the day: What is CAGR?

Compounded annual growth rate or CAGR measures the return from an investment which grows over a period. Most people consider the absolute return from an investment, which shows the percentage growth in the initial amount invested. CAGR breaks down the actual return from an investment into an annual figure assuming a constant annual return for the period under consideration.
CAGR is useful to compare historical returns across investments. If you remain invested for different periods, comparing returns on an annualised basis helps understand relative performance. It also helps in making an investment choice and helps compare performance across different assets.

Aurobindo net dips 1% on ARV sales

Aurobindo Pharma Ltd. reported fourth-quarter net profit slid less than 1% to ₹528.76 crore from ₹532.22 crore a year earlier.
Revenue from operations grew 11.2% to ₹4,049.1 crore. A 43.3% decline in anti-retroviral product portfolio sales to ₹148.6 crore impacted performance.
The company, however, registered sales growth in the formulations business in the U.S., Europe and Growth Markets.
Total formulations, including ARV, grew 12.8% to ₹3,248.6 crore during the quarter.
The company reported a 4.8% increase in the API sales to ₹799.6 crore.
For the full fiscal, net profit grew by over 5% to ₹2,422.92 crore (₹2,301.2 crore), while the total revenue from operations increased by 9.3% at ₹16,499.8 crore (₹15,089.9 crore).
Managing director N. Govindarajan said the company has reported a healthy growth in revenues and profitability in FY18, led by improvement in most of the markets. “We continue to ramp up investment in differentiated and speciality product portfolio. Our execution strength and pipeline evolution will drive growth for the future,” he said.

Oil hits multi-week lows on fears of growing supplies

LONDON (Reuters) - Oil prices extended losses on Monday as Saudi Arabia and Russia said they may increase supplies while U.S. production gains showed no sign of slowing.
FILE PHOTO: A general view of the Centenario deep-water oil platform in the Gulf of Mexico off the coast of Veracruz, Mexico January 17, 2014. REUTERS/Henry Romero/File Photo
Brent crude futures stood at $75.32 a barrel at 1805 GMT, down $1.12 from the previous close. The contract touched a three-week low of $74.49 earlier in the session.
U.S. crude futures were at $66.47, down $1.41, after hitting a six-week low of $65.80.
The spread between the two contracts reached $9.38 a barrel, its widest since March 2015.
Trading was light due to public holidays in the United States and United Kingdom.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia began withholding 1.8 million barrels per day (bpd) of supplies in 2017 to tighten the market and prop up prices that in 2016 fell to their lowest in more than a decade at less than $30 a barrel.
Prices have soared since the start of the cuts last year, with Brent breaking through $80 this month, triggering concerns that high prices could crimp economic growth and stoke inflation.
“The pace of the recent rise in oil prices has sparked a debate among investors on whether this poses downside risks to global growth,” Chetan Ahya, chief economist at U.S. bank Morgan Stanley, wrote in a weekend note.
To address potential supply shortfalls Saudi Arabia, the de facto leader of OPEC, and top producer Russia have been in talks about easing the cuts and raising oil production by 1 million bpd, sources said last week.
Russian Energy Minister Alexander Novak said on Saturday that a return to October 2016 production levels, the baseline for the current supply pact, was one option for easing curbs.
“Given that our crude balance is short some 825,000 bpd over (the second half of the year), a gradual increase of about 1 million bpd would probably limit stock draws to quite some extent,” Vienna-based consultancy JBC Energy said.
Meanwhile, surging U.S. crude production showed no sign of abating as drillers continued to expand their search for new oilfields to exploit.
U.S. energy companies added 15 rigs looking for new oil in the week ending May 25, bringing the rig count to 859, its highest since 2015, in a strong indication that American crude production will continue to rise.
U.S. crude output has already surged by more than 27 percent in the past two years, to 10.73 million bpd, ever closer to Russia’s 11 million bpd.

United Bank of India net loss at Rs 2.6 billion on bad debt provisioning

On account of a high level of bad debt and provisioning for it, government-owned United Bank of India (UBI) reported a net loss of Rs 2.6 billion for the March quarter. In the same period a year before, it had a net profit of Rs 735 million.
For the entire financial year of 2017-18, it had a net loss of Rs 14.5 billion, against a net profit of about Rs 2 billion in 2016-17.
Pawan Bajaj, managing director, told Business Standard they would seek Reserve Bank of India and government permission to use about Rs 14 billion from their share premium account of Rs 40 billion, to set off the accumulated loss. This is expected to be completed in the next two months.

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(NPAs) was Rs 13 billion, as compared to Rs 7.5 billion in January-March 2017. Gross were Rs 165 billion, against Rs 109 billion in the March quarter of 2016-17, a ratio against advances of 24.1 per cent, against 15.53 per cent a year before.
Net in the quarter were Rs 103 billion, against Rs 65 billion in that period of 2016-17; the ratio being 16.49 per cent, against the earlier 10.02 per cent.

Markets extend gains as oil prices cool off; Indian Oil, HPCL stocks jump

The extended gains on Monday as investor sentiment improved following a 6 per cent slump in global prices.
Gaining for the third day, the ended at 35,165.5, up 241 points, or 0.7 per cent. The rose 83.5 points, or 0.8 per cent, to 10.688.7. Both the indices have rebounded 2.5 per cent in the last three trading sessions. In the preceding week, they had dropped 3.4 per cent each amid a sharp uptick in prices and drop in the rupee’s value against the dollar.
prices fell after Saudi Arabia and Russia vowed to increase production to keep prices in check and offset the shortfall created by the drop in production in Venezuela and Iran. fell below $75 a barrel on Monday, down 6 per cent from a multi-year high of $80 touched on May 23.
Investor appetite received a further boost after the rupee extended gains against the dollar for the third day. The rupee on Monday closed at 67.42, 1.5 per cent higher, compared to the 16-month low of 68.42 touched on May 23. Other emerging market currencies also gained as the US 10-year gilt yield dropped from 3.11 per cent on May 17 to 2.93 per cent on Monday.
“The key driver for emerging will continue to be exogenous factors, in particular the performance of the US dollar and bonds, which have been key headwinds for the asset class in recent weeks,” Paul Greer, portfolio manager, Fidelity International, said to Bloomberg.
Till last week, domestic stocks and currency saw a huge selloff, as a rising US dollar and bond yields prompted investors to take money off risky assets.
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Foreign portfolio investors (FPIs) have pulled out $1.2 billion (Rs 84 billion) of equities this month. Despite stocks rebounding, FPIs have continued to take money off the table. On Monday, they sold shares worth Rs 8 billion, while domestic institutions bought shares worth over Rs 10 billion, the provisional data showed.
Shares of oil marketing companies — Indian Oil, Hindustan Petroleum Corp and Bharat Petroleum Corp — gained 4 per cent to 6 per cent on Monday. Shares of airline companies such as InterGlobe Aviation (that runs IndiGo), Jet Airways and Spicejet gained 3 per cent, 8 per cent and 20 per cent, respectively.
Shares of technology companies fell as the dollar weakened. Tata Consultancy Services (TCS) declined 2.4 per cent, while Infosys fell 1.2 per cent.
Sun Pharmaceutical was the biggest gainer with 7 per cent on analyst upgrades after March-quarter earnings beat expectations. Overall, 1,843 stocks gained, while 848 ended with losses on the BSE.
While domestic factors such as the monsoon and earnings will impact market performance, the market trajectory will be guided more by the movement in the dollar and US yields, according to experts. The US payrolls data due on Friday will also be key, since it will set the tone for the Federal Reserve meeting scheduled for June 12-13.

MCX shares continue to surge, up over 4% amid merger talks with NSE

Shares of of India (MCX) continued to gain for the second straight session on Monday, rising over four per cent amid reports of merger with National Stock Exchange (NSE). The stock soared 4.25 per cent to end at Rs 853.60 on the BSE. During the day, it jumped 6.49 per cent to Rs 872.
On NSE, shares of the company surged 4.53 per cent to close at Rs 854.85.
In terms of equity volume, 244,000 shares of the company were traded on BSE and over 2,200,000 shares changed hands on the NSE during the day.
Shares of of India had surged 14 per cent on Friday also.
In a clarification to the BSE on Friday, said, “We would like to state that as part of the corporate strategy, the company continuously evaluates various opportunities for enhancing shareholders’ value. If and when any proposal is required to be considered by the board of directors of the company warranting disclosures, the same shall be informed to the exchange, in full compliance with Sebi, so as to ensure uniform and simultaneous disclosure to all the investors.” As of now, there is no information, event which requires disclosures. Further, the company does not comment on market speculation, had said in the filing.

L&T posts Rs 31.70 billion profit in Q4, beats estimates

Engineering conglomerate (L&T) reported a 5 per cent year-on-year increase in its consolidated profit after tax (PAT) at Rs 31.70 billion for the quarter ended March 2018 on improved operational performance, surpassing the Bloomberg consensus estimate of Rs 29.95 billion. The company, which beat its revised guidance for order inflow in the last financial year, remains optimistic of a promising year ahead for new orders.
The firm’s revenues from operations were Rs 406.80 billion, 11 per cent higher than Rs 366.20 billion reported in the corresponding quarter a year earlier. These were a tad short of expectations of Rs 411 billion. Earnings before interest, taxation, depreciation and amortisation (Ebitda —an indication of operating profitability) came in at Rs 53.90 billion, or 23 per cent higher than Rs 43.80 billion reported in the same quarter a year back.
“The numbers are satisfactory in the context of the current situation, where the capital goods industry is caught in a crossfire of headwinds and tailwinds,” said R Shankar Raman, whole-time director and chief financial officer at  Shankar Raman was referring to headwinds like higher oil prices and other macro factors. He, however, added that government reforms like the Real Estate Regulatory Authority (RERA), the goods and services tax (GST), and Insolvency and Bankruptcy Code (IBC) proceedings had worked as tailwinds for the industry.
In its outlook for the current financial year, guided for a 10 per cent to 12 per cent growth in its order inflow compared to FY18, 12-15 per cent growth in revenue, and a stable (with an upward bias of 25 basis points) operating profit margin. The management expects the government and public-sector driven orders to continue to be a major contributor. “Private capex is still muted and we do not expect it to return in the next two years,” said S N Subrahmanyan, chief executive officer and managing director, 
For 2017-18, L&T reported an order inflow of Rs 1.52 trillion, 7 per cent year-on-year growth, beating its revised guidance of flat to 5 per cent growth announced in November last year. In Q4, L&T received orders worth Rs 496 billion, which were also at the top end of expectations of Rs 450-Rs 500 billion.
In 2017-18, the company said, it undertook staff rationalisation of 3,000 employees for its core projects and engineering business, while there was staff augmentation of 9,000 employees on the services side, leading to net employee addition of 6,000. On its recently concluded Infrastructure Investment Trust (InvIT), which saw investments from Canada Pension Plan Investment Board, Allianz Capital Partners and other financial institutions, L&T said, for now there were no plans to add more assets to the InvIT.
The standalone business includes heavy engineering, power, hydrocarbon, electrical & automation (L&T announced its sale for Rs 140 billion in Q1FY19 to Schneider) and infrastructure, while consolidated numbers include the standalone as well as financial services, information technology and developmental projects (road, metro, etc). The standalone numbers were a mixed bag with topline at Rs 269.42 billion, higher than the Bloomberg estimate of Rs 259.87 billion, while net profit at Rs 23.06 billion fell short of Rs 25.53 billion.
The infrastructure, which accounted for 8 of the top 10 new orders by value in the Q4, clocked 15 per cent year-on-year increase in revenue and 12 per cent in operating profit. Its share of order inflow jumped from 52 per cent in the first nine months of FY18 to 57 per cent for the full fiscal year.

FUTURE PLANS


Sunday, May 27, 2018

Financial modeling and valuation

Financial Modeling Course Syllabus
Topic 1: Valuation
§  Introduction to valuation
§  The importance of valuation
§  Understanding enterprise value and equity value
§  Valuation method 1: Comparable Company Analysis
§  Selecting comparable companies
§  Spreading comparable companies
§  Analyzing the valuation multiples
§  Concluding and understanding value
§  Valuation method 2: Precedent Transactions Analysis
§  Selecting comparable transactions
§  Spreading comparable transactions
§  Concluding value
§  Valuation method 3: Discounted Cash Flow (DCF) analysis
§  Understanding unlevered free cash flow
§  Forecasting free cash flow
§  Forecasting terminal value
§  Present value and discounting
§  Understanding stub periods
§  Performing sensitivity analysis
§  Weighted Average Cost of Capital (WACC)
§  Using the CAPM to estimate the cost of equity
§  Estimating the cost of debt
§  Understanding and analyzing WACC
§  Concluding valuation
§  Aggregating the three methodologies
§  Concluding value
Topic 2: Building an Integrated Cash Flow Model
§  Introduction to financial modeling
§  Understanding the links between the financial statements
§  Understanding circularity
§  Setting up and formatting the model
§  Selecting model drivers and assumptions
§  Modeling and projecting the financial statements
§  Projecting the income statement
§  Projecting the balance sheet
§  Projecting the cash flow statement
§  Creating the debt and interest schedule
§  Revolver modeling
§  Analyzing and concluding the model
§  Analyzing the output
§  Stress testing the model
§  Fixing modeling errors
§  Advanced modeling techniques
§  Using the model to create a Discounted Cash Flow (DCF) Analysis
Topic 3: Recruiting, Interviewing and Conclusion of the Course
§  Recruiting and Interviewing
§  What are financial institutions and investment banks looking for?
§  General interviewing overview
§  Qualitative/fit questions
§  Technical questions
§  After the interview
§  Following up
§  Selecting a firm
§  Selecting a group
§  Anything you ever wanted to know about investment banking
§  Conclusion of the course