A 24-percent growth in net profits in the March quarter helped FMCG major Hindustan Unilever (HUL) end FY-12 on a strong note. During the quarter, the company's domestic sales increased 20.4 per cent with volumes growing 9.6 per cent. The stock gained over 4 per cent during the week.

The soaps and detergents segment, and also the personal care business did well with key brands clocking double-digit growth. This was aided by a thrust on premium products. HUL grew sales of soaps and detergents by a robust 28 per cent during the quarter. Higher prices rather than volume growth accounted for much of the segment's expansion. The personal care segment's sales too increased a healthy 17 per cent. In comparison, the foods segment put up a pale show. Despite new launches, the category's sales grew just eight per cent, and margins dipped.

Lower spend on advertising improved the company's operating margins to 14.5 per cent from 12.9 per cent last year. Input costs though increased from 52.5 per cent of sales in the December 2011 quarter to 55.2 per cent. While HUL has pricing power, there may not be much more room for reducing ad-spend. With a weak rupee adding to costs, operating margins may not improve much hereon.

Order inflow worries increase for BHEL

The Rajasthan Electricity Board's scrapping of a tender worth Rs 12,000 crore for which BHEL was the lowest bidder, contributed to the latter's stock losing over 7 per cent over the week.

The bid was not part of BHEL's order book; hence there is little financial impact. Yet, the company may have diverted resources for the project. Besides, the incident highlights the larger risks of order cancellation and delays by financial troubled State Electricity Boards (SEBs).

With pricing not appearing to be the reason behind the tender cancellation, it raises the possibility of financial crunch in the Rajasthan SEB. Along with its counterparts in Tamil Nadu and Uttar Pradesh, the Rajasthan SEB is known to be among the top loss-making electricity boards in the country.

The trend of cancellation of orders is the bigger worry for BHEL. In January, the company had removed orders worth Rs 5,850 crore after cancellation by an unnamed customer. At Rs 22,100 crore, BHELs' order inflow for 2011-12 was just about a third of the Rs 60,500 crore of orders it received the previous year.

Bharti's mobile, DTH businesses deliver

Bharti Airtel's revenues in the March quarter grew 15 per cent over the same period last year, while operating profits improved 13.7 per cent. But net profits fell 28.2 per cent due to higher tax, increased interest costs and forex losses. The company's mainstay mobile services division grew; so did the DTH segment. But the tower business (Bharti Infratel) and tele-media stagnated on a sequential basis.

In mobile services, Bharti Airtel increased subscriber additions. It added 5.6 million customers in the March quarter, compared with only 2.8 million and 3.6 million in the previous two quarters. It also improved ARPUs (average revenue per user) to Rs 189. Despite this increase, the proportion of regular users grew to 91.9 per cent of the overall base. The DTH segment also expanded well with addition of 1.59 lakh customers in the quarter. Also, the segment's ARPU rose to Rs 166, among the highest in the industry.

Though Bharti Infratel's operating margin rose, its revenues declined marginally. In the tele-media business, the company's subscriber base reduced sharply. This, though, may have been a conscious strategy to improve ARPUs. The Bharti stock gained 1.6 per cent during the week.

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