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ICICIdirect Research Posted on 09:02am 04-Jun-2021

Sebi has revised the overseas investment limit for mutual funds (MFs)...

* Market Outlook

Indian markets are likely to open flat and remain at record highs on the back of mixed global cues as optimism surrounding decline in the Covid-19 cases is negated by the concern related to the changes in the US monetary policy

* Markets Yesterday

• Domestic markets ended higher tracking BFSI stocks amid gains across sectors

• US markets ended lower on the back of release of betterthan-expected macroeconomic data and concerns regarding monetary policy outlook


* Key Developments  

• Bharat Forge is expected to report a healthy performance in Q4FY21 amid a pick-up in commercial vehicle demand both domestically and globally amid limited decline in margins due to operating leverage benefits. On a standalone basis, we expect the company to report total operating income of | 1,108 crore (up 26% YoY & 7% QoQ). EBITDA in Q4FY21 is expected at | 223 crore with corresponding EBITDA margins at 20.1%, down 60 bps QoQ. Ensuing PAT for Q4FY21 is expected at | 94 crore vs. loss of | 73 crore in base quarter Q4FY20

• For Q4FY21, APL Apollo Tubes reported a consolidated topline of | 2587 crore, up 37% YoY, down 1% QoQ. For the quarter, APL Apollo reported consolidated EBITDA of | 206 crore, up 72% YoY, down 11% QoQ. Consolidated EBITDA margin came in at 8.0% vs. 6.3% in Q4FY20 and 8.9% in Q3FY21. Consolidated PAT came in at | 134 crore, up 121% YoY & down 10% QoQ

• Quess Corp reported Q4FY21 numbers. Revenues increased 7% QoQ (flat YoY) to | 3005 crore mainly led by workforce management (up 9% QoQ) and operating asset management ( up 9% QoQ). The company has made a provision of ~ | 119 crore for trade receivable from government contracts and | 20 crore loss in training & skill development and food business. As a result, of these charges, EBITDA declined from | 151 crore in Q3FY21 to | 38 crore in Q4FY21. Lower EBITDA coupled with depreciation, finance tax expenses led to loss at net level. The company has declared a dividend of | 7 per share

• Nucleus reported Q4FY21 numbers. Revenues were flat QoQ (down 10% YoY) | 124.2 crore. EBIT margins improved from 18% in Q3FY21 to 23%. PAT increased 10.2% QoQ (down 3.2% YoY) to | 27.4 crore

• RBI would be coming out with its monetary policy decision today. As per consensus estimates, key interest rates are likely to be unchanged

• Sebi has revised the overseas investment limit for mutual funds (MFs). The market regulator said in a circular that MFs can make overseas investments up to | 100 crore each. MFs had made representations to the regulator to increase the investment limit. Last November, Sebi had enhanced the overseas investment limit from $300 million per mutual fund to $600 million.

• IDBI Bank has secured a US$239 million (~|1744 crore) judgement in the commercial division of the High Court of London against a Cypriot subsidiary of India-based Essar Shipping Group, believed to be one of the largest debt judgments obtained by an Indian bank in the English courts

• Niti Aayog has submitted the finalised names of PSU Banks to be privatised to the Core Group of Secretaries on Disinvestment, as part of the disinvestment process. Following the clearance from the Core Group of Secretaries, headed by the Cabinet Secretary, the finalised names will go to Alternative Mechanism (AM) for its approval and eventually to the Cabinet headed by the Prime Minister for final approval, according to Business Standard

• Department of Telecommunications on Thursday notified the guidelines for the production-linked incentive scheme (PLI) for manufacturing telecom and networking products. The government has earmarked | 12,195 crore under the scheme for five years. While 10 applicants each among MSMEs and non-MSMEs will be eligible for the incentives, at least three among non-MSMEs will be domestic companies. The application for the same will be made over next two months. Among listed companies, Dixon (in a JV with Bharti Enterprises), Sterlite (in a JV with VVDN) and HFCL have shown interest, as per Business Standard

• Highway construction companies have urged the government to impose curbs on export of steel, saying domestic prices of the commodity have surged, inflating the cost of projects. Industry experts said the capital cost of highway projects could rise up to 10% on the back of surging steel prices and emerge as a serious constraint in months to come. The impact could be large on the highways and infrastructure construction sectors, which consume the domestic steel

• Lupin announced its entry in digital healthcare space, focussed on building digital therapeutics platform for doctors and patients in India, through its subsidiary Lupin Digital Health

• Cadila Healthcare has received tentative USFDA approval to market Osimertinib Tablets (Kinase Inhibitors), used to treat lung cancer. Drug is set to be manufactured at company’s SEZ, Ahmedabad manufacturing facility

• Mphasis, Government of Alberta and the University of Calgary (UCalgary) together announced a strategic partnership to Establish Quantum City Centre of Excellence (CoE) focused on the commercial development of Quantum technologies. The company will also create 500-1000 jobs in Alberta, Canada

• Snowman Logistics has entered into a strategic partnership with Hyderabad based Dr Reddy’s Laboratories, to provide temperature-controlled end-to-end logistics solutions for the delivery of the two-dose Sputnik Covid-19 vaccine across India. The locations are strategically located to take care of not just the state distribution but the whole of the regional requirements. The temperature, throughout, will be maintained between -20 degrees Celsius and -25 degrees Celsius


* Today's Highlights

Results: Bharat Forge, Jubilant Pharmova, Moil Ltd

Events: India interest rate decision, reverse repo rate, cash reserve ratio, EU retail sales