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Market Watch Stronger Rupee how does it impact Indian companies
Market Watch Stronger Rupee how does it impact Indian companies 
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The best recession-proof stock to own today is a medical REIT. I first recommended Medicinal Properties Trust (MPW) three years ago, around $9 a share. Since then it has paid out 10 dividends, the last four of which where 27 cents apiece, or $1.08 annually. That’s 9% of the current stock price. |
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| Stronger Rupee how does it impact Indian companies |
| Wednesday, 02 May 2007 | ||||||
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The rupee is up 7% ruling at its 9 year high even after it has eased to its lowest this week, making it the best performing currency against the dollar this year, rupee appreciation will definitely have an overall mixed impact on the earnings of many of the blue chip companies in India.The companies that will be negatively impacted by the appreciating rupee include global commodity stocks like Reliance, Hindalco, Tata Steel and software companies like Satyam Infy etc. And the companies that are likely to benefit from the occurrence will be Jet Airways, Reliance Communications and auto companies like Tata Motors, Maruti, Hero Honda etc as the imported price of their raw materials will cost less, from a larger viewpoint it’s more like loosing 100 points one side and gaining 70 on another. Engineering companies like Suzlon also gain on raw material cost savings. Jet will be the other gainer on its aviation fuel costs, Reliance's 70% of revenues come from exports which would be hit by the rising rupee and this would further hit their profitability Reliance prices its products in the global markets off landed costs. With a decrease in landed costs, profits will be hit; software companies like Infosys Technologies, Satyam Computers TCS and Mind Tree Consulting and there are so many others that will be hit on the back of appreciating rupee as their exports are priced in foreign currency. The excellent growth in bottom lines posted by these blue chips have seen bearish trading sentiments in the scrips and have virtually offset the gains. But brokerage firm, Merrill Lynch, still expects strong volume growth to lead to steady earnings increase for these companies.
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