28 Axis Finance, a subsidiary of private sector lender Axis Bank, has sent a legal notice to Zee Entertainment Enterprises... | iCommunity ICICIdirect

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ICICIdirect Research Posted on 09:35am 19-Jan-2022

Axis Finance, a subsidiary of private sector lender Axis Bank, has sent a legal notice to Zee Entertainment Enterprises...

* Market Outlook

Indian markets are likely to open lower on the back of a selloff on Wall Street in the wake of a surge in treasury yields, as the prospect of Federal Reserve monetary tightening to fight high inflation weighed on markets.


*  Markets Yesterday

• Domestic markets ended lower tracking losses across sectors amid negative global cues.

• US markets ended lower amid fear of the Fed raising interest rates.


* Key Developments

• Bajaj Auto is expected to report a muted performance on the back of high margins in the base quarter and accrued export benefits accounted in Q2FY22. For Q3FY22, BAL reported total sales volume of 11.8 lakh units, up 3.2% QoQ with exports share in volumes pegged at 56% vs. 53% in Q2FY22. With 1.7% QoQ rise in ASPs at | 74,502/unit, we expect net sales at | 8801 crore, up 5% QoQ. EBITDA in Q3FY22 is expected at | 1,316 crore with EBITDA margins at 14.6%, down 140 bps QoQ. Consequent PAT for the quarter is expected at | 1,201 crore, down 5.8% QoQ.

• Larsen & Toubro Infotech is expected to report its numbers today. The company is expected to report 5.5% QoQ CC growth. In dollar terms, growth is expected to be 5% QoQ due to 50 bps cross currency headwinds. In rupee terms we expect revenues to increase 6.3% QoQ. We expect LTI's EBIT margin to expand 20 bps QoQ at 17.4%.

• We expect better growth from international crop care to have supported topline growth for Rallis during Q3FY22. We expect topline to increase 9.1% YoY to | 622.6 crore. EBITDA & PAT are expected to remain at | 62.7 crore (+4.2% YoY) & | 38.4 crore (-6.6% YoY), respectively. Key monitorable is growth in the international business, inventory situation of Metribuzin and offtake of PEKK under CRAMS portfolio.

• Tata Communications is expected to report Q3 earnings today. We expect gradual growth recovery and YoY growth in revenues after three quarters of decline. The data revenue is expected to grow 2% QoQ (up 2.5% YoY) at | 3203 crore. The voice revenues would continue to remain weak with 5% QoQ (14.7% YoY decline) decline at | 575 crore. The overall revenue is expected to grow 1% QoQ at | 4215 crore. Data segment margins are expected at 31% (down 240 bps QoQ as it had one-off benefits). Overall margins are expected at 25.6% (down 110 bps QoQ), as Q2FY22 had one off benefits.

• Just Dial reported a weak set of numbers. The company reported 1.9% QoQ growth in revenues at | 159 crore as total listings grew by 1.4% while pricing improved 0.3% QoQ. However, EBITDA came in at only | 10.2 crore (51.7% QoQ decline) and margins at 6.3% (~700 bps QoQ decline) due to 9% QoQ increase in employee expenses and 17% QoQ growth in other expenses. PAT declined 49% QoQ decline to | 19 crore.

• Newgen reported revenues of | 203 crore which was up 9.2% each on YoY basis. SAAS revenues declined 9.6% QoQ, up 9.2% YoY to | 14.2 crore due to client related adjustment. License revenue were up 37% YoY to | 50 crore while annuity revenues (AMC + Support + SAAS) reported growth of 11% YoY to | 112 crore. EBITDA was down 15% YoY to | 58 crore due to increase in remuneration to manage attrition. The company acquired ‘Number Theory software for | 16 crore ( ~5x price to sales).

• LTTS reported 5% QoQ revenue growth to |1687 crore, while CC growth was 4.2% QoQ. The growth was driven by Transportation, Telecom and Plant engineering which reported 5.1%/4.7%/4.4% QoQ growth. Geography wise, the growth was driven by India and North America market which reported 9.3%, 2.8% QoQ growth, respectively. EBIT margins improved 20 bps QoQ to 18.6%. The company won an order of US$45 mn from Tier I US Auto for electric vehicle.

• The Anup Engineering’s revenue for the quarter came in at | 47.2 crore, up 60.2% YoY (due to low base) and down 47% QoQ due to poor performance in all segments. Further, EBIDTA margins came in at 23.3% vs. 25.5% in Q2FY22. Absolute EBIDTA came in at | 11 crore vs. 22.7 crore in last quarter. Reduced EBITDA margin is due to negative operating leverage. Ensuing PAT came in at | 6.1 crore vs. | 11.7 crore in Q2FY22.

• In a regulatory filing, Hero MotoCorp has informed exchanges about its strategic investment in the parent of Gogoro Inc. (its domestic partner in developing swapping solutions in e-mobility). The investment is a part of consortium under a PIPE (private investment in public equity) deal with total consortium investment pegged at US$ 285 million (up from initial US$ 257 million).

• Hella Infra Market Pvt Ltd has proposed to invest | 270 crore (through a combination of equity and debenture) in Shalimar Paints. This will help Shalimar to strengthen its balance sheet and expansion into new geography.

• HCL Technologies (HCL) informed the stock exchanges that it has launched a dedicated Intel Ecosystem Unit to help build focused, innovative and industry-tailored solutions for Intel clients. The new unit will focus on increasing the creation and adoption of state of the art technologies while developing an accelerated technology roadmap for enterprises on cloud, end user computing, network and edge, and AI.

• NTPC on Tuesday invited bids to set up a 900-megawatt (MW) solar energy park in the Republic of Cuba. NTPC, a corporate partner of ISA International Solar Alliance has been chosen as the preferred partner for implementation of the projects.

• According to The Economic Times, Axis Finance, a subsidiary of private sector lender Axis Bank, has sent a legal notice to Zee Entertainment Enterprises (ZEE) and its promoters, Subhash Chandra and his son Punit Goenka, seeking to recover over | 146 crore in dues before finalising the proposed merger of the company with Sony Pictures Network India (SPNI).

• Small Industries Development Bank of India (SIDBI) has sanctioned | 650 crore to two small finance banks — AU SFB and Jana SFB - to provide funds to finance companies and Micro Finance Institutions (MFIs). An amount of | 530 crore has already been released to these SFBs as per business standard.

• According to The Economic Times, IndusInd Bank has sold more than | 4,050 crore of distressed loans to asset reconstruction companies (ARC) in the last three quarters to clean its books. The bank sold | 2,552 crore loans to Edelweiss ARC and | 1,500 crore to Omkara ARC in separate pools comprising retail and corporate loans.

• As per Financial Express, The Indian Banks’ Association (IBA) has suggested that the government extend the validity of its |4.5-lakh-crore guaranteed loan scheme for companies and individuals preferably by one year through March 2023. It has also pitched for providing an additional dose of 10% of the eligible finance for all eligible borrowers, who continue to be affected by the Covid-induced extended disruptions, under the existing ECLGS Scheme.

• Reliance Jio has paid | 30,791 crore, which includes accrued interest, to the Department of Telecom towards prepayment of the entire deferred liabilities pertaining to spectrum acquired in auctions before March 2021.

• As per Trai’s latest data, Reliance Jio has gained 2.0 million mobile subscribers in November 2021 while market rivals Bharti Airtel added 1.3 million mobile users. Vodafone Idea (VIL) lost 1.8 million subscribers during the reported period.

• DGH has offered 15 CBM blocks for exploration, development and monetisation in its latest bidding round starting from February 15. Also, 32 oilfields were offered in Discovered Small Fields (DSF) bidding round.


*  Today's Highlight

Results: Bajaj Auto, Rallis, L&T Infotech, Syngene, Tata Communication, Mastek, Saregama India, CCL Products.