28 Banks have made a case for lowering fixed deposit (FD) tenure to three years for availing tax benefits. | iCommunity ICICIdirect

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ICICIdirect Research Posted on 09:38am 18-Jan-2022

Banks have made a case for lowering fixed deposit (FD) tenure to three years for availing tax benefits.

* Market Outlook

Indian markets are likely to open on a flat note tracking mixed global cues. Quarterly earnings of Bajaj Finance, Tata Elxsi and Just Dial would be in focus as they announce their quarterly results today.


*  Markets Yesterday

•  Domestic markets ended marginally higher on the back of gains in IT stocks amid mixed global cues.

• US markets were closed on Monday on account of Martin Luther King’s Day


* Key Developments

• For Bajaj Finance, AUM growth was far greater than expectation at 26% YoY & 8.6% QoQ to | 181300 crore. New loan addition came in at 74 lakh vs. 63.3 lakh QoQ. Accordingly, NII is expected to grow 33% YoY to | 5700 crore. NIMs are expected to rise with both consumer and mortgage book witnessing strong growth. Provisions are expected to be contained at | 1364 crore, as the management had indicated that no adverse impact in NPA book was seen in Q3FY22. With C/I ratio under control, PAT is estimated to increase 55% YoY to | 1780 crore.

• According to The Economic Times, Apple and Samsung are likely to produce smartphones worth US$5 billion locally in FY22 under the government’s flagship PLI scheme. The companies are likely to export smartphones worth US$2 bn of total production. The global manufacturers such as Samsung, Foxcon’s Hon Hai and Wistron are likely to cross their PLI targets in FY22.

• Sonata Software’s IT services business (21% of the revenue mix) has reported 9.5% QoQ increase in revenues at | 395.2 crore while EBITDA margins declined 70 bps QoQ to 28%. The growth in IT services was aided by the US, which grew 11% QoQ, followed by Europe and RoW, which grew 2.5% and 2.3%, respectively. Product business (trading business, which generally has lumpy quarterly numbers) reported 142% QoQ increase in revenues at | 1,464 crore (on a low base as Q2 revenues were down 36% compared to Q1, so Q3 revenue increased 54% vs. Q1). However, EBITDA margins came in lowest in the last five quarters at 2.5%. At the company level, it reported 93% QoQ revenue growth at | 1858 crore (on base effect, it grew 49% compared to Q1), while margins declined 630 bps QoQ to 7.9% (declined 250 bps vs. Q1).

• UltraTech reported a weak operational performance for Q3FY22 on account of higher cost pressure and weak demand owing to unseasonal rains and festive season. Its revenues were up 5.4% to | 12471 crore YoY led by higher realisations while EBITDA declined 24.6% YoY to | 2221 crore.

• For Q3FY22, Tata Steel Long Products reported a topline of | 1677 crore, up 23% YoY and 2% QoQ. EBITDA for the quarter was at | 251 crore compared to | 410 crore in Q3FY21 & | 242 crore in Q2FY22. EBITDA margin for Q3FY22 was at 15.0% compared to 30.0% in Q3FY21 & 14.8% in Q2FY22. Ensuing PAT for Q3FY21 was at | 104 crore compared to profit of | 304 crore in Q3FY21 & | 135 crore in Q2Y22.

• For Q3FY22, Angel One reported a sharp 92% YoY rise in total income to | 607 crore wherein gross broking income jumped 86% YoY to | 415 crore while interest income was up 80% YoY to | 98.6 crore. Sequentially revenue and PAT was up 13% and 22.6%, respectively. Expenses also increased 82% YoY but lagged income growth and thus net profit for the quarter was up 110.6% YoY to | 164.6 crore. Overall ADTO saw growth of ~5.5x YoY and 20% QoQ to | 694600 crore. NSE active client base also posted healthy growth of 3.0x YoY and 24% QoQ to 31 lakh while total client base was at 78 lakh.

• Prestige Estates registered highest ever quarterly sales of | 4,267 crore (up 111% YoY) and clocked highest ever collections of | 2,431.6 crore (up 70% YoY) during Q3FY22 backed by the heightened response to newly launched projects viz. Prestige Avalon, Aspen & Eden Park, part of The Prestige City, Bengaluru, Prestige Beverly Hills, Hyderabad and the existing inventories across geographies. Going forward, the company focus remains on revenue expansion driven by its capitalisation on brand premium, strong execution track record, market consolidation, and robust launch pipeline of over 15 mn sq ft.

• As per Anarock, unsold inventory came down to the levels seen pre-Covid as property sales recovered in 2021. Sales in Mumbai, Delhi-NCR, Bengaluru, Hyderabad, Pune, Chennai and Kolkata rebounded to >90% of the pre-pandemic 2019 levels. Also, the top seven cities recorded sales of ~2.36 lakh units in 2021. That caused the housing inventory across the cities to fall to 32 months by 2021-end from 55 months a year ago. Factors such as positive homebuyer sentiment, all-time low home loan rates, and anticipation of imminent price hikes drove sales.

• The board of UltraTech Cement has approved capex of | 965 crore towards modernisation and expansion of capacity at Birla White from the current 6.5 LTPA to 12.53 LTPA. This expansion project is scheduled to get completed by 2026.

• In a regulatory filing, Bosch India informed exchanges about appointing Ms Karin Gilges as the Chief Financial Officer of the company effective from May 1, 2022. Ms Gilges has been with the Bosch group for over 25 years and is currently serving as Senior Vice President in Bosch Sanayi ve Ticaret AS, Bursa, Turkey as Commercial Plant Leader.

• The members of the Schaeffer company through postal ballot have approved sub-division of equity shares of the company from one (1) equity share having face value of | 10/- each into five equity shares having face value of | 2/- each fully paid up.

• Sun Pharma has initiated a class II recall for 696 bottles of Pregabalin capsules (50mg) in US due to failed tablet/capsule specifications.

• Lupin has initiated a class III recall for 50,832 bottles of Gatifloxacin ophthalmic solution in US due to failed stability specifications. Lupin has also initiated a recall for 23,965 bottles of Oxycodone hydrochloride tablets in US due to out of specification impurity test.

• State-owned NTPC has invited a request for proposal (RFP) for raising up to $750 million (around | 5,570 crore) via ECB to fund its power projects, including renewable energy. NTPC is looking to raise external commercial borrowing (ECB) in the form of term loan amounting to $500 million plus green shoe option of $250 million.

• According to Business Standard, Cholamandalam Investment and Finance Company plans to acquire 72.12% stake in fintech payment solutions provider Payswiff Technologies Pvt Ltd for | 450 crore. Incorporated in 2013, Payswiff is engaged in the business of enabling online payment gateway services for e-commerce businesses and provides e-commerce solutions.

• As per Business Standard, DCB Bank has appointed Rupa Devi Singh as its new part time chairman following the retirement of Nasser Munjee. Her appointment is subject to approval from regulatory authorities like Reserve Bank of India and the shareholders of the Bank.

• According to Business Line, Kotak Mahindra Bank (KMBL) has introduced the Same Day Settlement (SDS) feature for merchants for payments received on its Point of Sale (PoS) terminals. Available in two cycles with a cut-off time of 2 PM and 5 PM, respectively, merchants can opt for either or both the cycles and receive their funds in just a few hours on the same day.

• As per Business Line, banks have made a case for lowering fixed deposit (FD) tenure to three years for availing tax benefits, in line with mutual fund products like equity-linked savings scheme (ELSS). Currently, the tax break is available on five-year tax-saving FD schemes. One can claim an income tax deduction by investing money in a five-year FD scheme under Section 80C of the Income Tax Act, 1961.

• Axis Bank has emerged as the frontrunner to buy Citi's consumer business in India, which is being valued at around $1.5 billion (~|11150 crore) in a planned deal that is likely to happen this month, as per The Economic Times. While Kotak Mahindra Bank is still in the race, it has submitted a lower bid than Axis Bank so ranks second in Citi's order of preference.

• As per Reuters, petrol and diesel sales by PSU OMCs declined 2.8% YoY and 5% YoY, respectively, in the first fortnight of January. On an MoM basis, petrol and diesel sales fell 13.8% and 14.1%, respectively, during the same period.

• As per Business Standard, delay in divestment process has not affected BPCL's petrochemical expansion plans. The company is going ahead with its focus on commodity petrochemicals and projects at all three refineries will need an investment of | 40000 crore.


*  Today's Highlight

Results: Bajaj Finance, Anup Engineering, Just Dial

Events: UK unemployment rate