Deepak Jasani, Head Retail Research, HDFC Securities on Reliance Industries Q1FY21 Results
Reliance Industries’ adjusted PAT came in marginally higher than estimates helped in part by higher other Income and lower tax during the quarter. Both refining and Petrochemicals business performed well at the operating profit level due to optimized crude procurement, relatively higher utilization, cost management and agile product placement. Reliance Retail’s topline performance was resilient considering the adverse operating environment. Reliance Jio’s performance was broadly in line but the ARPU at ₹.140 surprised positively.
Reliance’s reported bottomline growth was helped by low tax rates due to new rates & deferred tax credit due to planned O2C restructuring and exceptional income of ₹4,966 crore (net of taxes of ₹1,508 crore) due to profit on divestment of stake in domestic fuel retailing business.
Technical View | We are trading in the crucial support zone of 11,000-11,100. A break of this zone on a closing basis might trigger a short term weakness for the Nifty which could drag it down by 150-200 points. For the upside to resume, we need to get back to the 11,300-113,50 levels from where the market made this U-turn, says Manish Hathiramani, Index Trader and Technical Analyst, Deen Dayal Investments.
Dabur shares gain over 3% after better-than-expected earnings
The share price of Dabur India gained over 3 percent on Friday after the company reported better than expected earnings for the first quarter of fiscal 2021. The stock rose as much as 3.92 percent in the early trade to hit an intraday high of Rs 511.95 per share on the BSE. Dabur India reported a 5.9 percent fall in net profit at Rs 341.8 crore for the quarter ended June 2020 crore as against Rs 363.1 crore in the same period last year. The profit, however, beat the CNBC-TV18 poll estimate of Rs 330 crore. More here
Dixon Technologies gains over 6% post import restriction of television sets
Dixon Technologies’ share price rallied as much as 6 percent on Friday, a day after the government imposed restrictions on the import of television sets with an aim to cut inbound shipments of non-essential items given the escalating tensions between India and China. The domestic contract appliance manufacturer’s stock rose as much as 6.36 percent to Rs 7,500 apiece. Year-to-date, the midcap stock has delivered 100 percent returns to its shareholders despite the outbreak of the COVID-19 pandemic. Since March lows, the stock has climbed 150 percent to the current levels. More here
Jaikishan Parmar, Sr. Equity Research Analyst, Angel Broking on HDFC
“For Q1FY21, HDFC Ltd reported a mixed set of numbers. NII grew by 10 percent YoY however, adjusting higher liquidity equity investment made in recent years NII grew 17 percent YoY. AUM grew at 12 percent YoY and 3 percent Sequentially, The individual book grew 11 percent and non-individual grew at 15 percent YoY. Other income increased owing to stake sale. PAT declined 5 percent YoY largely impacted due to higher provision cost. The moratorium for individual loans reduced 600bps to 16.6 percent and non-individual declined to 460bps. HDFC Ltd has taken a total Rs954cr worth of COVID provision, which we believe is a bit lower. However, HDFC has an additional provision of 1.47 percent of AUM, this is well above the regulatory requirement. It has a very strong CET of 16.2 percent. Additional provision, strong CET, and healthy pre-provision profit provide comfort on balance sheet quality,” Parmar said.
Tata Power gets shareholders’ nod to raise Rs 2,600 cr from Tata Sons
Tata Power on Thursday said it has received shareholders’ approval to raise Rs 2,600 crore via issuance of preferential shares to its promoter Tata Sons. The resolution was approved at the company’s annual general meeting (AGM) with requisite majority, it said in a regulatory filing. “The Scrutinizer’s Report was received on Thursday, 30th July 2020 and, as set out therein, all the Resolutions have been passed with the requisite majority,” it said. Earlier this month, Tata Power’s board had approved a proposal to raise Rs 2,600 crore via issuance of preferential shares to Tata Sons.
Harendra Kumar, MD, Elara Securities on HDFC and FMCG stocks
On HDFC
HDFC has held up its performance quite well but prima facie the market is very worried about the increasing supply on the financial stocks. The amount of supply that is coming up in the financial side is not a small number and given that the credit outlook is so tepid for the next six-eight months, their ability to generate ROEs on that fund raise is very limited. So the market is not pricing in the current numbers but in terms of the outlook and their ability to generate superior returns over the cost of equity which is going to be the limiting factor for financial stocks. Analysts like some of the private banks with good liability franchises but in my view it is more of a – to stay invested if you have to stay invested in financial stocks. So yes HDFC, ICICI Bank and for that matter even Axis after these results look reasonably better placed than some of the other banks.
On FMCG
We don’t find comfort of value at this point of time at least in the largecaps. My shift from FMCG – if you want to limit this behaviour in terms of steady growth – will shift towards technology. I think they have similar characteristics what FMCG had over the last 10 years. They have good ROEs, they have good stable businesses, management and they are seeing catalyst for topline growth. So my bet would be on a significant rerating in terms of P/E multiples for some of the IT stocks at this moment, not so much for FMCG stocks.
#1QWithCNBCTV18 | UPL’s EBITDA margins are expected to improve due to synergy gains realized from Arysta integration & operating leverage. The company is aiming to reduce its net debt to EBITDA to 2x by FY21 from 2.9x as at FY20. Here’s what to expect pic.twitter.com/542hNuePqt
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Opening Bell: Sensex, Nifty open marginally lower as financials fall
Indian indices opened with minor cuts on Friday as gains in IT stocks were capped by losses in financials. At 9:18 am, the Sensex was trading 93 points lower at 37,643 while the Nifty fell 27 points to 11,075. HCL Tech, BPCL, Adani Ports, Wipro and TCS were the top gainers on the Nifty50 index while Kotak Bank, HDFC, HDFC Life, Dr Reddy’s, and HDFC Bank led the losses.
AAI asks SpiceJet to operate on cash and carry basis, but defers decision later
The Airports Authority of India (AAI) had placed SpiceJet’s operations under “cash and carry” arrangement at all airports, via a notice issued on July 29. However, the decision has now been deferred. Under the cash and carry mode, an airline can use airport facilities only after making advance payments. “Airports Authority of India deferred its decision to put SpiceJet on cash and carry. SpiceJet continues to have normal operations at all AAI-run airports as before without any impediments,” the airline’s spokesperson told CNBC-TV18. An airline has to make payments for services such as landing, parking and using navigation services to the Airports Authority of India. As per the standard procedure of AAI, an official said that airlines can maintain dues equivalent to half of their security deposit. This is not the first time SpiceJet has faced such a situation, but the notice underlines the abysmal condition of the domestic carrier amid the COVID-19 pandemic.
Amazon records profit in international business; indicates more hiring in India
Amazon has recorded a profit of $345 million in its international business, helped by an increase in sales amid the coronavirus crisis. This is the first such quarterly profit globally in the last several years. Amazon’s international business is led by Europe, India, and Japan, and the company has seen losses from its international business often climb to as high as $900 million in some quarters. Over the recent quarters as well, the company has seen high international losses — a loss of nearly $400 million in the March quarter and $617 million in the December quarter. In the second quarter of the last financial year, Amazon saw losses of $600 million in its international business.
On the India front, Amazon management said the country is seeing the biggest investments among the new markets the company is looking at. “In India, we are focused on digitising Indian sellers and small businesses and we have launched features for digitisation. There is great work being done by the team. They have goals there of getting more sellers and hiring more people,” the CFO said. More here
Reliance Q1 net profit rises 31% YoY to Rs 13,248 crore; Jio turns in stellar performance
Oil-to-telecom conglomerate Reliance Industries Ltd on Thursday reported a 31 percent year-on-year rise in consolidated net profit at Rs 13,248 crore for the quarter ended June 30, 2020, despite the disruption caused in the wake of the COVID-19 pandemic. The number was ahead of street expectations. In the corresponding quarter last year, the Mumbai-headquartered company posted a net profit of Rs 10,104 crore. The company’s technology arm Jio Infocomm turned in a strong performance because of a massive surge in data consumption. Revenues rose 34 percent to Rs 19,513 crore, EBITDA spiked 55 percent year-on-year to Rs 7281 crore, and net profit nearly trebled to Rs 2520 crore. Commenting on the performance, Mukesh Ambani, Chairman and Managing Director Reliance Industries said: “The severe demand destruction due to global lockdowns impacted our hydrocarbons business but the flexibility in our operations enabled us to operate at near-normal levels and deliver industry-leading results. More here
HDFC gets shareholders’ approval for raising up to Rs 1.25 lakh cr via debt securities
Mortgage lender HDFC Ltd on Thursday said the company’s shareholders have approved raising up to Rs 1.25 lakh crore by issuing bonds or other hybrid instruments on a private placement basis. The approval was received at the company’s annual general meeting (AGM) held through audio visual medium. On July 2, the company had informed about its capital raising plan and said that it would seek shareholders’ nod at the AGM. As a special business, the board of directors got approval for issuance of redeemable non-convertible debentures and/or other hybrid instruments on private placement basis up to an amount not exceeding Rs 1,25,000 crore, HDFC Ltd said.
JUST IN: China July manufacturing PMI at 51.1 versus Reuters poll of 50.7 & 50.9 (MoM)
First up, here is quick catchup of what happened in the markets on Thursday
Indian benchmark indices, Sensex and Nifty ended lower Thursday dragged by selling in banks, energy and metals on the monthly futures & options expiry day. However, pharma and IT positive for the day. The Sensex ended 335 points lower at 37,736 while the Nifty lost 101 points to settle at 11,102. BPCL, IndusInd Bank, IOC, Axis Bank and HDFC were the top draggers on the Nifty50 index while Dr Reddy’s, Sun Pharma, Wipro, Vedanta, and Maruti were the top gainers.
Welcome to CNBC-TV18’s Market Live Blog
Good morning, readers! I am Pranati Deva the market’s desk of CNBC-TV18. Welcome to our market blog, where we provide rolling live news coverage of the latest events in the stock market, business and economy. We will also get you instant reactions and guests from our stellar lineup of TV guests and in-house editors, researchers, and reporters. If you are an investor, here is wishing you a great trading day. Good luck!
