Surge in growth-oriented news flow in H1’17 signals improvement in India Inc business confidence: Heckyl

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News flow related to growth-oriented business activities touched the highest level in 2-1/2 years indicating improvement in the business confidence of Indian companies, according to a study conducted by Heckyl, a leading Fintech engaged in news and financial data analytics.

Heckyl has analyzed news data for all the listed companies in India for the past 2-1/2 years covering over 51,000 growth-oriented news items for 1,915 companies.

The first half of 2017 witnessed a year-on-year rise of 15.10% and 11.20% over second half of 2016 in news items featuring growth-oriented business activities. At the same time, the number of companies mentioned in the growth-oriented news items has also grown 24.3% on a y-o-y basis and 23.7% over preceding six months.

Growth oriented news flow at multi-year high

“M&A and Partnerships” and “Product/Project Launch” related activities dominated the news flow during the first half of current year. As a percentage of total news items, “M&A and partnerships” related news jumped to 8% in H1 2017 from 6.83% in H2 2016, while news for “product/ project launch” increased to 5.34% in H1 2017 from 4.92% in H2 2016.

At the same time, the number of companies mentioned in these news categories has also grown in H1 2017 except for “Corporate Growth and Expansion”.

In terms of percentage increase, “Fund Raising” activities have seen the highest growth in all the 5-half year periods under study.

Telecom operators led the growth in “M&A and Partnerships” related news items in H1 2017, while “Product/Project Launch” related news flow was led by IT, Auto and Personal Products companies.

News flow shows surge in M&A, partnerships, and product launch related activities

At the sector level, Specialty Chemicals, Personal Products and Aerospace & Defence related companies witnessed a jump in growth-oriented news flow during H1’17.

“M&A and Partnerships” and “Product Launch” related activities led the news flow for both Specialty Chemicals and Personal Products companies.

Meanwhile, the central government’s focus on boosting defence capabilities aided the aerospace & defence sector, which saw sharp increase in “Contracts”, “M&A and Partnerships” and “Product/ Project Launch” related news flow.

Sectors with Surge in News Flow

On the other hand, Banks, Auto, and Pharma were top 3 sectors which dominated overall growth-oriented news flow. News covering Banks as a percentage of total news (51,011 in the past 2 ½ years) stood at 2.66% in H1 2017, up from 2.31% in H2 2016.

Meanwhile, the news mentioning Auto companies as a percentage of total news was at 1.92% in H1 2017, up from 1.71% in H2 2016. However, the share of news featuring Pharma companies in total news items has declined sharply from 2.51% in H2 2016 to 1.9% in H1 2017.

Top 3 sectors which dominated news flow

Banks step up fund raising activities

News flow on banks showed a sharp increase in “Fund Raising” activities in H1 2017. At the same time, Banks also witnessed a rise in “M&A and Partnership” related news items in H1 2017.

Surge in growth-oriented news flow fuels rally in Banking stocks

A sharp increase in growth-oriented news flow aided rally in the BSE Bankex index of 27.7% during H1 2017.

Product launches dominate news flow for Auto makers

News flow centered on “Product Launch” for Auto companies. At the same time, news items featuring “Product Launch” have also gone up in H1 2017. A significant rise in “M&A and Partnerships” related activities has been observed in the news items covering the Auto companies.

Automakers drive on top fear

The BSE Auto index posted a gain of 15.5% in H1 2017 due to increase in growth-oriented news flow.

Growth-oriented news coverage hits 2-1/2 year low for Drug makers

Pharma companies witnessed a steep drop in news items featuring growth-oriented activities to a 2-1/2 year low in H1 2017. News flow on drug makers showed a major fall in M&A, partnership, and product launch related activities.

Drug makers feel the heat

A steep fall in the growth-oriented news flow weighed on the BSE Healthcare. The index lost 3.65% in H1 2017.

Type of news items analyzed under growth-oriented categories:

1. Corporate Growth and Expansion:
a. NHPC plans to work on five hydroelectric projects in Pitorgarh
b. Dr. Reddy’s Expands Commercial Operations in Europe

2. Fund Raising:
a. Hindalco raises Rs 3,350 cr via issue of shares to QIBs
b. HDFC Bank set to raise Rs 50000 crore in a years’ time frame

3. Contracts:
a. North Eastern Carrying Corporation grabs 400 crore contract from Tata Steel
b. Future Retail and Laura Ashley sign exclusive right and license deal

4. Product/ Project Launch:
a. Zensar Tech launches digital financial transactions solution
b. BHEL commissions 2 units at Maharashtra thermal power project

5. M & A and Partnerships:
a. Motherson Sumi to buy Finland’s PKC for $609 million
b. Cipla USA enters into a collaboration with MEDRx

The Bottom-line:

A significant rise in news flow highlighting growth-oriented activities reflects improvement in overall business confidence. At the same time, an increase in a number of companies mentioned in such news items indicates broad-based improvement in growth oriented activities. On the flip side, stagnant news flow on “Corporate Growth and Expansion” and pick up in “M&A and Partnerships” related news show shift in corporate preference towards inorganic growth.

From investors’ perspective, analytics derived from news coverage can help them to get a bird eye view of growth related activities at the broader level. At the same time, it can help to gauge overall revenue visibility. Most importantly, such alternative data can be used in the top-down analysis of the sector for picking stocks with bright growth prospects.

To know more about Heckyl News Analytics, email us at info@heckyl.com

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