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ICICIdirect Research Posted on 09:00am 16-Jul-2021

Reliance Industries is planning to launch IPOs of its oil to chemical (O2C) and retail businesses.

* Market Outlook

Indian markets are likely to open flat to positive tracking mixed global cues in spite of continued investor caution led by rising global Covid cases.

* Markets Yesterday

• Domestic markets ended higher on the back of gains mainly in IT and BFSI stocks.

• US markets ended mixed amid corporate earnings results, release of macroeconomic data and global news flow.


* Key Developments  

• For HDFC AMC, AUM is expected to increase 6% QoQ to | 4.2 lakh crore, primarily contributed by debt schemes. Moderation in market share is expected to continue in Q1FY22. Steady AUM mix is seen keeping revenue at | 524 crore, i.e. ~50 bps of AUM (up 27% YoY, 4% QoQ). Steady other income and controlled expense trajectory is seen leading PBT to | 440 crore, i.e. 42 bps of AUM. PAT is expected to show single digit growth at 5% to | 330 crore, ~31 bps of closing AUM.

• For HDFC Bank, strong credit growth of 14.4% YoY to | 1147500 crore stayed way higher than system growth at 5.5% YoY. Deposit grew 13% YoY with CASA ratio at 46%. NII growth is seen at 9.7% YoY to | 17191 crore with margins expected to be stable at 4.3%. Other income may moderate QoQ due to partial lockdowns with PAT expected to grow 27% YoY to | 8511 crore. Asset quality may be stable with GNPA ratio seen at 1.35%, NNPA at 0.42%. Expect provision to moderate to | 3902 crore.

• As per latest RBI data, bank credit grew 6.08% to | 109.31 lakh crore and deposits increased 9.76% to | 154.51 lakh crore in the fortnight ended July 2, 2021. In the previous fortnight ended June 18, 2021, bank credit had grown 5.82% and deposits by 10.32%.

• Icra has estimated NHAI would end up paying | 450-500 crore to farmer’s agitation-hit BOT-Toll project operators, as part of its decision to pay 75% of total compensation sought by them. The cumulative loss since the start of protests in October up to June 30 is estimated at | 1,600 crore with | 1,200 crore for BOT-toll projects and remaining for public-funded projects.

• Tata Elxsi reported Q1FY22 numbers. Revenues increased 7.7% QoQ to | 558.3 crore. The revenue growth was led by 6.3% QoQ growth in embedded product design and 11.8% QoQ growth in industrial design. However, EBITDA margin declined from 32.4% in Q4FY21 to 26.9% in Q1FY22. Consequently, PAT declined 1.6% QoQ to | 113.4 crore.

• For Q1FY22, Tata Steel Long Products reported a topline of | 1688 crore, up 158% YoY, 9% QoQ. EBITDA for the quarter was at | 520 crore compared to | 7 crore in Q1FY21 & | 498 crore in Q4FY21. Consolidated EBITDA margin for Q1FY22 was at 30.8% compared to 1.1% in Q1FY21 & 32.2% in Q4FY21. Consolidated PAT for Q4FY21 was at | 332 crore compared to a loss of | 131 crore in Q1FY21 and PAT of | 340 crore in Q4FY21.

• The Supreme Court will hear the adjusted gross revenue (AGR) case on July 19, 2021 for Bharti Airtel and Vodafone Idea petition seeking directions to recalculate AGR dues, citing "mathematical errors" in calculation of the outstanding amount by the department of telecom.

• Bharti Airtel has joined hands with Cisco to launch its connectivity solutions for enterprises based on the latter's Software Defined Wide Area Networking (SD-WAN) technology. Its "Intelligent VPN solution", which is an automated and centrally managed SD-WAN offering, is now available to its large customer base across India.

• According to media sources, NTPC has achieved a cumulative generation of 100 BU in the current financial year. During Q1FY21, the company recorded generation of 85.8 BU, up 26% YoY. NTPC Korba (2,600 MW) in Chhattisgarh is the top performing thermal power plant in India with 97.61% plant load factor between April and June 2021.

• Gati has transferred its 69.79% equity holding in Gati Kausar to Mandala Capital AG Ltd. Gati Kausar has ceased to be a Gati subsidiary. The company is poised to have reduced its debt at a consolidated level by ~| 105 crore.

• According to Business Standard, Reliance Industries is planning to launch IPOs of its oil to chemical (O2C) and retail businesses. At least one of IPOs is expected to be launched in FY22.

• Opec in its monthly report said that global oil demand in CY22 would reach pre-Covid levels and increase 3.4% YoY to 99.9 mbpd. The demand is expected to be more than 100 mbpd in second half of CY22.

• The Oil Minister had a discussion with Saudi Arabia and UAE regarding energy partnership with India. The discussions were amid reports of UAE and Saudi Arabia reaching an agreement regarding increase in oil production.

• Ola Electric has begun taking bookings for its upcoming scooter. Pricing and other details are set to be announced in coming days.

• Sudhanshu Vats has joined Pidilite as Deputy Managing Director. An alumnus of IIM Ahmedabad, Mr Vats has previously worked for Unilever, Castrol, Viacom18 and EPL.


* Today's Highlights

Results: HDFC AMC, Just Dial, GNA Axles, L&T Finance Holding

Events: EU CPI YoY, EU trade balance