The non-performing assets of most public sector banks have been a big drag in the movement of their stock prices during the last few quarters. The banks gross non-performing assets or NPAs stood at Rs 4,392 crore as on 31 March 2016 against Rs 3,438 crore as on 31 March 2015. The ratio of gross NPAs to gross advances stood at 0.94% as on 31 March 2016 as against 0.93% as on 31 March of last year. The Reserve Bank of India had listed 150 companies in December 2015 whose loans were to be provided for in the bank books against risk of any default. But last week, the RBI pruned the list by informing the banks individually that 20 firms were taking the right steps to reduce their debt and thus, these effected banks were not supposed to provide these NPAs in the March 2016 quarter. This prompted shares of public sector banks like PNB, SBI and Canara Bank to extend gains of nearly 3-4% and edge higher during the week. The Sensex and Nifty closed the week on a somber note to settle at 25,838 and 7,899 levels respectively. The stock market seems to be consolidating at these benchmark indices indicating profit booking at higher levels. Traders and brokers expect the markets to move in a narrow range during the next one week.
The IMD forecast of a slightly warmer than normal summer in CY16 has raised hopes for good sales show for Whirlpool of India Ltd. Since India is a low penetration market but a highly seasonal one, an uptick in air conditioner and refrigerator sales is expected for the ongoing quarter. It has focused on product innovation, portfolio expansion and a timely execution for volume growth across all categories. So, the right execution strategies by the company can drive double digit growth in next few months. Whirlpool India is headquartered in Gurgaon and is one of the leading manufacturers of major home appliances in the country. After entering India in the 1980s, it made its major foray in 1995 by acquiring Kelvinator India Ltd and establishing its presence both in the washing machine and refrigerator segment. It owns three state of the art facilities at Faridabad, Pondicherry and Pune producing air conditioners, microwave ovens, water purifiers, washing machines and refrigerators. Overseas parent, Whirlpool USA owns 75% of the stock while the balance is split between domestic and foreign institutional investors. Large quantities of the Whirlpool stock is also held by HDFC MF and Franklin Templeton MF in their fund scheme portfolios. The company is tackling the currency volatility nicely and also taking full advantage of commodity softness to drive cost to the maximum possible and focusing on manufacturing efficiencies along with improving the product portfolios. The company posted good results for the last quarter despite tough market conditions and intense competition by delivering roughly 13% top line growth and around 40% bottom line growth. Whirlpool India’s trailing 12 month earnings per share was at Rs 18.51 per share for the quarter ending December 2015 with the PE ratio at 40. The book value of the company stands at Rs 71 per share. At the current market price of Rs 735, the price to book is 10.38. The fundamentals of the company are expected to do well in the short-term and the stock can touch Rs 850 in the next 3-4 months.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.