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The Marketing News Blog serves as an extension of the American Marketing Association's flagship publication. Produced by Marketing News writers and editors, this blog provides fresh perspectives on all aspects of marketing, including advertising, sales, promotion, direct and database marketing, B2B marketing, marketing research and customer relationship management. In addition, Marketing News follows the regulatory and legislative developments that marketers need to know, delves into how technology affects the practice of marketing, and covers global marketing trends and issues.
Brand loyalty, replacement demand keep MRF ahead; stock clocks 480% returns
The MRF stock has been one of the best performing stocks
in the domestic tyre industry with manifold returns over the past five
years. At its current market price of Rs 14,802.55, this 10-face value
stock has clocked absolute returns of 480% over the past five years and
about 44.5% in the past one year, outperforming the average gains of
224% for the 5-year period and 9.2% gains in the past one year by the
Indian tyre industry.
It is one of the country's leading market players with a market share of close of 21.8% in FY10 - as per a report by Centrum Broking. The report also highlights that MRF's leadership position in the tyre market is due to its strong brand loyalty in the domestic market as well as a dedicated and well entrenched distribution network that act as a strong competitive barrier.
Given its brand loyalty, dedicated pan-India reach and stronghold in the replacement tyre market, MRF's consolidated revenues have grown by over 28% CAGR (compounded annual growth rate) over the past three years - as at September 2012 (the company follows August-September financial year), ahead of its peers such as Apollo Tyres, whose consolidated sales grew by 16.4% CAGR over the past three years and CEAT with a 3-year CAGR consolidated sales growth of 21% for the year ended March 2013.
On the margins front too, the company has been able to maintain its consolidated earnings before interest depreciation and tax (EBITDA) margins at over 10% in FY12 (September 2012). For FY13, Apollo Tyres has reported a consolidated EBITDA margins of 11.5%, MRF's annual results for the year are awaited as the company's financial year ends in September.
With business from original equipment manufacturers (OEMs) under pressure due to a slowdown in the automotive segment, tyre companies today are banking on replacement or after-sales market to boost sales. MRF enjoys a dominant position in this segment with replacement sales attributing to nearly 75-76% of its revenues.
That the replacement market will continue to be strong over the next couple of years is also apparent from the fact that almost 70.72 lakh passenger vehicles (cars and utility vehicles) and nearly 19 lakh commercial vehicles (medium, heavy and light) have been added to the Indian roads during FY10 to FY12, whose tyres will be due for replacement in the near future giving tyre manufacturers a decent business opportunity.
Given its strong and visible growth trajectory, there can be a further upside to this stock from the medium- to long-term perspective.
It is one of the country's leading market players with a market share of close of 21.8% in FY10 - as per a report by Centrum Broking. The report also highlights that MRF's leadership position in the tyre market is due to its strong brand loyalty in the domestic market as well as a dedicated and well entrenched distribution network that act as a strong competitive barrier.
Given its brand loyalty, dedicated pan-India reach and stronghold in the replacement tyre market, MRF's consolidated revenues have grown by over 28% CAGR (compounded annual growth rate) over the past three years - as at September 2012 (the company follows August-September financial year), ahead of its peers such as Apollo Tyres, whose consolidated sales grew by 16.4% CAGR over the past three years and CEAT with a 3-year CAGR consolidated sales growth of 21% for the year ended March 2013.
On the margins front too, the company has been able to maintain its consolidated earnings before interest depreciation and tax (EBITDA) margins at over 10% in FY12 (September 2012). For FY13, Apollo Tyres has reported a consolidated EBITDA margins of 11.5%, MRF's annual results for the year are awaited as the company's financial year ends in September.
With business from original equipment manufacturers (OEMs) under pressure due to a slowdown in the automotive segment, tyre companies today are banking on replacement or after-sales market to boost sales. MRF enjoys a dominant position in this segment with replacement sales attributing to nearly 75-76% of its revenues.
That the replacement market will continue to be strong over the next couple of years is also apparent from the fact that almost 70.72 lakh passenger vehicles (cars and utility vehicles) and nearly 19 lakh commercial vehicles (medium, heavy and light) have been added to the Indian roads during FY10 to FY12, whose tyres will be due for replacement in the near future giving tyre manufacturers a decent business opportunity.
Given its strong and visible growth trajectory, there can be a further upside to this stock from the medium- to long-term perspective.
NEW DELHI: Indian markets are likely to trade in a range with a
positive bias on Tuesday. The key support level for the index is placed
at 5,825 levels.
"The Nifty is expected to trend up till 6000. In this period the key support will be around 5825 and resistance will be at 5950," said Somil Mehta, Senior Tech Analyst (Equity) at Sharekhan.
"The Nifty has completed an expanding leading pattern on the daily chart by closing above the 20-daily moving average (DMA) and the 40-DMA," he added.
Mehta is of the view that it is now expected to retrace the correction from 6142 to 5700 by 61.8 % to reach 6000. The short-term bias for the index remains positive for a target of 6000 with reversal around 5700.
The medium-term outlook remains positive because the Nifty has retraced 61.8% of the previous rally from 4770 to 6229. The momentum indicator on the weekly chart has also given a positive crossover
Here is a list of ten stocks which are likely to be in focus in trade today:
Financial Technologies Ltd: FTIL, the promoter of crisis-hit NSEL, today said it has received a show-cause notice on October 5 from commodity market regulator FMC regarding its 'fit and proper' status as a shareholder in MCX.
JSW Steel Ltd: The company has acquired Heidelberg Cement India's 0.6 million tonne per annum (mtpa) cement grinding facility in Raigad, Maharashtra, "as a going concern on slump sale basis."
Godrej Consumer Products Ltd: FMCG firm, GCPL said that it has entered hair salon segment with acquisition of 30 per cent stake in Mumbai-based premium hair salon chain Blunt for an undisclosed sum.
ONGC Ltd: An oil spill was reported off the Mumbai coast following a rupture in Oil and Natural Gas Corp's (ONGC) main trunk pipeline that carries crude oil from Mumbai High fields.
Banking stocks are likely to remain in focus after the central bank reduced the rate under the marginal standing facility (MSF) by 50 basis points to 9%, and introduced lending to banks for seven days and 14 days, instead of the current practice of just a day.
GSK Pharma Ltd: Drug maker GlaxoSmithKline Pharmaceuticals said its sales continue to be affected in the major pockets of the country as its products are not being purchased by stockists and retailers from September 15, 2013.
Bharti AirtelBSE 2.57 %, Idea Cellular: The telecom department has lowered the proposed one-time charge for airwaves held by nine mobile phone companies whose permits were quashed by Supreme Court in February 2012.
Apollo Tyre Ltd: The bid by Apollo Tyres to buy Cooper Tire for $2.5 billion (Rs 14,400 crore), touted as the largest ever acquisition in the auto sector, is at risk of falling apart with both companies squabbling openly and the Indian side making accusations of "misrepresentation", which the US company has rejected.
IOC: The West Bengal government will open financial bids for acquisition of its 31% stake in Haldia Petrochemicals in a week, the state's commerce and industry minister has said. Although the names of the bidders have not been declared, persons with knowledge of the matter said Indian Oil Corp was the sole bidder by 11 am on Monday-the deadline for submitting bids.
"The Nifty is expected to trend up till 6000. In this period the key support will be around 5825 and resistance will be at 5950," said Somil Mehta, Senior Tech Analyst (Equity) at Sharekhan.
"The Nifty has completed an expanding leading pattern on the daily chart by closing above the 20-daily moving average (DMA) and the 40-DMA," he added.
Mehta is of the view that it is now expected to retrace the correction from 6142 to 5700 by 61.8 % to reach 6000. The short-term bias for the index remains positive for a target of 6000 with reversal around 5700.
The medium-term outlook remains positive because the Nifty has retraced 61.8% of the previous rally from 4770 to 6229. The momentum indicator on the weekly chart has also given a positive crossover
Here is a list of ten stocks which are likely to be in focus in trade today:
Financial Technologies Ltd: FTIL, the promoter of crisis-hit NSEL, today said it has received a show-cause notice on October 5 from commodity market regulator FMC regarding its 'fit and proper' status as a shareholder in MCX.
JSW Steel Ltd: The company has acquired Heidelberg Cement India's 0.6 million tonne per annum (mtpa) cement grinding facility in Raigad, Maharashtra, "as a going concern on slump sale basis."
Godrej Consumer Products Ltd: FMCG firm, GCPL said that it has entered hair salon segment with acquisition of 30 per cent stake in Mumbai-based premium hair salon chain Blunt for an undisclosed sum.
ONGC Ltd: An oil spill was reported off the Mumbai coast following a rupture in Oil and Natural Gas Corp's (ONGC) main trunk pipeline that carries crude oil from Mumbai High fields.
Banking stocks are likely to remain in focus after the central bank reduced the rate under the marginal standing facility (MSF) by 50 basis points to 9%, and introduced lending to banks for seven days and 14 days, instead of the current practice of just a day.
GSK Pharma Ltd: Drug maker GlaxoSmithKline Pharmaceuticals said its sales continue to be affected in the major pockets of the country as its products are not being purchased by stockists and retailers from September 15, 2013.
Bharti AirtelBSE 2.57 %, Idea Cellular: The telecom department has lowered the proposed one-time charge for airwaves held by nine mobile phone companies whose permits were quashed by Supreme Court in February 2012.
Apollo Tyre Ltd: The bid by Apollo Tyres to buy Cooper Tire for $2.5 billion (Rs 14,400 crore), touted as the largest ever acquisition in the auto sector, is at risk of falling apart with both companies squabbling openly and the Indian side making accusations of "misrepresentation", which the US company has rejected.
IOC: The West Bengal government will open financial bids for acquisition of its 31% stake in Haldia Petrochemicals in a week, the state's commerce and industry minister has said. Although the names of the bidders have not been declared, persons with knowledge of the matter said Indian Oil Corp was the sole bidder by 11 am on Monday-the deadline for submitting bids.
WASHINGTON: Certain provisions of the comprehensive immigration reform bill not only hurts Indian IT companies, but would also damage American competitiveness,
and imperil thousands of jobs, a top US corporate leader has argued as
the legislation is being debated in the House of Representatives.
"US policymakers need to understand the significant and harmful unintended consequences if legislation is passed containing provisions that would limit market entry of IT professionals," Ajay Banga, CEO of MasterCard and chairman of the US-India Business Council wrote in an op-ed in The Hill.
The final piece of legislation needs to ensure that high skilled visa programs continue to attract workers to the US and allow American companies to have a competitive advantage in today's highly competitive global marketplace, he said.
Banga argued that the provisions discriminate against Indian IT companies, but to be very clear, some US IT providers would be blocked from providing these services.
"Moreover, there would be very real and negative consequences to US businesses that rely on these services. The harmful effects would cut across an array of American industries looking to keep their business growing, from construction and transportation to travel and tourism.
"These companies, customers of the 24/7 'knowledge economy', rely on it to keep growing and creating jobs," he wrote.
"Ultimately, the provisions damage competitiveness, imperil the thousands of American jobs that have been created as part of the building of that knowledge economy, and undercut the very drivers for making more IT professionals available to meet American needs," Banga said.
US and Indian companies that bring temporary IT personnel to American businesses when such trained professionals are in short supply domestically provide a critical service in the US marketplace - there is no reason for government policy to differentiate between any two IT companies that compete to provide essentially the same services in essentially the same ways with essentially the same labour pool, he argued.
"High-skilled workers play a major role in the US economy today. They work for our biggest job creators, are often entrepreneurs themselves and are directly contributing to the innovative companies that will employ Americans for generations to come," he said.
"Until the US can produce sufficient numbers of skilled professionals domestically, the reality is that talent must be sourced from around the globe so our companies can continue to compete successfully on the global stage," Banga added.
"US policymakers need to understand the significant and harmful unintended consequences if legislation is passed containing provisions that would limit market entry of IT professionals," Ajay Banga, CEO of MasterCard and chairman of the US-India Business Council wrote in an op-ed in The Hill.
The final piece of legislation needs to ensure that high skilled visa programs continue to attract workers to the US and allow American companies to have a competitive advantage in today's highly competitive global marketplace, he said.
Banga argued that the provisions discriminate against Indian IT companies, but to be very clear, some US IT providers would be blocked from providing these services.
"Moreover, there would be very real and negative consequences to US businesses that rely on these services. The harmful effects would cut across an array of American industries looking to keep their business growing, from construction and transportation to travel and tourism.
"These companies, customers of the 24/7 'knowledge economy', rely on it to keep growing and creating jobs," he wrote.
"Ultimately, the provisions damage competitiveness, imperil the thousands of American jobs that have been created as part of the building of that knowledge economy, and undercut the very drivers for making more IT professionals available to meet American needs," Banga said.
US and Indian companies that bring temporary IT personnel to American businesses when such trained professionals are in short supply domestically provide a critical service in the US marketplace - there is no reason for government policy to differentiate between any two IT companies that compete to provide essentially the same services in essentially the same ways with essentially the same labour pool, he argued.
"High-skilled workers play a major role in the US economy today. They work for our biggest job creators, are often entrepreneurs themselves and are directly contributing to the innovative companies that will employ Americans for generations to come," he said.
"Until the US can produce sufficient numbers of skilled professionals domestically, the reality is that talent must be sourced from around the globe so our companies can continue to compete successfully on the global stage," Banga added.
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