Money From Simple Recession Proof Businesses!

A friend of mine, Chaman Raj, wrote a very simple yet powerful piece on the power of observation to make money in the stock markets. The article made me dig into the specific stocks he talked about in his post to see how they have been doing so far.

He talked about the companies which we come across in our daily lives yet pay no attention to. Some of such companies are MT Educare, Tree House, Lovable Lingerie, Page Industries etc. Lets have a look at them one by one.


 MT Educare: MT Educare is a very young company established in 2006, run by Mahesh R Shetty. The company is in one of the most lucrative, or let's tone it down to 'fast growing' , businesses at present i.e. into coaching and education support. It has a vast network of coaching centers providing services to secondary and higher secondary students, students with commerce background and other competitive examinations. It has centers across Maharashtra, Tamil Nadu, Gujarat and Karnataka and runs around 188 coaching centers. It has collaborations with other institutes too to run centers in New Delhi and Gurgaon.
Lets see how its stock prices have done over the period after its IPO:
           

Certainly, nothing spectacular to take home about. But that could be attributed to the fact that the government is coming around with regulations to rein in the coaching institutes for charging abnormally high fees and the fact that most of these are run by school/college faculties. But with an ever increasing heads enrolling for higher education in India, all such companies focusing on professional studies are going to stay relevant for days to come. In the same context, one can take a look at Career Point too.


In its last earnings report for June'12, MT Educare posted a sales of Rs 34.7 crore and a PAT of Rs 2.53 cr. On an equity base of around 3.95 crore shares, the EPS stands at Rs 0.91 per share. For the whole year, the company may post an EPS of Rs 3.6-3.75 per share. At the current share price of Rs 102.25, P/E stands at approximately 28 while the industry PE hovers around 17 and Career Point in the same domain has a PE of 10.56. The company has a very low Debt-Equity ratio (0.04) which is generally the case with all coaching institutes. But it has very low current ratio (0.80) too. The company has grown tremendously since inception. The sales increased multifold from a mere Rs 4.55 crore in 2008 to Rs 138.47 Cr last year.  The PAT has also been increasing at over 60% for the past 4 years! Probably this could be the reason for the high valuation in PE. And looking from that point of view, the company looks under-valued. Companies in some of the other sectors get much more valuation even for half this growth.


The next stock discussed in the blog was Tree House. And this is certainly a great institution, and I am talking only from the shareholders' point of view. The companies run one of the longest chains of pre-schools/play schools in India. It also serves the K-12 section as well as provides the teacher training materials. Pre-schools is the cash cow for the company as it charges high premium for its services in this category. No wonder, the company's Sales and PAT have been growing at the rate of over  80% and 120% for the past 4 years or so. The company is in an expansion mode and is trying to diversify in terms of geography of operations. With a consistently increasing demand for pre-schools in India where more and more women are taking up jobs and parents' urge to make their kids ready for future competitions, the company looks set for a high flier.


Next in line is Lovable Lingerie. And this is where the heat turns on. And I am still talking from the stockholders point of view. The company has low debt, high current ratio (2.48), quick Inventory Turnover (5.04), reasonable debtors' turnover (10.59) and very comfortable Interest Coverage Ratio (39.58). However, the ROCE% (Return on Capital Employed) has been faltering down from as high as 45.08% in 2007-08 to 15.28% in 2011-12. It is still substantial when compared to other sectors/companies. Moreover, the dip in the ROCE% is due to a high base which has increased substantially in the last few years. The sales of the companies increased by 38.89% to Rs 140.95 Cr and PAT by 53.66% to Rs 21.65 Cr for the year ended March'12. With more and more awareness about the inner garments seeping into the Indian mindset, the company will keep making good money for the shareholders. However, from charts point of view, the company has been in a intermediate down turn. The stock gave a breakout recently after which it has been consolidating around the same levels.
  



With a decent PE of around 28, the stock is reasonably valued for its leadership status in its line of business. One could look to accumulate the stock closer to Rs 300/share where a lot of support kicks in for the stock.


What Lovable is for women, Page Industries is for Men. Well, Approximately. :)
Page Industries is the Indian licensees of the famous Jockey brand. The company also manufactures under-garments for men, women and children. But, the company's story revolves around Jockey only. As a brand, Jockey has been phenomenal. Such is the strength of its brand value, that at time when the whole industry was in a slump and other textile/readymade cloth manufacturer were fighting the price war, Page Industries went on to increase the prices of the Jockey under-garments and garnered higher sales than ever. Company's sales grew from Rs 198.33 Cr in 2007-08 to Rs 741.09 Cr in 2011-12 with PAT improving at a CAGR of 12.9% from Rs 23.82 Cr to Rs 89.98 Cr during the same period. The company reported a splendid EPS of Rs 74.7/share on a small equity base of Rs 11.15 Cr from the previous Rs 48.21/share in 2010-11. It is a big dividend paymaster and pays off nearly 50% of its earnings to its shareholders. The stock has given a return of more than 40% in this year itself. This is superb given the fact that the stock gave a return of around 58% in 2011 when major indices gave a negative returns of 25%.


The reason for these stocks to be ever attractive for investors are very clear. They are recession-proof - more or less, with the assumption that you wouldn't stop wearing underwear even if you are out of a job. And with an economy coming out of recession, or rather living in the continuous fear of it striking back again, one would like to look at companies which are not highly leveraged, have small business cycles, reliable management and possibly less policy issues.


Due to constraint of time, I would leave the topic here.  Other stocks that I wish to cover in my next article are Jubilant Foodworks,  the company which runs the Dominos pizza chain in India; Gillette, the market leader with almost monopolistic powers in the Men's shaving/grooming section and others which either generate very high free cash flows or are unique in their business model.


Till then, Happy Investing! :)


P.S. Here's the link to my friend's article How To Observe & Make Money.

Cement Companies : Cartelization of Good Numbers

Shree Cement posted superb results today where its net profit multiplied 5.92 times YOY to Rs 228 crore vs Rs 38.5 Cr. The best estimates from the analysts was pegging it at 4.9x to Rs 190 Cr. Well, the stock has surprised the streets although it gone down after the results. I guess the phenomena of 'Buy on rumors and sell on news' is what has happened here and most likely all the cement stocks will face similar situations after their results.

If we look at the prices of the major cement companies in the past 1 month or so, we see that they have been outperforming the sensex by quite a margin. Ambuja Cements, ACC, Ultratech has been trading at their all time highs.

Stock	Price movement	Today's Price	Change %*
ACC	Low of 1285.15 on 6th Sept to a High of 1514.4 on 15th Oct	1445.7	17.83%
Ambuja	Low of 179.25 on 6th Sept to a High of 223 on 4th Oct	209.45	24.41%
Ultratech	Low of 1645.6 on 5th Sept to a High of 2074.95 on 12th Oct	2026.15	26.1%
Madras Cement	Low of 181.2 on 6th Sept to a High of 199 on 10th Oct	185.2	9.82%
Shree Cement	Low of 3282.6 on 5th Sept to a High of 4150 on 4th Oct	4057.85	26.42%
Grasim	Low of 2887 on 6th Sept to a High of 3478 on 16th Oct	3464.45	20.47%
J K Lakshmi	Low of 91 on 5th Sept to a High of 120.4 on 15th Oct	118	32.31%
Nifty	Low of 5217.65 on 6th Sept to a High of 5815.35 on 5th Oct	5648	11.4%

*The change% is as per the highest and the lowest price in the duration (Column 2)

So apart from Madras Cement, all the big cement firms have outperformed the Nifty in the last 45 days of the recent rally. These are the large players in the cement sector. Smaller players like Burnpur cement with a market cap of Rs 66 Cr has moved from Rs 5.85 on 6th Sept to a high of Rs 13.4 on 12th Oct, the day it reported its results. A mind boggling move of 129% in mere 26 sessions! The company reported a sales of 20.69 Cr (+176.97%) and a PAT of 0.92 Cr (+607.69%). Since then the stock has cooled down to Rs 10.55.

Several factors attributed to the current rally in the cement stocks.

• Short monsoon has given the infrastructure companies more days of work which lead to more demand for cement companies.
• Several projects getting cleared post monsoon thus spurring up the demand.
• The companies were successful in taking the price hikes at regular intervals which negated the negative effect of diesel price hike of Rs 5 which affects the cement companies as primarily the freight charges go up.
• The cement dispatches have seen an improvement of 6.9% over the previous year (Anandrathi reports) due to improved efficiency. The cement capacity of the country stands at 330 Million tonnes.
• With a slight revival in the economy and government's consistent push to infrastructure and construction sector, the capacity utilization has improved to 76%.

However, the picture is not rosy for everyone. While the northern India players have seen a good improvements in prices, the southern players have been marred by a price war between the new entrants, Jaypee and JSW, which has forced the other players in the region too, to succumb to price war in a sector which has little differentiation. So, while a 50-KG bag was priced above Rs 250 in North India a month ago, it was hovering around Rs 225-230 in south. In fact, some of the companies are selling their products at a lower price than the last year. Probably, that explains a tepid stock price improvement for Madras Cement which is primarily a south based player.

And probably these are the only stocks where some 'surprise elements' can be expected after the results. If, for example, we look at Madras Cement - It has recently expanded its capacity from 10.49 MTPA (Million Tonnes Per Annum) to 12.49 MTPA and will increase its captive power capacity to 157 MW from the present 112 MW. Both these factors will increase its topline and bottomline.

Another such company is Mangalam Cement which is trading at Rs 163.5 and has a Market Cap of Rs 436 Cr as per today's close. The company has a D/E ratio of 0.05 and an interest coverage ratio of 25.1. It has also been a good dividend payer of around 60% at a face value of Rs 10 (Rs 6) consistently for the past 3 years. The company has reported a sales of Rs 188.11 Cr in its June'12 Quarter with a PAT of Rs 26.27 Cr which was 135.2% of its June'11 result. QOQ it saw a jump of 45.6%. The present quarter result could be reporting PAT in several multiples as the company reported only Rs 0.68 Cr last year (Sept 2011). However, the stock has jumped from the levels of 122.25 on 4th Sept to the highs of 172.2 in today's session. A rise of around 41%. However, one can still find this stock relatively cheap going by the simple PE ratios (as on today) of other players.

Stocks	P/E
Ambuja	20.75
ACC	17.54
Ultratech	21.87
Shree Cement	18.66
Madras Cement	10.77
Mangalam	6.14

Courtesy: Capitaline.com

Thus, there seems to have further upside for the stock in the coming days, obviously depending upon the kind of result the company posts. The company is one of the Birla group companies and has a professional management.

There are several other cement companies, some major regional players, which can be looked into for a definite gain in this result season (Well, almost definite ;) ). Meanwhile, ACC and Ambuja are going to report their numbers on 18th Oct. Both the stocks have greatly appreciated in anticipation of a bumper result. However, of late both the stocks, particularly Ambuja, is looking exhausted and is loosing steam. A look at the chart shows that 209 is a strong support for the stock violating which the stock can go down to the levels of 202 or so. MACD is also showing a build up of negative momentum. However, with the results on day after tomorrow, the technicals may not be so reliable.

 Most analysts are recommending ACC and Grasim over Ambuja because of the stretched valuations of the later. Grasim is a diversified company holding cement as one of its major portfolios. Through its subsidiary Ultratech, it has a capacity of 52 MTPA and is expected to report superior results at the back of efficiency improvement in its VHF business.

Similarly, one can take a look at other small cap players like Birla Corp, Orient Paper, JK Cement etc too.

The likes of Shree Cement have set the stage for splendid results from the cement sector as was expected. The speculation game is going to get intensified in this sector as the result days for the companies draw near. For smart traders, the sector is going to give money both ways, depending upon an individual's strategy. :)

Companies	Results
ACC	18th Oct
Ambuja	18th Oct
Ultratech	20th Oct
Prism Cement	23rd Oct
Grasim	30th Oct

Q2 Results : How to make sense of it?

So, the results season is on. 

So far, it has been the two behemoths, Infosys and HDFC Bank, which have declared their results. As has been the trend with Infy for the past few quarters, it's shares rose before the results day and fell sharply after the results were declared. Infy saw another dismal quarter and now the PE valuation between TCS and Infy has increased to unprecedented levels. As per Friday's closing, Infy is trading at a PE of 15.3 while TCS trades at a PE of 21.7! Till a year ago, Infy used to get a higher premium than TCS. The management guidance is not very encouraging for the investors and the continuous shifting of the top management from one position to another is also not sitting good with them. However, if Infy moves closer to Rs 2000/share under the present condition, it will become a dream-price kind of opportunity for a long term investor.

HDFC Bank carried on its superior performance and reported a PAT at 30% due to robust loan growth in the quarter gone by. However, the rich valuations that the bank is already having, there is not much upside present in the stock at this period of time.

The next week has several big names declaring their results. While Sales and PAT are the most common numbers that are tracked for every company, business-specific numbers sometime decide the stock price movement on the results day.

For eg, SBI could fall 5% even if its profit rises above everyone's estimates. Why? Because since the number of companies like Kingfisher Airlines, Suzlon, DCHL etc have increased in the loan portfolio of the banks, the focus has shifted from their NIMs (Net Interest Margins) to their reported NPA (Non-Performing Assets) numbers.

Thus, I will try to cover such numbers apart from the usual Sales and PAT figures to bring a much better visibility about the financial health of the companies.

15th Oct : Reliance Industries
The major numbers associated with RIL are its Sales, PAT, GRM and KG-D6 production. Based on various analyst reports, the verdict of the market can be narrowed down to the below table.

Street will be surprised if:

Parameters	+ve Surprise	-ve Surprise
Sales	Above Rs 94500 Cr	Below Rs 93000 Cr
PAT	Above Rs 5600 Cr	Below Rs 5100 Cr
GRMs	Above USD 9.5/bbl	Below USD 9/bbl
KG-D6 Production	Above 29.5 mmscmd	Below 27.5 mmscmd

Gross Refining Margin (GRM)-The difference between the cost of processing crude and the revenue from selling finished petroleum products.

15th Oct : Axis Bank
Investors are bullish on Axis Bank. The key numbers to watch out for in Axis Bank's results are its Net Sales, Net Interest Income, Net Interest Margins, Loan Book Growth, Non-Performing Assets and Loan Restructuring Pipeline, Provisions, CASA ratio and management's commentary on its asset quality.

Parameters	+ve Surprise	-ve Surprise
Sales	Above Rs 2400 Cr	Below Rs 2100 Cr
NIIs	Above Rs 1160 Cr	Below Rs 1075 Cr
NIMs	Above 3.5%	Below 3%
Loan Book Growth	Above 32%	Below 27%
NPAs (Gross)	Below 0.6%	Above 1%

16th Oct : Mindtree
As with most of the IT companies, the major numbers to look out for Mindtree are sales, profits, attrition rate, forex losses if any, client additions and management guidance (if provided).
Mindtree can surprise the street if it somehow reports a better PAT, northwards of Rs 75 Cr.
Similrly, HCL Tech coming up with its results on 17th Oct needs to report a PAT exceeding Rs 800 Cr for an upmove from the current price of Rs 581.65 a share. Although, in all likelihood, the price can climb a little higher on Monday/Tuesday in anticipation of the results.

17th Oct : Rallis India
With the improvement of monsoon in the later part of the year and increase in the sowing area of Kharif crops so much so that the deficit remained less than 4% of last year, Rallis India is expected to put up good show. It is expected to see an increase of around 46% QOQ in sales and a whopping 152% QOQ in Profits.

Parameters	+ve Surprise	-ve Surprise
Sales	Above Rs 510 Cr	Below Rs 490 Cr
Profits	Above Rs 64 Cr	Below 57 Cr



Note: Dhanuka Agritech is in the same space and can be looked into for far superior returns than Rallis India in the upcoming results.

With ACC & Ambuja reporting their numbers on 18th, it is going to be a day for Cement Sector. I shall try to cover those and other upcoming results in the forthcoming articles to make sure that investors can make sense of the various numbers declared by the companies and the caveats if any.
The tables above have been created with an intent to help the traders to take a long or a short call on the results day. However, it should not be taken as the only criteria for taking a position. The numbers have been derived from the average of various analyst expectations and by going through previous quarters' results to understand traders' sentiments towards the company's results.
Like all other articles, I hope it helps you to make money in the market :)

Equity Trading For Dummies : Thumbrules (Part 2)

First of all, thanks a lot to the readers for such an enthralling response to the last blog : Equity Trading For Dummies. It showed almost a 200% increase in readership for the first 48 hours!
This is an extension to the previous blog in which I have tried to list some more Factors/Indicators/Circumstances which affect the share prices of a company. Those who are active in markets very well know that these are not hard and fast rules but something that is most likely to happen in the given situation. So, when you read this, take them with a pinch of salt ;)
As always, looking forward to your constructive comments and suggestions.

Factor	Scenario	Impact
Credit Ratings	Decrease	Big investors take them seriously, especially if it comes from big houses like CRISIL, CARE, India Ratings(FITCH) etc. When India Ratings cut the ratings for Srei Infrastructure Finance from A+ to AA-, the stock tumbled 31% in a couple of sessions. A bad rating makes the availability of capital tough for the company apart from portending bad days.
Coal Supply	Decrease	Affects all coal-based steel & Power companies like JSW Steel, GVK Power, Reliance Power etc. Some of the companies like Tata Steel have their own coal mines called as Captive coal mines which helps to mitigate this decrease in supply to some extent. The amount of coal supply available with a company severely affects its Plant Load Factor (PLF) and thus its operations. JSW Steel fell drastically when the news of it having only 4 days of coal supply left hit the markets last year.
Rights Issue	At a price below the current market price	To increase the equity base, companies can take the route of a 'Rights Issue' which gives the existing shareholders the right to buy more of the company's shares. Generally, the companies price these issues at a steep discount to the current market price. This brings in more cash for the company but affects the present shareholders who are not tendering to the rights issue negatively. Alok Industries recently came up with its rights issue where the shareholders where given fresh equity at the rate of Rs 10 per share while the stock price at that time was around Rs 16. The stock fell by 18% the very day and drifted lower thereafter.
Promoter Stake	Increase	Affects the stocks positively as it shows that the promoters of the company have faith on the future of the company. Vakrangee Software hit its 52-week high on the day its promoters increased their stake by 4.57%. Similarly, Adani Power has dipped by 5% on reports that the promoters plan to sell part of their holdings in the coming days.
Festivals	As it closes in	All Hotels and Hospitality sector companies like Hotel Leela, Indian Hotels, EIH Ltd, Royal Orchid Hotels etc all rise. Sugar companies normally get high demand and if there is no negative ruling from government,  companies like Renuka Sugar, Balrampur Chini, Bajaj Hindustan should see uptick in their prices. Auto and Jewellery companies are also positively affected as people plan to buy new vehicles or jewellery during  the festivals. Companies like Jubilant Foodworks, which runs the Dominos Pizza, show increased revenue during these periods.
Movie Release	Bumper Opening	Very obvious, the companies associated with the movie will do well. Dabangg drove the prices of Shree Ashtavinayaka from around Rs 16 to Rs 52 in a couple of weeks. 'The Dirty Picture' did similar for Balaji Telefilms. PVR operates the largest chain of multiplexes and hence sees an uptick as and when any movie gets into the coveted club of Rs 100 Crores! Similarly, Cricket Worldcup affects these stocks negatively for obvious reasons.
Liquidity	Decrease	High Interest Rate Regime, Global Slowdown, Tax payments are some of the instances when the companies face liquidity crunch as big cash goes out of the market to safe havens or to government treasury. Very few factors impact share prices the way liquidity in the market does. A very recent example is the bond buying programs initiated by ECB and FED. Read about it here. Markets are already at their 52 Week high. RBI too pays heed to this parameter. Some of the SLR & CRR cut have been strategically announced just before the advance-tax payments by the companies. It's mostly on the increased liquidity in the system that now we are expecting the markets to scale 20K before the year ends.
Patents	Expiring	Bad for the actual innovator, good for the First-to-File pharmaceutical company as it enjoys a 180-day exclusivity for the sale of drug. We all know what Lipitor's FTF did to the share prices of Ranbaxy. More on this, read here.
Non-Performing Assets (NPAs)	Rising	One of the major parameters constituting any loan portfolio of banks and financial institutions. SBI slipped over 3.5% when it reported to have a gross NPA of 4.99% in its June'12 results. With strict regulations and BASEL III norms kicking in, this could be a big sore point for banks with high NPAs. Private banks like ICICI, HDFC, Yes Bank, IndusInd Bank generally have lower NPAs while PSUs like Central Bank, PNB etc normally have higher NPAs.
Markets	Booming	This is a very generic condition which is good for almost all stocks. But I would like to draw attention to the broking firms as investors suddenly start to flock in which leads to increased account activities and brokerage fees. Something like what is happening at present. Aditya Birla Money has appreciated by 80% in the past 8 days. Other firms like Edelweiss, India Infoline, Motilal Oswal, Geojit BNP also show similar trends.

Happy Investing :)

Equity Trading For Dummies : Thumbrules

The Equity trading is generally called as 'Gambling' and rightly so as 90% of the traders in the market only speculate the movement of the market/stocks and gain or lose money depending on their luck. But stock markets have their rules and they are a great source to learn Economics – both micro and macro as well as the way a business works. There are numerous factors which affect the way traders react to the share prices of a company. I have tried to compile the most common ones which one would generally come across while following the markets. These are strictly for those who have little or no exposure to markets and are willing to learn some tricks of the trade to get going. 

In the below table, I have detailed the impact of one scenario, for example A decreasing Rupee. The impact for a Rising Rupee will be vice-versa.

So, let’s take a look.

Factor	Scenario	Impact
Rupee	Decreasing	Exporters get more income IT, Pharma gains as they mostly export. Specially, those IT firms, who have higher hedged currency, outperforms Import bill gets dearer Everything we import gets expensive, specially oil. OMCs like IOC, BPCL, HPCL are the major losers. Airlines like Spicejet, Jet Airways have to pay more for ATF which makes up 40% of their costs.
Crude Prices	Increasing	Companies in exploration and extraction of crude oil gains. Eg. Cairn India OMCs and almost everything falls as we are heavily dependent on oil imports. It affects our fiscal spending and thus fiscal deficit.
Repo Rate	Decreasing	Cost of capital reduces and thus companies can borrow more for growth purposes. Thus almost everything gains led by banks and financials. Rate sensitives like Auto, Metals and highly leveraged companies gain in low interest rate regime.
Inflation	Increasing	Purchasing power of people decreases as the same amount of money fetches less. Consumption related stocks like HUL, ITC, Marico etc should effectively go down. However, if the overall economy is in bad shape, they still get higher valuations for being relatively safer.
Rainfall	Decreasing	Rural India gets affected and agri based companies like Rallis India, Fertilizer companies like Coromandal, RCF, Chambal are hit negatively as demand decreases. Tractor companies like M&M, Eicher and two-wheeler company like Hero Motocorp which has high exposure to rural market is also negatively hit as low rainfall leads to low income for rural india.
Commodity	Increasing	Rubber prices directly impact tyre manufacturers like Ceat, Apollo, MRF. Copra prices affect Marico and other hair oil manufacturers. Increase in Aluminium and Copper prices is good for a company like Hindalco, Sterlite which mines these metals while will augur negatively for stocks like Auto, Electronics manufacturer or other companies which utilize these metals.
Gold	Increasing	For that matter, increase in the prices of precious metals affects companies like Titan, Gitanjali etc which are in jewellery business as their margins decrease. A price increase by them helps to regain the lost margins. Gold Loan companies like Mannapuram and Muthoot gain as more and more people raise loan against gold at higher prices and thus the company's loan book expands. A falling gold price can be a nightmare for the gold loan companies!
Company Outlook of Parent/ Customer/ Supplier	Dismal	Dismal outlook for HP affects the share prices of Mphasis negatively as HP is the largest customer for the company. Such dependence exist for several companies. Similarly, something good for the supplier/customer will be reflected in the company's prices too.
Corporate Governance	Poor	Market hates such news. In the past one year, companies like DLF, Indiabulls, Everonn Education, Reliance Communications, Sun TV and many more have bore the brunt of reports of poor corporate governance. While a positive report is a long term value creator for the investors, a poor report creates instant money for short-sellers.
Equity	Buy Back	A buy back leads to an increase in EPS and thus more often the prices of the stock appreciates. The caveat is the quantum of buy back and the price till which the company is ready to buy. While buyback through tendering shows vigorous uptick, the open market buybacks generally keep the stock buoyed for longer duration. RIL's open market repurchase of the share began the recent rally in its stock prices.
Debt	Reduction	Any plans for debt reduction is mostly considered to be good. But at what cost the debt is being reduced is of prime concern to investors. DLF, IVRCL etc plan to deleverage their balancesheets by selling off their less productive ventures and shareholders like that. While Orchid Chemicals' sale of its Penecillin & Penem API business to Hospira served negatively for the shareholders as the business was a substantial source of revenue for the company.
Excise/Customs Duty	Increase	Mostly affects companies in a negative way as their PAT gets affected. But increase in the excise duty of a competitor product augurs well for the company. For eg. Budget 2012 increased the excise duty on the non-cigarette tobacco products which served positively for cigarette manufacturer ITC.

As I said earlier that these are only a few of the factors which affect the share prices of a company. There are many more. Depending upon the response and the feedback to this article, I may or may not cover them. J