Sensex, Nifty Close Lower For Third Day; Maruti Misses Q1 Estimates On Covid Woes
Catch all live updates on share prices, index moves, corporate announcements and more from Indian stock markets today.
KEY HIGHLIGHTS
Closing Bell
India’s stock benchmarks fell for a third straight day as companies continued to report lacklustre earnings performance for the June quarter, mainly hit by the impact of the deadly wave of Covid-19 cases in the country.
The S&P BSE Sensex shed 0.26% to 52,443.71 and NSE Nifty 50 Index fell by a similar magnitude to 15,709.40. HDFC Bank Ltd. contributed the most to the index decline, decreasing 1.6%. Kotak Mahindra Bank Ltd. had the largest drop, falling 2.7%.
While the S&P BSE MidCap index remained unchanged, the S&P BSE SmallCap underperformed the larger peers, declining 0.45% .
Fourteen of the 19 sectoral indices compiled by the BSE Ltd. fell, led by S&P BSE Auto index's 1% drop. On the flipside, S&P BSE Telecom gained nearly 4.5%, making it the best performer followed by the S&P BSE Metal's 1.4% jump.
The market breadth was skewed in favour of bears. About 1,439 stocks advanced, 1,765 declined and 129 remained unchanged on the BSE
Maruti Suzuki Misses Q1 Estimates On Covid Woes
Maruti Suzuki reported net income for the first quarter that missed the average analyst estimate.
Net income Rs 441 crore vs. estimate Rs 879 crore
Revenue Rs 17,770 crore vs. estimate Rs 18,170 crore
Total costs Rs 17,720 crore vs. Rs 5,770 crore YoY
Raw material costs Rs 8,540 crore vs. Rs 1,330 crore YoY
COMMENTARY AND CONTEXT
Covid’s second wave adversely impacted 1Q production and sales
Q1 profit primarily impacted due to lower sale volumes
“Commodity prices increased steeply but the company continued to make efforts to reduce costs,” Maruti says
Osamu Suzuki to have title of “Honorary Chairman”
SRF Gains Nearly 6% On Earnings Beat
Shares of SRF Ltd gained 5.92% to Rs 8,114.05 apiece as net income in the June quarter beat average analyst estimates.
Net income up 3.8% at Rs 395.28 crore vs estimate of Rs 346 crore
Revenue from operations Rs 2,699.40 crore vs estimate of Rs 2,472 crore
Total costs up 3.28% to Rs 2,178.27 crore
Other income up 6.33% to Rs 13.78 crore
Managing Director of SRF Ashish Bharat Ram said that the second wave of Covid infections had an adverse impact on certain raw material prices and disrupted demand and supply chains in some business segments. However, he expects Covid-19 would not have any material impact on its liquidity or ability to service its debt or other obligations.
Out of the 25 analysts tracking the company, 17 maintained ‘buy’, 4 maintained ‘hold’ and 4 analysts maintained ‘sell’ recommendations. The overall consensus price of analysts tracked by Bloomberg hints at a downside of 7.8%. .
Pfizer Q1 Net Income Beats Estimates
Pfizer Ltd reported net income for the first quarter that beat the average analyst estimate.
Net income Rs 200 crore vs estimate Rs 150 crore
Revenue Rs 749 crore vs estimate Rs 683 crore
Total costs Rs 493 crore
Market Check: Sensex, Nifty Extend Decline; Europe Mostly Gains
India's stock benchmarks edged lower as investors asessed a slew of disappointing quarterly earnings.
The S&P BSE Sensex shed 0.68% to 52,219.34, and NSE Nifty 50 Index posted losses of similar magnitude to 15,644.80.
The S&P BSE MidCap outperformed the larger peers as it declined by 0.25% while the S&P BSE SmallCap almost mirrored the larger peers and shed 0.64% .
Sixteen of the 19 sectoral indices posted losses with S&P BSE Bankex declining by 1.51% while S&P BSE Telecom gained nearly 4%.
The market breadth was skewed in favour of bears. About 1,163 stocks advanced, 1,939 declined and 113 remained unchanged on the BSE.
Dalmia Bharat Sheds Over 5% After Q1 Profit Letdown
Shares of Dalmia Bharat Ltd. shed 5.34% to Rs 2,130.00 apiece after reporting a sequential decline in net profit in June quarter numbers released post market hours on Tuesday.
Q1FY22 (Consolidated, QoQ)
Income from operations down 17.7% at Rs 2,589 crore vs Rs 3,146 crore
Net profit down 62.8% at Rs 238 crore vs Rs 640 crore
Total income down 17.9% at Rs 2,615 crore vs Rs 3,186 crore
Total expenses down 19% at Rs 2,243 crore vs Rs 2,769 crore
Earnings per share at Rs 14.23 vs Rs 32.91
Out of the 28 analysts tracking the company, 27 maintained ‘buy’ and 1 analyst maintained ‘hold’ recommendation. The overall consensus price of analysts tracked by Bloomberg hints at a downside of 5.2%.
IDBI Bank Q1 Profit, Bad Loans Rise Sequentially
IDBI Bank reported net income for the first quarter of Rs 603 crore vs. Rs 144 crore YoY.
Net income Rs 603 crore vs. Rs 512 crore QoQ
Net non-performing assets 1.67% vs. 1.97% QoQ
Provisions Rs 1,752 crore, down 29% QoQ
Net interest income Rs 2,506 crore vs Rs 3,240 crore QoQ
Provision coverage ratio including technical write-offs at 97.42% as on June 30
COMMENTARY AND CONTEXT
Return on Assets at 0.83% for Q1; Return on Equity at 14.44%
CASA ratio at 52.44%, up 489 bps y/y
CRAR at 16.23% vs 13.37% y/y
Provision coverage ratio at 97.42%, compared with 94.71% y/y
Cost of Deposit improved 93bps y/y to 3.72% for 1Q; Cost of Funds improved 98 bps y/y to 3.98%
Corporate, retail loan ratio at 38:62 as on June 30, compared with 43:57 y/y
Recovery from technically written off accounts at Rs 331 crore in 1Q vs Rs 269 crore in 4Q FY21
Bank had Covid-19 related provisions of Rs 863 crore as of June 30
IDBI Bank shares were trading little changed after rising as much as 2.2%
InterGlobe Aviation Stock Hits Two-Month Low On Q1 Loss
Bharti Airtel Gains After Revising Prepaid Mobile Tariff
Airtel prepaid packs will now start from Rs 79 after India’s second largest wireless phone operator discontinued its Rs 49 entry level prepaid recharge, according to an exchange filing.
The Rs 79 plan will offer up to four times more outgoing minutes of usage to customers along with double data, Airtel says
Bharti shares rose over 4%; Vodafone Idea climbed 3.5%
Bharti Airtel's scrapping of its lowest-priced prepaid mobile plan reflects the management's push to rationalize competition with a focus on enhancing subscriber mix, in our view. The telco said it would upgrade its Rs 49 prepaid recharge by doubling data allowance to 200 megabytes and charge Rs 30 more, widening its price premium to existing offerings by rivals Reliance Jio and Vodafone Idea.Bloomberg Intelligence
Telecom Index Bucks The Trend
IndusInd Gains As Analysts Maintain Bullish Rating
Shares of IndusInd Bank gained 3.48% to Rs 1,009.80 apiece after reporting net profit above estimates in the June Quarter post market hours on Tuesday.
Net profit up 9.7% QoQ to Rs 1,016.05 crore vs estimate of Rs 802 crore
Net interest income at Rs 3,564 crore vs estimate of Rs 3,569 crore
Gross NPA at 2.88% vs 2.67% QoQ
Net NPA at 0.84% vs 0.69% QoQ
Total provisions at Rs 1,844.02 crore vs Rs 1,865.69 crore
Brokerage View
UBS
Maintains ‘neutral’ with a 12-month price target of Rs 1,100.
June quarter earnings in line with subdued expectations.
Higher-than-expected investment gains aided net profit.
Higher loan growth to support FY22/23 earnings.
Improvement in funding profile to aid resumption of loan growth.
Key risks
NPAs could rise in microfinance, telecom segments.
Impact of any future third wave of Covid is a major downside risk.
Emkay
Recommends ‘buy’ with a 12-month target price of Rs 1,375.
Despite lower margins, higher opex and elevated provisions, the bank reported an in-line PAT due to healthy fee growth.
Believe that the worst is over in terms of asset quality, subject to no severe third covid wave.
Expect RoA/RoE to improve from 0.9%/8% to 1.7-1.9%/15-16% over FY23/24E.
Large corporate credit growth remains healthy.
Strong underlying retail credit appetite to aid growth momentum.
Better credit growth, slowdown in deposits at recent rate cuts and lower interest reversals to drive margins higher in the near to medium term.
Key Risks
Prolonged normalisation of growth/asset quality trajectory.
To read more brokerage views on IndusInd, click here.
Glenmark Life Sciences, Rolex Rings IPOs See Strong Retail Investor Interest
Retail investors continued to lead the bid for shares in the initial public offerings of Glenmark Life Sciences Ltd. and Rolex Rings Ltd. The retail portion in Rolex Rings' offer was fully subscribed within the opening hour today, repeating what happened with the Glenmark unit's issue yesterday.
Glenmark Life Sciences' issue was subscribed 5.20 times as of 4 p.m. on its second day, while Rolex Rings' offer was subscribed 3.05 times so far on day one.
Follow subscription updates live here:
S.J.S. Enterprises Seeks Approval For Up To Rs 800-Crore IPO
S.J.S. Enterprises, an Indian decorative aesthetics products maker, filed draft prospectus with market regulator Sebi for an Rs 800 crore ($107 million) initial public offering via an offer-for-sale of shares by its founders, according to a copy of the filing on issue manager manager IIFL Securities’ website.
The company isn’t selling any new share, and won’t receive any proceed from the IPO
The Bangalore-based company makes decorative aesthetics products for the automotive and consumer appliance industries, and counts Tata, Hyundai and Fiat among its customers
Its IPO comprises offer-for-sale of up to Rs 688 crore worth of shares by Evergraph Holdings Pte. and Rs 112 crore of shares by K.A. Joseph
Axis Capital, Edelweiss Financial and IIFL Securities will manage the IPO
PSU Bank Stocks Selloff
Aarti Drugs Declines The Most In Over Two Months
Shares of Aarti Drugs Ltd. shed 7.3% to Rs 671 apiece after it reported a sequential decline in net profit in the June quarter earnings on Tuesday.
Revenue up 15.7% at Rs 581.6 crore vs Rs 502.7 crore QoQ
PAT down 5.5% at Rs 48.8 crore vs Rs 51.6 crore QoQ
EBITDA down 0.7% at Rs 81.3 crore vs Rs 81.9 crore QoQ
EBITDA margin down 231 bps at 14% vs 16.3% QoQ
Segmental Performance
Revenue for the API segment up 13.8% at Rs 446.5 crore vs Rs 392.1 crore QoQ
Revenue for the formulation segment up 40.1% at Rs 86.5 crore vs Rs 61.7 crore QoQ
Revenue for Specialty Chemicals segment down 1.7% at Rs 47.1 crore vs Rs 47.9 crore QoQ
Adhish Patil, chief financial officer of the company said the margins were impacted due to the sudden hike in prices in more than 20 raw materials during the June quarter.
All three of the analysts tracking the company maintained ‘buy’ recommendation. The overall consensus price of analysts tracked by Bloomberg implied an upside of 41.9%.
Zomato Slips More Than 6%
Dr Reddy’s Set To Rebound After Weak 1Q: Analysts
Dr Reddy’s Laboratories should record a quick recovery on the back of new product launches in the U.S., after the Indian pharmaceuticals company posted weak results for its first quarter, analysts said.
Shares of the Hyderabad-based company continued to fall Wednesday after plunging 10.5% Tuesday, following its release of first-quarter earnings that missed consensus estimates. The drugmaker’s earnings were mainly hit by weaker-than-estimated sales in its North American markets.
Earlier this month, the company received a subpoena from the U.S. SEC related to an anonymous complaint about unfair practices in Ukraine. “Our initial take is that while this could be material if the SEC investigation throws up a negative finding, it shouldn’t affect our thesis on the company,” Jefferies analyst Abhishek Sharma writes.
SEC probes are common in the pharma sector and are usually settled without a significant impact on company operations, Sharma wrote, adding that whether the U.S. investigation will throw up anything adverse on Dr. Reddy’s is uncertain.
Here is what analysts are saying about the company’s quarterly earnings performance:
Jefferies (Buy, price target Rs 5,761)
Q1 earnings were impacted by a fluctuation in company’s Pharmaceuticals Services and Active Ingredients business and an increase in selling, general and administrative expenses
The company has, however, guided to better days ahead and sees the weakness as transient
The silver lining is that North America revenues remained flat q/q despite an all-round price erosion which has impacted other U.S. exporters’ Q1 results, the note says
Management sounded confident that margins will recoup from 2Q onwards, led by improvement in PSAI revenues and U.S. launches improving profitability from next quarter
Morgan Stanley (Overweight, price target Rs 5,859)
Dr Reddy’s remains confident about returning to 25% Ebitda margins after reporting 20.7% in Q1, driven by new launches, cost improvement and operating leverage; the company’s strong balance sheet provides opportunity for M&A, especially in India
The company doesn’t see API issues affecting its generic drug Vascepa, which helps lower fats in the blood
It has four products in its biosimilar pipeline, which, unlike its past launches, it will be the first to market
Dr. Reddy’s has also launched a multi-service mobile app platform that integrates doctors, diagnostics, pharmacies and insurance for out-patients; the company has first-mover advantage in this space
Sanofi India To Sell Nutraceuticals Business For Rs 587 Crore
Sanofi India Ltd. approved sale of its nutraceuticals business to Universal Nutriscience Pvt., a partnership between Kedaara Capital and Universal Medicare, for Rs 587 crore ($78.8 million), according to an exchange filing.
The deal will help Sanofi India focus on “growth pillars, while allowing nutraceuticals business to have more opportunities for expansion in an organization where it will have a better strategic fit,” the company said
The deal value includes some debt like obligations such as retirals and provision for sales returns, and is subject to customary working capital adjustments and post-closing adjustment on certain contractual arrangements
Expect deal to close within three months
Sanofi India will transfer 16 nutraceutical brands to Universal Nutriscience as part of transaction, including Seacod, E-Cod, CoQ, Primosa, and Collaflex
All employees of the unit would be transitioned to Universal Nutriscience
Sanofi India Q1FY22
Revenue from operations at Rs 789.1 crore vs Rs 725.1 crore QoQ
Net profit at Rs 178.3 crore vs Rs 145.9 crore QoQ
Total income at Rs 806.2 crore vs Rs 751.4 crore QoQ
Total expenses at Rs 563.6 crore vs Rs 556.5 crore QoQ
Other income at Rs 17.1 crore vs Rs 26.3 crore QoQ
Opening Bell: Sensex, Nifty Swing Amid Weak Regional Trade
Indian stock benchmarks fluctuated between gains and losses in opening trade, in line with weak Asian trading, as China’s regulatory crackdown pulls down stocks in the region while local companies continued to report disappointing earnings.
The S&P BSE Sensex lost as much as 0.6% to 52,281.14 after opening 0.2% higher. The NSE Nifty 50 Index fell as much as 0.5% to 15,676.35. HDFC Bank Ltd. contributed the most to the index decline, decreasing 1.1%. Tata Consumer Products Ltd. had the largest drop, falling 2.1%.
The broader markets too fell in line with their larger peers. The S&P BSE MidCap lost 0.3% while the S&P BSE SmallCap was little changed. Sixteen of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by a gauge of banking companies.
India’s June quarter earnings have been lackluster so far. Of the 21 Nifty companies to have reported, 16 have missed analysts’ estimates while profits of four companies were above the consensus view. Just one company, Kotak Mahindra Bank, reported in line with expectations.
Investors will now be watching the earnings performance of Maruti Suzuki, the country’s biggest carmaker, which will be reporting its results this afternoon. FMCG company Nestle India will also be releasing the numbers today.
Coforge Q1 Profit Misses Estimates; Raises Sales Growth View
Coforge Ltd. reported net income for the first quarter that missed the average analyst estimate.
Net income Rs 124 crore vs estimate Rs 134 crore
Revenue Rs 1,462 crore vs estimate Rs 1,396 crore
Total costs Rs 1,315 crore
Ebitda Rs 236 crore vs estimate Rs 231 crore
Ebitda margin before employee stock options at 16.1% vs 17.1% YoY
Dividend per share Rs 13
COMMENTARY AND CONTEXT
Company planning for FY22 organic growth of at least 19% in constant currency terms, higher than 17% indicated earlier
Total order book up 38.7% YoY to $645 million as of June 30
Order intake increased to $318 million,on the back of three large deals secured during Q1, including a $105 million contract
Total headcount, including employees of recently-acquired SLK Global, at 20,491
Rolex Rings IPO: Opens For Subscription
Rupee Bonds Steady Ahead Of Rs 17,000 Crore T-Bill Auction
Indian bonds are steady before a Rs 17,000 crore ($2.3 billion) sale of Treasury bills. The rupee also trades little changed ahead of the Fed’s policy decision later on Wednesday.
USD/INR steady at 74.48; pair rose 0.1% on Tuesday
Yield on 6.1% 2031 bond steady at 6.18%; 5.63% 2026 bond yield also unchanged at 5.69%
India’s economic growth estimate for 2021 were slashed by 3 percentage points to 9.5% by the International Monetary Fund
The government collected a net Rs 2.46 lakh crore in the first quarter of the current fiscal year from direct taxes, compared with Rs 1.17 lakh crore a year earlier, junior finance minister Pankaj Chaudhary told Parliament in a written reply on Tuesday
Global funds sell net Rs 1,460 crore of India Stocks Tuesday: NSE
They bought Rs 28 crore of sovereign bonds under limits available to foreign investors, and withdrew Rs 325 crore of corporate debt
State-run banks bought Rs 395 crore of sovereign bonds on July 27: CCIL data. Foreign banks bought Rs 2,340 crore of bonds
SGX Nifty Rises Amid Weak Asia Trading
Asian stocks followed Wall Street lower Wednesday as a rout in China spurs caution and U.S. megacap technology earnings receive a mixed response.
Chinese equities fell further, and modest gains in Hong Kong provided little succor after this week’s plunge on a regulatory crackdown that’s stirred questions about how far Beijing will go to curb big companies. The Nasdaq Golden Dragon China Index -- which tracks 98 of China’s biggest firms listed in the U.S. -- has suffered a record drop. The offshore yuan pared a slide.
India's SGX Nifty 50 Index futures for July delivery rise 0.1% to 15,764.50, while MSCI Asia Pacific Index -0.6%. The NSE Nifty 50 Index fell 0.5% Tuesday to 15,746.45.
Treasuries were boosted by the flight-to-quality sparked by the China selloff and a solid 5-year auction. The dollar was little changed after a two-day retreat. Elsewhere, oil was trading above $72 a barrel and Bitcoin at about $39,000.
Back home, IndiGo, IndusInd Bank, Torrent Pharma, Karnataka Bank, Granules India, Dalmia Bharat may react as the companies reported quarterly results after the market closed Tuesday.
Maruti, Nestle, Mahanagar Gas, Coforge, Pfizer India, ABB India are among the companies scheduled to report earnings Wednesday. Dr Reddy’s, Birlasoft, HEG, Mahindra Lifespace are holding their annual shareholders’ meeting. Foreign investors sold net Rs 2,220 crore of stocks on Monday, according to NSDL website.