Wednesday, October 14, 2009

Excise Duty cuts continue to help

Exide Industries - the big battery manufacturer in India - reported Sep 09 earnings earlier this week. The crucial bit is this - gross sales went down by 5%, but because excise duty rate is lower this year, net sales were the same. Company reported a 50% jump in profits. But if one were to assume the same excise rate as last year, profits would have jumped by 25% - aided by lower commodity prices (lead).

It is possible that the reversal of excise duty cuts will be a big headwind for profit growth next year - especially in the manufacturing sector. Most analysts will probably take this year profit numbers and project growth on that. That might prove to be really wrong.

Disclosure: No position in Exide.

1 comment:

Great Penny Stocks said...

Silver still looks cheap here adjusted for inflation in 1980 at its peak of 50 dollars an ounce. It would be trading at 200+ dollars an ounce today or even 250. And gold adjusted for its high of 1000 dollars an ounce in 1980 would be at 4000 or 5000 dollars an ounce. So I don't believe we have seen the top in gold or silver yet not even close to it.
Their has been a correction of late in gold and silver but I believe that both gold and silver will move higher once again.