Blog posts

13 May 2022

Market closes lower, State Bank of India's Q4 profit rises 41.3% YoY to Rs 9,114 crore

Trendlyne Analysis

Nifty 50 fell over 300 points from the day’s high and closed marginally lower due to heavy selling pressure towards the end of the trading session. Major Asian indices closed higher after US indices closed marginally lower on a volatile day of trade. However, US equity futures rose after the US Federal Reserve Chairman Jerome Powell pushed back against speculation of a 75 bps hike in its next two meetings. Powell reaffirmed that the US Fed is likely to raise the federal funds rate by half a percentage point and isn’t actively considering a 75 bps hike. Crude oil rises but is set to post a decline for the week. The prospect of European Union ban on Russian oil shortening supply and demand concerns from weaker global growth is affecting crude oil prices. Retail inflation in India rose to 7.79% in April against 6.95% in March mainly due to higher edible oil and fuel prices. European indices follow the global trend and trade higher than Thursday’s levels.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the green despite the benchmark index closing lower. Nifty PSU Bank, which lost over 3% on Thursday, closed flat. Nifty Pharma and Nifty FMCG closed higher than Thursday’s levels. Nifty IT closed in the red, tracking the NASDAQ 100, which also closed lower on Thursday.

Nifty 50closed at 15,782.15 (-25.9, -0.2%), BSE Sensexclosed at 52,793.62 (-136.7, -0.3%) while the broader Nifty 500closed at 13,471.50 (6.3, 0.1%)

Market breadth is highly positive. Of the 1,870 stocks traded today, 1,298 were in the positive territory and 541 were negative.

Mahindra CIE Automotive, EPL, Timken India, and ZF Commercial Vehicle Control Systems Indiaare trading with higher volumesas compared to Thursday.
State Bank of India sees a short build-up in its May 26 futures series as its open interest rises 20.9% with put to call ratio at 0.4.
Delhivery’s Rs 5,235-crore IPO gets bids for 1.6X of the available 6.2 crore shares on offer on the last day of bidding. The retail investor quota gets bids for 57% of the available 1.1 crore shares on offer.
Zydus Lifesciences rises as it is set to launch Bemdac (Bempedoic acid), a new drug, for the first time in India. This drug will aid in treating uncontrolled LDL (low-density lipoprotein) or 'Bad' cholesterol for patients and falls under the cardiac segment.
State Bank of India's Q4FY22 profit rises 41.3% YoY to Rs 9,114 crore and net interest income rises 15.3% YoY to Rs 31,198 crore. In FY22, the bank's profit rises 55.2% to Rs 31,676 crore.
Venus Pipes and Tubes’ Rs 165.4-crore IPO gets bids for 16.3X of the available 35.5 lakh shares on offer on the final day of bidding. The retail investor quota gets bids for 19X of the available 17.7 lakh shares on offer.
Life Insurance Corporation of India’s shares quotes a discount of Rs 25 in the grey market today. LIC IPO GMP (grey market premium) is trading in the negative zone for three consecutive sessions. The IPO is likely to list on May 17.
HDFC Securities maintains an ‘Add’ rating on Torrent Power with a target price of Rs 501, indicating an upside of 13.8%. The brokerage has a positive outlook on the company due to higher demand, and improved collections efficiencies across its distribution business. The brokerage expects the company’s revenue to grow at a CAGR of 4.8% over FY22-24.
Nifty 50was trading at 16,076.35 (268.4, 1.7%), BSE Sensexwas trading at 53,615.66 (685.4, 1.3%) while the broader Nifty 500was trading at 13,733.35 (1.99%).
Market breadth is surging up. Of the 1,856 stocks traded today, 1,618 were gainers and 213 were losers.
IFB Industriesis trading with more than ten times its weekly average trading volume. Hatsun Agro Products, CreditAccess Grameen, Honeywell Automation India, and RHI Magnesita India are trading at more than three times their weekly average trading volumes.
FMCG stocks like Hindustan Unilever, United Breweries, Godrej Consumer Products and Tata Consumer Products, among others are rising in trade. The broader sectoral index Nifty FMCG is also trading in green.
Stocks like InterGlobe Aviation, Pidilite Industries, Bank of Baroda, Gland Pharma, and MindTree, among others, are in the oversold zone according to the technical indicator relative strength index or RSI.
Aditya Birla Capital’s Q4FY22 net profit rises 20% YoY to Rs 450.3 crore and revenue rises 18.4% YoY to Rs 6,620.1 crore driven by growth in loan book and customer base. In FY22, net profit rises 51.4% YoY to Rs 1,705.9 crore and revenue rises 15.4% YoY to Rs 22,241.3 crore.
Anupam Rasayan India is rising as Q4FY22 profit rises 108% YoY to Rs 46.1 crore and revenue rises 17% YoY to Rs 317.2 crore million driven by a volume ramp-up. In FY22, the company's profit rises 116% to Rs 152.2 crore
RBL Bank rises as its Q4FY22 net profit surges 164% YoY to Rs 198 crore with net interest income rising 25% YoY to Rs 1,131 crore. However, net interest margin increases 87 bps to 5.04%. Provisions declined 36.1% YoY to Rs 400.6 crore. Asset quality improvement is a mix as gross NPAs increase marginally by 6 bps to 4.4%, but net NPAs fall 78 bps YoY to 1.34%.
Matrimony. com is rising as its Q4FY22 net profit rises 15.6% YoY to Rs 11.7 crore. Revenue rises 10.7% YoY to Rs 116.3 crore on the back of strong demand in its matchmaking and marriage services. Net profit rises 31.4% YoY in FY22 to Rs 53.2 crore and revenues increase by 14.4% to Rs 452.4 crore.
Brigade Enterprises’ Q4FY22 net profit falls 17.9% YoY to Rs 32.5 crore while revenues rise 17.5% to Rs 964.7 crore. Leasing revenue rises 51.2% YoY to Rs 179.8 crore and Real estate revenue rises 10.8% YoY to Rs 711.6 crore. However, net profit falls due to an increase in finance costs and sub-contractor costs.
Nifty 50 sees a short covering in its May 26 futures series with its open interest falling by 1.5% and put to call ratio at 0.83.
Seimens' Q4FY22 net profit rises marginally by 2% YoY to Rs 340 crore while revenues rise 13.5% YoY to Rs 4,021.5 crore. Revival in public and private capex fuels order growth for Siemens, while its mobility segment gets high value orders during the quarter. Higher commodity and logistics costs impact company's earnings growth in Q4.
Consumer Price Index (CPI) inflation rises 84 bps to 7.79% in April 2022 from March 2022 data of 6.95%. The sharp rise is because of a surge in fuel prices and food items. The rise in food prices is because of an increase in prices of edible oil and vegetables as the wheat output may fall this year. CPI for the fuel and light segment is 10.8% and food is 8.38%.
Tata Motors’ Q4FY22 net loss narrows by 86.4% to Rs 1,032.8 crore but revenues fall by 11.2% to Rs 79,341.6 crore. The company’s arm Jaguar Land Rover’s (JLR) revenue decreases by 7% YoY in FY22 to Pound 18.3 billion due to supply-side constraints arising from the global semiconductor chip shortage.
Larsen & Toubro’s Q4FY22 net profit rises 9.9% YoY to Rs 3,620.7 crore and revenue rises 8.6% YoY to Rs 53,366.3 crore driven by robust order inflows. The company’s order inflow grows 46% YoY to Rs 73,941 crore. However, the operating margin falls by 95 bps YoY to 12.3% due to a rise in fuel costs and raw material costs.
Apollo Tyres’ Q4FY22 net profit drops 61% YoY to Rs 113 crore despite internal cost control measures and multiple price hikes. Cost of materials for the company shoot up by 29.5% YoY to Rs 3,110.7 crore. However, revenue increases 10.9% to Rs 5,578.3 crore with maximum revenue growth in coming in from Europe. Revenue rises 19.9% to Rs 1,684.7 crore. The company recommends a dividend of Rs 3.25 per share.

Riding High:

Largecap and midcap gainers today include Tata Elxsi Ltd. (7,886.65, 14.56%), Tata Motors Ltd. (404.30, 8.60%) and Indraprastha Gas Ltd. (372.65, 7.72%).

Downers:

Largecap and midcap losers today include Adani Green Energy Ltd. (2,171.55, -10.89%), Indus Towers Ltd. (182.85, -9.28%) and Oracle Financial Services Software Ltd. (3,230.70, -7.70%).

Volume Rockets

18 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included Poonawalla Fincorp Ltd. (248.05, 14.57%), Tata Elxsi Ltd. (7,886.65, 14.56%) and IFB Industries Ltd. (944.75, 11.39%).

Top high volume losers on BSE were Hatsun Agro Products Ltd. (856.20, -13.66%), Honeywell Automation India Ltd. (34,332.15, -7.61%) and Emami Ltd. (427.70, -5.11%).

CreditAccess Grameen Ltd. (927.90, 5.48%) was trading at 6.6 times of weekly average. Ujjivan Small Finance Bank Ltd. (17.55, 9.01%) and RHI Magnesita India Ltd. (544.10, 1.62%) were trading with volumes 4.4 and 4.2 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

32 stocks tanked below their 52-week lows.

Stocks making new 52 weeks lows included - Akzo Nobel India Ltd. (1,764.50, 0.34%) and Aurobindo Pharma Ltd. (562.55, -1.44%).

24 stocks climbed above their 200 day SMA including Poonawalla Fincorp Ltd. (248.05, 14.57%) and Mahindra Holidays & Resorts India Ltd. (233.25, 7.86%). 10 stocks slipped below their 200 SMA including DCM Shriram Ltd. (992.10, -5.62%) and IIFL Wealth Management Ltd. (1,456.85, -3.89%).

The Baseline

13 May 2022

Bad Day for Britannia? And some sectors see earnings jump in Q4

Dear Firstname,

While western India reels under a heat wave, the eastern coast saw a storm. It's dark clouds for the stock markets as well, as the US indices experienced "carnage" and Indian stocks fell sharply. Outside stock markets, bad weather has also ravaged a key agri crop, adding to the woes of a major FMCG company.

In this week’s Analyticks:

India’s wheat harvest wilts in the heat wave, could add to Britannia’s pain in H1FY23
Top scorers in a bad season: Companies, sectors which delivered growth in a difficult economic environment

Let’s get into it.

Global wheat shortage, damage to India’s wheat crop add to Britannia’s woes in upcoming quarters

Amid the intensifying Russia-Ukraine conflict, India in April was hoping to ‘feed the world’ with a record wheat output. Cut to May 2022, and wheat production is set to fall for the first time in eight years.

The hottest March in 122 years has played a part in this, as it has affected both the quality of the wheat crop as well as the output per hectare (yield). What could be the impact of this for biscuit makers like Britannia?

Britannia beats volume growth expectations in Q4 and sustains margins

Analysts like Motilal Oswal originally expected flat sales volume growth for Britannia in Q4FY22. Aggressive price hikes and resulting impact on rural demand were the underlying causes of flat volume growth.

The company increased the prices of its products by nearly 13% in 9MFY22 and by 10% in Q4FY22. Britannia undertook these price hikes primarily by reducing the grammage of its products.

This definitely impacted the price sensitive rural consumer. But Britannia reported a 4-5% sales volume growth in the quarter, despite sluggish rural demand. Expansion of its distribution channels, higher demand for biscuit brands like Tiger Krunch and Milk Bikis, drove volume growth.

However, will Britannia will be able to sustain volume growth in H1FY23? Varun Berry, Managing Director of the company, said that even if commodity prices stay at current levels in the near-term, Britannia will have to take additional price hikes of 10% in Q1FY23 to protect its gross margins. It might be challenging to maintain meaningful sales volume growth in coming quarters.

Britannia’s gross margins fell nearly 250 bps YoY to 38% due to steep cost inflation in inputs like palm oil, wheat, sugar, cashew and milk, which rose 17% QoQ on an average in Q4FY22. Still, the company managed to protect its margins on a QoQ basis aided by its long-term commodity contracts.

Britannia to encounter high inflationary pressures in H1FY23

Global wheat prices jumped 35%+ ever since the Russia-Ukraine war broke out. Russia banned wheat exports to protect its domestic supplies, while Ukraine’s wheat harvests have stalled. Another key reason is the disruption of wheat shipments in the Black Sea region due to the war - ports have closed along this route, and ships have been blocked.

Interestingly, prices in India didn’t rise rapidly, since it is a wheat-surplus nation.

The severe heat wave starting mid-March have killed India's hopes of being the world's saviour in wheat supplies. The Indian government's initial forecasts were of a record wheat output of 111.3 million tonnes in 2021-22. But wheat is extremely sensitive to high temperatures, especially when it is ripening in the month of March. As March 2022 witnessed a hot spell, the wheat kernels shrivelled i.e., reduced in size.

In fact, according to Bloomberg, the crop yield could fall anywhere between 10%-20% in 2021-22 (Crop yield basically means the amount of agricultural production harvested per unit of land area).

Now, farmers are staring at a crop damage of at least 10-20% of their harvest in 2021-22, according to the Food and Agriculture Organization, a United Nations agency. They are trying to make up for the loss by seeking better prices for their produce. There are reports of farmers withholding their produce to sell their output to private traders or export it at a better price, in line with global market rates. This is why the government's wheat procurement may also fall by half to 19.5 million tonnes.

With India expecting a fall in production and wheat supplies constrained globally, prices will head further north. And with Indonesia restricting palm oil exports, there is more pain in store for food companies like Britannia and Nestle. Even though analysts forecast a 14% YoY profit growth for Britannia in FY23, the real impact of spiralling commodity costs may become apparent in the coming months.

Screener:Companies seeing a big jump in net profit growth, operating margin improvement and revenue growth in Q4FY22

As we are halfway into the current result season, some companies showed good earnings growth, while others didn’t. This screener throws-up a set of 60 stocks in total who are beating the averages, out which 31 are part of the Nifty 500.

Notably, around 10 stocks are from the banking and financial services sector. Banking heavyweights like ICICI Bank and Kotak Mahindra Bank saw their net profits rise 50%+ on a YoY basis in Q4FY22. However, their revenues rose 11.7% YoY on average. Reversal of Covid-related provisions played a bigger part in the earnings growth here. Provisions also fell on account of better loan recoveries and lower bad loans in the quarter.

Meanwhile home loans, personal loans, loans against property and credit card loans drove the overall net interest income growth for most banks. Financial performance of leading NBFCs like Bajaj Finance and SBI Cards also stood out in Q4FY22.

Agrochemical and fertilizer companies like Astec Lifesciences and Gujarat Narmada Valley Fertilizers witnessed over 80% YoY growth in their Q4 net profits. Higher sales realizations and volume growth in the exports segment worked in favour of this sector.

The hotels and realty sector put forth a commendable performance in Q4FY22. Hotels like Indian Hotels Company, EIH and Mahindra Holidays witnessed nearly 3X YoY rise in their net profits on an average driven by robust demand in the leisure travel segment. Operating revenues for Godrej Properties and Mahindra Lifespace Developers skyrocketed 3X YoY backed by robust sales bookings in value terms.

The other major sector which saw profit growth in Q4FY22 was electric utilities. Favourable merchant power prices on higher electricity demand worked to the advantage of power generation companies like JSW Energy and Adani Power.

You can find some popular screeners here.

Signing off this week,

The Trendlyne Team

Trendlyne Marketwatch

12 May 2022

Market closes lower, Delhivery’s IPO gets bids for 23% of the total available shares

Trendlyne Analysis

Nifty 50 extended its four-day losing streak and closed sharply below 16,000. The Indian volatility index, India VIX increased by 6.8% on a volatile day of trade. Asian indices closed lower after the US inflation print topped expectations at 8.3% but moderated from previous month’s high. US indices closed sharply lower on Wednesday as a high inflation level could lead to aggressive monetary tightening by the Federal Reserve. The tech-focused NASDAQ index lost 7.5% this week while the S&P 500 fell over 5%. Investors continue to monitor the effect of aggressive monetary policy on global economic growth. Crude oil prices moderate after rising sharply on late Wednesday as Russia sanctioned some European gas companies. European indices follow the global trend and trade sharply lower than Wednesday’s levels. In the last week, foreign investors have sold over Rs 12,545.6 crore worth shares of Indian companies.

Nifty Smallcap 100 and Nifty Midcap 100 closed in the red, following the benchmark index. Nifty Metal and Nifty Media closed lower than Wednesday’s levels. Nifty IT closed in the red, tracking the tech-heavy NASDAQ 100, which fell over 3% on Wednesday.

Nifty 50closed at 15,808.00 (-359.1, -2.2%), BSE Sensexclosed at 52,930.31 (-1,158.1, -2.1%) while the broader Nifty 500closed at 13,465.25 (-306.6, -2.2%)

Market breadth is moving down. Of the 1,872 stocks traded today, 323 were gainers and 1,540 were losers.

Saregama India, Nuvoco Vistas Corporation, KPR Mill, and J B Chemicals & Pharmaceuticalsare trading with higher volumesas compared to Wednesday.
Nifty 50sees a short build-up in its May 26 futures series as its open interest rises 13.8% with put to call ratio at 0.64.
Petronet LNG’s net profit rises 24% YoY to Rs 791 crore and revenue rises 47.4% YoY to Rs 11,241.7 crore on rising sales volumes. However, the operating margin falls by 393 bps YoY to 10.5% due to an increase in the cost of materials consumed by 55.6% YoY to Rs 9,782.8 crore.
Auto stocks like Bharat Forge, Tata Motors, Bosch, and TVS Motor among others are falling in trade. The broader sectoral index Nifty Autois also trading in red.
Public sector bank stocks like Punjab National Bank, Bank of India, Punjab & Sind Bank, and Canara Bank among others are falling in trade. The broader sectoral index Nifty PSU Bank is also trading in red.
Delhivery’s Rs 5,235-crore IPO gets bids for 23% of the available 6.2 crore shares on offer on the second day of bidding. The retail investor quota gets bids for 40% of the available 1.1 crore shares on offer.
Prudent Corporate Advisory Services’ Rs 538.6-crore IPO gets bids for 122% of the available 60.1 lakh shares on offer on the last day of bidding. The retail investor quota gets bids for 1.3X of the available 29.5 lakh shares on offer. The issue is entirely an offer for sale of Rs 538.6 crore.
ICICI Securities maintains a ‘Buy’ rating on Hindalco Industries with a target price of Rs 700, implying an upside of 65.4%. The brokerage believes the company is well placed to benefit from the improving demand for cans and specialty products in North America. The brokerage expects progressively higher contract prices across product segments to improve the company's margins in the medium term.
Venus Pipes and Tubes’ Rs 165.4-crore IPO gets bids for 4.2X of the available 35.5 lakh shares on offer on the second day of bidding. The retail investor quota gets bids for 7.5X of the available 17.7 lakh shares on offer.
Metal stocks like Tata Steel, APL Apollo Tubes, JSW Steel and Jindal Steel & Power among others are falling in trade. The broader sectoral index Nifty Metal is also trading in red.
Relaxo Footwears is trading with more than seven times its weekly average trading volume.KRBL, Kalyan Jewellers India, Punjab National Bank, and Aptus Value Housing Finance India are trading at more than two times their weekly average trading volumes.
One97 Communications (Paytm) and Aditya Birla Sun Life AMC touch an all-time low of Rs 517.2 and 483.2 respectively. One97 Communications (Paytm) is falling for three consecutive sessions while Aditya Birla Sun Life AMC is falling for two consecutive sessions.
Indian rupee falls to an all-time low of Rs 77.59 against the US dollar as high inflation print in the US strengthens prospect of aggressive rate hikes by the Federal Reserve. In addition, foreign investors sell Rs 12,545.6 crore worth of Indian shares in the last week.
ICICI Securities upgrades its rating on Zensar Technologies from ‘Hold’ to ‘Buy’ with a target price of Rs 294, indicating an upside of 17.8%. The brokerage has a positive outlook on the company as its gross margin increased by 50 bps QoQ to 30.1% due to improved utilization and volume mix. ICICI Sec expects the company’s revenue to grow at an 18.5% CAGR over FY22-24.
Punjab National Bank is falling as Q4FY22 profit falls 51.7% YoY to Rs 338.3 crore and revenue falls 6.3% YoY to Rs 21,350.6 crore. In FY22, profit rises 50.7% to Rs 3,860.7 crore.
Mangalore Refinery and Petrochemicals surges as its Q4FY22 net profit rises 11X YoY to Rs 3,008.4 crore due to rising sales volumes, and a deferred tax credit. Revenue rises 35.7% YoY to Rs 28,250.5 crore and EBITDA rises 3X YoY to Rs 2,937 crore.
Relaxo Footwears is falling as its Q4FY22 net profit falls 38.5% YoY to Rs 62.9 crore. Revenues decrease by 6.7% to Rs 704.1 crore. Operating profit margin falls by 5.9 percentage points YoY in Q4FY22 to 15.9% due to high raw material costs. Net profit falls 20.2% YoY in FY22 to Rs 233 crore but revenues rise 12.4% YoY to Rs 2,677 crore.
Kennametal India is falling despite a 22.2% YoY increase in Q4FY22 to Rs 26.9 crore. Revenues rise 7.2% YoY to Rs 247.8 crore. Revenue from hard metal products rises 6.7% YoY to Rs 209 crore while revenues from machining solutions rise 14.3% YoY to Rs 36.6 crore.
Coforge’s Q4FY22 net profit rises 13% QoQ to Rs 207.7 crore and revenue rises 6.3% QoQ to Rs 1,766.1 crore led by a robust growth of 21.4% QoQ in order intake. The maximum revenue growth came from Europe, Middle East and Africa segment at 24.2% QoQ. EBITDA margin rises by 68bps QoQ to 18.9% and the attrition rate rises by 140 bps QoQ to 17.7%.
JMC Projects (India) secures new orders worth Rs 2,348 crore. It includes water supply projects worth Rs 2,193 crore and building and factory projects worth Rs 155 crore. Kalpataru Power Transmissions, the holding company of JMC, receives new orders worth Rs 4,474 crore on a consolidated basis.
NCC’s Q4FY22 profit jumps 2.1 times YoY to Rs 242.2 crore mainly due to an exceptional item gain of Rs 172 crore that includes profit on the sale of one of its subsidiaries. Revenue rises 22.8% YoY to Rs 3,491.8 crore in Q4FY22. Net profit rises 79.8% YoY in FY22 to Rs 482.4 crore and revenues rise 39% to Rs 11,208.7 crore in FY22.
Birla Corporation’s Q4FY22 net profit falls 55.4% YoY to Rs 111 crore because of a one-off credit adjustment of Rs 124.9 crore in income tax expense in FY21. The management also believes that high fuel costs cut down profits. Fuel costs rise 27.8% YoY to Rs 450.1 crore. Revenue is up 6.2% YoY to Rs 2,264.2 crore. Revenue from the cement segment increases 6.2% YoY to Rs 2,150 crore and the jute segment rises 5.9% to Rs 114.2 crore.