Latest Updates iCommunity

Latest Updates

ICICIdirect Research Posted on 09:04am 24-Jun-2020

Bharti Infratel board will meet today to finalise the long pending merger with Indus Towers with some renegotiations in merger valuation...

* Market Outlook

Indian markets are likely to open flat tracking mixed global cues. However, global news flows, corporate earnings reports and the outcome of today’s Cabinet meeting will be key monitorables.

 

* Markets Yesterday

• Domestic markets ended higher on the back of positive global cues

• US markets ended higher after White House trade advisor Peter Navarro clarified his remarks about the US-China trade deal

 

* Key Developments  

• Gail's operational performance in Q4FY20 is expected to remain weak mainly due to subdued profit from gas transmission & gas trading segment. Gas transmission volumes are expected to fall 4.7% YoY at 104 mmscmd with EBIT at | 695 crore vs. | 772.9 crore YoY. We expect lower EBIT from gas trading business segment at | 352 crore vs. | 587.5 crore YoY due to lower margins on US volumes. On LPG liquid hydrocarbon front, EBIT is expected to increase 78% YoY to | 740.6 crore due to higher realisations, lower gas costs. Petchem segment is expected to report EBIT at | 91.4 crore on lower gas prices

• IOC's crude throughput in Q4FY20 is expected at 16.4 MMT, a decline of 6.3% QoQ. Marketing segment volumes are expected to decline 12.3% YoY along with inventory losses. However, core margins are expected to be higher QoQ. GRMs are expected at -$2.5/bbl vs. $1.3/bbl in Q3FY20 on account of inventory losses and lower gas oil and gasoline spreads. Hence, we expect the company to report a net loss of | 2376.3 crore

• United Breweries Q4FY20 volumes are expected to de-grow 6% to 37.2 million cases while net revenues are expected to de-grow 8% YoY to | 1542 crore. EBITDA margins are expected to increase 100 bps to 14.0% due to lower COGS to sales ratio (48% vs. 49.5% in Q4FY19). Subsequently, absolute EBITDA is likely to remain flat at | 172 crore. PAT is expected to grow 5% YoY to | 71 crore (tax rate expected at 25.2% vs. 36%)

• PNC's execution, ideally would have been strong in Q4FY20E, with construction in six out of seven HAM projects in full swing. However, we take into account the impact of lockdown, which could restrict higher YoY revenue growth for the company during the quarter. Hence, we expect PNC Infratech to report flattish topline growth to | 1,078.5 crore in Q4FY20E. The EBITDA margins are expected at 13.5%, broadly in-line with management guidance of 13.5-14.0%. Overall, PNC's bottomline is expected to de-grow 58.2% YoY to | 58.5 crore in Q4FY20E since it received one-time net tax rebate worth | 24.1 crore in Q4FY19. Management commentary on order inflows, progress on HAM projects would be key monitorable

• GM Breweries reported its Q4FY20 numbers. While the topline de-grew 7% YoY to | 109 crore, the absolute EBITDA de-grew 33% to | 19 crore as the EBITDA margins contracted 650 bps to 17.3%, mainly due to 600 bps contraction in the gross margins (higher raw material prices especially rectified spirit). Subsequently, PAT degrew 27% to | 18 crore. The company announced dividend of | 3 per share (subject to shareholders approval)

• For Q4FY20, EIH Associated Hotels' revenue dropped by 17% YoY to | 70.6 crore as tourism got impacted in March. Consequently, margins also saw sharp decline of 800bps YoY to 25%. Company reported net profit of |10.7 crore (down 41% YoY). The company owns and operates 874 rooms across 6 leisure and 2 business destinations in India

• The Union Aviation Ministry stated Tuesday that the government is considering establishment of “individual bilateral bubbles” with the US, the UK, Germany and France for allowing airlines of the respective countries in the agreement to operate international passenger flights

• India crude oil output fell 7% YoY in May to 2.6 MMT with privately operated fields' production declining 18%. Natural gas output declined 16% YoY to 2.3 BCM in May as ONGC's output fell 13% due to lower offtake

• As per media reports, IOC, BPCL and HPCL have reduced ATF production due to lower demand and replaced it with diesel

• Info Edge's IE Venture Fund I has entered into an agreement to invest about ₹ 3.5 crore in Rusk Media Private Limited (Rusk).Rusk Media is engaged in the business to carry on the production of digital content across genres like fiction, music, lifestyle, technology, amongst other things and distribution of such content across multiple platforms, brands and fields. Info Edge will acquire 10% stake in the company. Rusk had a turnover of ₹ 3.43 crore in FY20 implying a valuation of EV/Sales of 10x

• Bharti Infratel board will meet today to finalise the long pending merger with Indus Towers with some renegotiations in merger valuation

• Wipro Limited has announced that it has been awarded a strategic, multi-year infrastructure modernization and digital transformation services engagement by Germany-based energy company E.ON

• Tata Consultancy Services announced that it has successfully deployed TCS DynaPORT, a state-of-the-art terminal operating system at the Mundra CT4 terminal for Adani Ports and Special Economic Zone (APSEZ) Limited. TCS will help in digitising order to invoice process

• Just Dial has fixed 3 July as record date for determining eligible shareholders for buyback. Just Dial had approved a buyback at | 700 per share

• The road transport ministry has invited comments from all stakeholders and the general public in relation to the issue of postponing BS Trem IV emission norms (that were to be applicable to tractors, harvesters and construction equipment) from October 1, 2020 to October 1, 2021

• As per media sources, SECI's 2 GW ISTS connected tender received an overwhelming response. The tender received bids for 4.35 GW solar capacity from 12 project developers

• TV shoots across some states have resumed following safety measures. Producers and broadcasters are still in process to figure out insurance cover and costs associated with it

• ICRA has downgraded Yes Bank's Basel II Compliant Upper Tier II Bonds worth | 32611 crore to default

 

* Today's Highlights

Results: PNC Infratech, Gail, Indoco Remedies, IOC, India Cements, United Breweries, Sanghi Industries