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ICICIdirect Research Posted on 09:02am 01-Jul-2020

IOC, NTPC and SDMC signed an MoU for building a waste-to-energy plant at the Okhla landfill site in Delhi...

* Market Outlook

Indian markets are likely to open with a flat to negative bias on the back of mixed global cues and indications of no nearterm respite from the pandemic as government extended the food aid till November. Global news flows and virus tackling measures in India would be key monitorables.

* Markets Yesterday

• Domestic markets ended marginally lower tracking mixed though largely positive global cues

• US markets ended sharply higher following continued optimism about the economic outlook and release of better than expected June consumer confidence data


* Key Developments  

• Output of eight core industries fell 23.4% in May 2020 (37% decline in April 2020) on account of Covid-19 related lockdown. Except for fertiliser production, which grew 7.5% YoY in May 2020, all other sectors - coal (14.0%), crude oil (7.1%), natural gas (16.8%), refinery products (21.3%), steel (48.4%), cement (22.2%) and electricity (15.6%) recorded a decline in production

• As per RBI data, gross bank credit decelerated to 7% YoY to | 91.08 lakh crore in May 2020 led by slower loan growth to medium and large industries while micro and small segment loan growth was healthy. Retail credit contracted 2.9% to | 27.78 lakh crore while housing loans declined 0.7% to | 13.29 lakh crore. On account of lockdown, overall credit shrunk 1.7% in May 2020 against March 2020 levels

• NCL reported a weak set of Q4FY20 numbers. Gross revenue fell 11% YoY to | 283.7 crore. Cement division reported 13% YoY drop in revenues while other segments revenue declined 11% YoY. With drop in revenues margins for the quarter came down to single digit at 9.1% vs 20.5% reported last year and 12.4% reported last quarter. As a result, net profit fell sharply by 71% YoY to 7.56 crore. The debt level continues to remain high at |286 crore (higher by 20 crore on YoY) basis which remains near term concern amid demand slowdown

• Control Print reported flat revenue of | 46 crore. However, on a quarterly basis, the topline fell 2.6% QoQ. Higher COGS impacted OPM by 160 bps YoY, 570 bps QoQ to 18.3%, leading to EBITDA fall of 7% YoY, 25% QoQ to | 8.5 crore. Adjusting the fair value change in investments, PAT was at | 5.4 crore against | 4.6 crore in Q4FY19 & | 7 crore in Q3FY20

• Crisil Research estimates that domestic tractor industry would contract by ~1% YoY during FY21E as against double digit decline expectation for other automotive segments. It also estimates that auto component industry would post top line decline of 16% YoY, impaired by Covid disruption and resulting impact on vehicle sales

• Following a complaint by Vedanta Ltd and Bharat Aluminium Company, the government has initiated a probe into alleged subsidised exports of aluminium wires from Malaysia. The Commerce Ministry's investigation arm -- Directorate General of Trade Remedies (DGTR) -- has started the probe to see if the subsidy programme of Malaysia for exports of ''Aluminium Wire/Wire Rods above 7 mm diameter'' is impacting domestic industry. The period for investigation is from April 2019 to December 2019

• In the aviation space, the international passenger flight services in the country will resume in a phased manner during 'Unlock 2.0'. At present, these services are suspended till July 15

• Yes Bank has moved the Bombay High Court asking to prevent Zee Entertainment promoters from selling any more stake in group companies

• India's total number of active subscribers with Pay DTH operators were at 69.98 million at end of 2019 with Tata Sky being the leader

• Bank of Baroda has informed exchanges regarding a board approval to raise | 2000 crore through issue of Basel III Compliant Additional Tier I Bonds in single or multiple tranches

• Indian Bank has informed exchanges regarding reduction in the MCLR rates by 10 bps across all tenors with effect from July 3, 2020. As per these revised rates, one year MCLR stands at 7.4% vs 7.5% earlier

• IOC, NTPC and SDMC signed an MoU for building a waste-to-energy plant at the Okhla landfill site in Delhi. The plant will use plasma technology for producing syngas to generate power

• Affle India has completed the acquisition of Appnext for 66% stake and 100% assets. The remaining 28% & 5% stake will be acquired over three and five years, respectively

• GMM Pfaudler entered into a binding term sheet with De Dietrich Process Systems India Pvt Ltd (DDPSI) for itemised sale of their manufacturing facility at Hyderabad, Telangana. The state of the art facility equipped to manufacture Glass Lined Equipment is located at Nacharam Industrial Estate, spread across an area of 6 acres. GMM Pfaudler will pay consideration of €6.25 million

• As per media sources, the Indian Railways ran three in one freight service which had 177 wagons carrying 15000 tonnes of freight and three electric locomotives with a 6000 HP capacity each. The run was conducted between Bilaspur (Chhattisgarh) and Chakradharpur (Jharkhand) divisions and it led to lower transit time of freight trains

• As per media reports, Glenmark Pharma has been charged with manipulating the prices of generic drugs sold in US. The charging document, filed in the District Court of Philadelphia, alleges that Glenmark conspired with Apotex Corp and other pharma companies to raise the price of the cholesterol drug, pravastatin and other generic drugs

• As per media sources, amount sanctioned to MSMEs under the Government's Emergency Credit Line Guarantee Scheme were at | 1.01 lakh as on June 26, 2020. During the same period disbursements were at | 45860 crore, wherein PSB's share was at | 29232 crore while private banks disbursed | 16628 crore

• As per media sources, S&P expects loan restructuring to only defer the NPA recognition and would not solve the asset quality issue. In addition, the rating agency estimates slippages to come at 6% with NPA to rise to 13- 14% levels as against current levels of 8.5% by the end of FY21. Further, improvement is expected to remain gradual with 1% decline in GNPA expected in FY22E

• As per media sources, manufacturers of alcoholic beverages have urged the Government of West Bengal to reduce sales tax on liquor from the existing 30% to a reasonable" rate, which will increase volumes. The State Government imposed 30% sales tax on liquor and the new prices came into effect from April 9

• As per media sources, the Transport Minister is of the opinion of using assets such as de-commissioned aircraft of Indian Air Force for cargo handling. The move could scale up the size of Marine (fish, prawns), fruits and vegetables exports to destinations such as Dubai and Singapore

• As per media sources, solar tariff has hit a record low of | 2.36 per unit in the latest SECI auction. The total auction size was 2000 MW, of which Spain's Solarpack won 300 MW at the lowest price of | 2.36 per unit. Six foreign companies and one local company were among the winners of the auction

• Media sources indicate that NTPC’s Telangana Super Thermal Power Project Phase-I plans to address environmental concerns by disposing fly ash through a slurry pipeline. To move the ash to the mine void, NTPC is using a high-concentration slurry disposal technology which is safe without any ash spills and contamination. The ash disposal system of the project complies with the CEA’s guidelines and follows latest environmental practices

• Media reports said the government of Andhra Pradesh has ordered taking back 253 acres of 483 acres land allotted to Amara Raja group alleging non utilisation of land for allotted purposes. The impact of this development is unclear as of yet


* Today's Highlights

Events - India Nikkei Manufacturing Markit PMI, EU Manufacturing PMI