Share Market Live: Sensex, Nifty Off Day’s Low Amid Volatility; It Stocks Drag
Indian share indices were flat to higher on Tuesday in choppy trade. Equities have been volatile globally as investors assess the outlook for monetary policy, inflation and the impact of China’s strict covid policies on the global economy. Broader Asian stock markets slipped after a slide in U.S. stock futures.
eMudhra IPO gets 96% subscription on second day
The Initial Public Offer (IPO) received bids for 1,09,00,752 shares against 1,13,64,784 shares on offer, according to NSE data.
The category for Retail Individual Investors (RIIs) received 1.69 times subscription, while the portion for Qualified Institutional Buyers (QIBs) got subscribed 25% and non-institutional investors 16%
ABFRL to raise ₹2,195 crore from Singapore’s GIC
Fashion retailer Aditya Birla Fashion and Retail Limited (ABFRL) on Tuesday said its board has approved raising up to ₹2,195 crore from an affiliate of GIC, Singapore’s sovereign wealth fund.
GIC will invest ₹770 crore now towards subscription of equity and warrants, followed by up to ₹1,425 crore in one or more tranches within 18 months. Post the entire investment, GIC will own 7.5% equity stake in ABFRL. Aditya Birla Group will hold 51.9% stake in the company post the completion of this transaction, the company informed the exchanges.
Zomato’s improved disclosures is appetizing; focus on first earnings call
Zomato Ltd’s shares surged to a high of Rs67.60 apiece in Tuesday’s morning trade on NSE. This represents an 18.5% gain from previous closing. This comes on the back of the company announcing March quarter (Q4FY22) results after market hours on Monday. (Full report)
Sensex at noon: Off day’s low amid volatile trade
Delhivery shares surge post flat stock market debut
Shares of SoftBank Group-backed Delhivery Ltd made stock listing at ₹495 on the NSE, a premium of nearly 2% over its IPO issue price of ₹487 per share. On BSE, Delhivery shares started trading at ₹493 apiece, and later surged to ₹540 in early deals.
Rupa & Co slips 16.8% after the resignation of Dinesh Kumar Lodha from the post of chief executive officer
PM Modi holds bilateral talks with US President Biden in Tokyo
Prime Minister Narendra Modi met US President Joe Biden in Tokyo on Tuesday shortly after holding the Quad Leaders’ Summit.
The meeting marks a continuation of their regular dialogue having interacted most recently in virtual mode on April 11.
The two leaders are expected to review the India-US Strategic Partnership and follow up on discussions held during PM’s bilateral meeting with President Biden in September 2021.
Prabhudas Lilladher on Divi’s Laboratories 4QFY22 earnings
Divi’s Laboratories (DIVI) registered a strong performance in FY22 aided by higher sales from Molnupiravir. We believe efforts on backward integration, debottlenecking and utility upgradation will continue to yield better margins. Divi’s remains preferred play on Indian CRAMS and API given its strong execution track record. However, in near term growth is likely to remain muted given high base. At CMP, stock is trading at 34x P/E on FY24E. Our FY23 and FY24E stands marginally reduced by 1-2%. We recommend our ‘Accumulate’ rating with revised TP of ₹4,300/share (Rs4,750 earlier).
§ Higher revenues aided by CS segment: Divi’s Q4FY22 sales increased 41% YoY (flat QoQ) to Rs25.2bn, higher than our estimates of Rs22.4bn largely driven by strong growth in custom synthesis (CS) (+140% YoY) largely on account of Molnupiravir sales. We believe company has booked +$100mn of sales from Molnupiravir in Q4. During FY22 EU and US contributed 77% of revenue. Product mix for generics and custom synthesis in FY22 were at 41% and 59% of revenue, respectively. Nutraceutical business for the quarter was at ₹1.57bn with flat YoY. Generic segment declined 30% YoY.
§ Better product mix and higher revs aided EBITDA: GM came in at 66.7%, down 80bp YoY and flat QoQ, largely on account of increase in the RM prices and product mix. Employee expenses grew 19% YoY while other expenses increased by 16% YoY on higher frieght cost. EBITDA up by 54% YoY (flat QoQ) at Rs11bn with OPM at 44% (flat QoQ) vs 40% in Q3FY21 mainly aided by higher CS revenues. Tax came in lower at 17%. PAT came in higher at Rs9bn; up 78% YoY (flat QoQ) vs our est of ₹6bn.
§ Key concall takeaways: (1) Company registered strong growth during the quarter and its core investments on debottlenecking, capacity expansion and backward integration has started yielding positively in de-risk of external supply dependent and fastest deliveries (2) On the Kakinada plant, capex is likely to be in the tune of Rs10-20bn. Still awaiting for government clearance. (3) The company is operating at 80-85% of capacity utilization (1700 reactors) and have additional 200 reactors for any additional opportunity. (4) Company has ability to pass on any raw material volatility. (5) Multiple validations are going on across Sartans, CS and new generic segments. (6) Constant currency growth for Q4 was 39% while FY22 was 34%. (7) Tax rate was lower at 20% in FY22 due to incremental sales for SEZ which enjoys tax benefits (8) Increase in receivable days on account of higher sales towards end of Q4 (9) CWIP as of Mar’22 was at ₹4.7bn with net cash of ₹28bn.
Nifty IT down 1.7%; Mindtree slips 3%
Ramco Cement stock slips to new 52-week low amid galore of challenges
The March quarter earnings for FY22 of The Ramco Cement Ltd, released post market hours on Monday, were disappointing, to say the least. Volume growth on a year-on-year (y-o-y) basis was flat at 3.19 million tonnes. Operating margin at 17.3%, was higher than consensus estimate of 16.6%, but declined around 1,040 basis points, y-o-y, impacted by continued input cost inflation. One basis point is 0.01%.
Consequently, shares of the company hit a new 52-week low of Rs656.35 on the NSE in Tuesday’s opening trade. (Full report)
Aether Industries IPO opens today
Specialty chemicals company Aether Industries’ initial public offering (IPO) opened for public subscription today and concludes on May 26. The firm has fixed a price band of ₹610-642 per share for its issue. Ahead of IPO, Aether Industries garnered ₹240 cr from anchor investors.
The company has cut the size of the fresh issue of equity shares to ₹627 crore from ₹757 crore planned earlier following the pre-IPO placement. Apart from fresh issue, there will be an offer-for-sale (OFS) of up to 28.2 lakh equity shares by the promoter.
BSE Midcap down 100 points in overall weak market
Reliance Securities on SAIL’s 4QFY22 result
SAIL reported a 32% YoY and 22% QoQ increase in revenues, which stood at ₹307bn during the quarter, as against our estimate of Rs321bn
Sales volume increased 8.4% YoY and 23% QoQ to 4.71mn tonnes; 2% below our estimate of 4.8mn tonnes
Realisation increased 22% YoY, but surprisingly fell 1% QoQ to Rs65,359/tonne, lower than our estimate of ₹66,950/tonne
SAIL’s EBITDA was aided by lower employee expenses, while volumes and realisation being marginally lower than our estimate. Going forward, we believe that the company is well positioned to continue benefiting from stable spreads over the next few years. Capacity expansion is nearing completion, resulting in volume growth. Also, we expect balance sheet deleveraging to continue, with net debt slated to reduce from Rs348bn in FY21 to Rs182bn in FY24E. We currently have a BUY rating on the stock.
Venus Pipes and Tubes makes positive debut on exchanges
Shares of Venus Pipes and Tubes made a positive debut on BSE today with the stock rising to ₹351 against issue price of ₹326. The IPO or initial public offer of Venus Pipes and Tubes was subscribed 16.31 times. The retail portion saw good demand and was subscribed 19.04 times. The portion for non-institutional investors received 15.69 times subscription and qualified institutional buyers 12.02 times.
Rupee almost flat against US dollar in early trade
At the interbank foreign exchange, the rupee opened weak at 77.56 against the US dollar, then turned volatile to trade in a tight range of 77.56 to 77.51. The domestic unit was trading at 77.56 against the greenback, registering a fall of just 1 paisa over the last close.
Prabhudas Lilladher on Shree Cement earnings
Shree cement’s (SRCM) reported Q4FY22 EBITDA tad below our estimates. While, it missed consensus estimates (CE) by 10%. EBITDA fell 23% YoY to Rs9.1bn.
SRCM commanded meaningful differential in EBITDA margins over its peers on back of higher share of cheaper renewable power, indirect tax incentives and logistics advantage. However, the gap has contracted significantly over last one year due to optimisation of realisations and extensive work on rationalisation of freight cost done by the peers. We believe that gap would further narrow down with multi-fold increase in share of renewable power and further reduction in lead distance coupled with commissioning of new plants. Given the expensive valuations (EV/EBITDA at 14.2x FY24e) and high expectations on both margins (Rs1,350/t) and volume growth (CAGR of 12% over FY22-FY24e), we expect stock to extend its underperformance to peers and broader indices. We trim our assigned EV/EBITDA by 10% to 15x FY24e due to performance in-line with industry. Maintain Hold rating with revised TP of Rs23,150 (earlier Rs25,687).
§ Weak demand in East region impacted the volumes: Volumes declined 2.3% YoY to 8.0mnt (PLe:8.1mnt), in line with industry.
§ EBITDA/t declined 21% YoY/10% QoQ to Rs1,135: Blended realisations fell 1% QoQ (+5% YoY/260) at Rs5,077, in line with our estimate. Due to 73% YoY increase in energy cost, Cost increased sharply by 17% YoY to Rs3,943 (PLe:Rs3,932). This led to contraction in EBITDA/t by 21% QoQ/10% YoY to Rs1,134 (PLe:Rs1,144). Adjusted for write-back of prior year tax or Rs1bn, PAT fell 29% YoY to Rs5.5bn (PLe:Rs5.6bn, CE:Rs6.0bn).
§ Target to become 80mtpa player by 2030: Company guided to increase its capacity to 80mtpa (current 46.4mtpa) by 2030. It already announced greenfield plant of 3.5mnt in Rajasthan for commissioning by FY24 end. The work on 3mtpa greenfield grinding unit in West Bengal is on track for commissioning in FY23. We expect addition of greenfield plant of 3.0mtpa in Andhra Pradesh in FY25. We believe that majority of growth would come through greenfield expansions.
Nifty broad market indices; volatility index up 9%
Zomato zooms 17% post Q4 result
Shares of Zomato Ltd surged over 17% to ₹66 apiece on the BSE in Tuesday’s opening deals after the online food delivery platform’s earnings. Revenue from operations rose 75% to ₹1,212 crore from ₹692 crore year-on-year (YoY). Consolidated net loss widened to ₹359.7 crore in the fourth quarter ended March 2022, impacted by higher expenses.
Nifty at open: Shree Cement, Nestle best gainers, Axis Bank, Kotak Bank biggest laggards
Sensex 160 points up in opening session; M&M, IndusInd Bank best gainers
Sensex, Nifty open flat
Market outlook: Sameet Chavan, chief analyst-Technical and Derivatives, Angel One
The Indian equity market started with high volatility at the opening bell on Monday, led by mixed global cues and domestic macro developments over the weekend. .. the benchmark index pared down all the initial gains to conclude the day a tad above 16200 levels with a mere cut of 0.32%.
We allude to our previous commentary of not being complacent with single-day momentum until the sturdy hurdle of the unfilled gap at the 16480-16650 zone is not taken out by the bulls, that certainly is seen in the market. The undertone is expected to remain upbeat till the index holds over the 16000 psychological mark. And looking at the technical setup, the market is likely to trade in the mentioned slender range till a decisive breakout is not seen on either side in the near period. Meanwhile, broad-based traction has been observed across the bourses on the sectoral front, wherein the significant benefactors that boosted the positive sentiments were the Auto and IT space. At the same time, the crackdown in the metal sector has dampened the overall sentiments in the market.
Going forward, where the index is likely to remain in the slender range, many stock-specific adjustments are likely to continue. Hence, traders are advised to have a stock-centric approach and stay abreast with the global and domestic developments on a regular basis.
Sensex down in pre-opening session
India joins issue with G7 over wheat export ban criticism
Indian officials advised wealthy nations to stop wasting food and pointed out New Delhi makes up less than 1% of global wheat exports after the Group of Seven developed economies criticized India’s ban on wheat shipments amid the Russia-Ukraine war.
Commerce ministry officials told Mint that at least eight countries, including Egypt, Turkey and Kuwait have exercised export restrictions amid wheat shortages triggered by the war. G7 nations, they said, have no “locus standi” to ask India to keep grain exports open. India exported over $600 million worth of wheat in March and April to offset shortages, they added.
Delhivery IPO view: Yash Gupta, equity research analyst, Angel One
We are expecting another soft listing of the new IPO, as Delhivery may open near its offer price of ₹462- ₹487. We have given a neutral rating to Delhivery IPO on the back of expensive valuations, if we look at a valuation based on annualized FY22 numbers, the IPO is priced at EV/Sales of 4.8x and Price to Book value of 5.2x at the upper price band of the IPO. For 9MFY22 the company has reported an EBITDA loss of ₹232 crores and a Net loss of ₹891 crores. If we look at the grey market premium, as per different market news GMP of Delhivery IPO is trading at ₹5. So looking at expensive valuation and some correction in the market in the last 2 weeks we are expecting a soft listing of Delhivery IPO.
Stocks to Watch: Maruti Suzuki, Zomato, Marico, ONGC
Companies that will announce their March quarter earnings today –Grasim Industries, Adani Ports, Balkrishna, Balrampur Chini, Bank of India, JM Financial, Ipca Labs, Minda Industries, Strides Pharma and Zee Media among others– will also be in focus today.
IMF’s Gopinath says the global economy has buffer against recession
While the world economy faces headwinds, current growth forecasts offer a buffer against a potential global recession, the International Monetary Fund’s No. 2 official said on Monday.
Among the major threats to economic growth, IMF First Deputy Managing Director Gita Gopinath said the conflict in Ukraine could escalate, adding: “You could have sanctions and counter-sanctions”. (Full report)
Quad made important place in short span, ensured peace in Indo-Pacific: PM Modi
The four Indo-Pacific leaders of the “Quad” grouping vowed on Tuesday to stand together for a free and open region at the start of talks, and also pledged to work on fighting climate change.
Highlighting that the Quad’s scope has become extensive despite Covid-19 challenges, Prime Minister Narendra Modi on Tuesday said the mutual trust, and determination of the members countries including the US, Australia and Japan is giving new energy and enthusiasm to democratic powers.
GST rate revision may get delayed
The plan to rationalize goods and services tax (GST) rates to boost revenue collection for central and state governments may get delayed because of the sudden deterioration in macroeconomic conditions, including slowing economic growth and surging inflation.
A ministerial panel led by Karnataka chief minister Basavaraj Bommai looking into GST rate rationalization will weigh the evolving economic conditions while making recommendations, said a person familiar with discussions among its members.
Oil eases as traders focus on EU embargo impasse, gasoline drop
Oil fell on signs the European Union is struggling to agree on an embargo on Russian imports, and as gasoline sank from last week’s record. Brent crude futures for July slid 35 cents, or 0.3%, to $113.07 a barrel. U.S. West Texas Intermediate (WTI) crude futures for July delivery dropped 36 cents, or 0.3%, to $109.93 a barrel. Both benchmarks declined by more than $1 earlier in the session.
Asian shares down
Asian shares slipped on Tuesday as relief at a rally on Wall Street was quickly soured by a slide in US stock futures, while the euro held near one-month highs as odds narrowed on a July rate rise by the ECB. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.3% in hesitant trading. Japan’s Nikkei fell 0.4% and Chinese blue chips eased 0.3%.
Wall Street ends with gains overnight
Stocks closed broadly higher Monday, an upbeat start to the week on Wall Street after seven weeks of declines that nearly ended the bull market that began in March 2020. The S&P 500 gained 72.39 points to 3,973.75. The Dow added 618.34 points to 31,880.24, and the tech-heavy Nasdaq picked up 180.66 points to 11,535.27.
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- November 21, 2022