Tata Steel flagged-off the 1st raw material consignment of ferrous scrap on the 24th of July for trials at its steel recycling plant being set-up in Rohtak in Haryana...
* Market Outlook
Indian markets are likely to open flat tracking mixed global cues and a weak start of Asian peers. Global news flows and earnings outcome of domestic companies would be key monitorables.
* Markets Yesterday
• Domestic markets ended sharply higher tracking positive Asian and European cues amid hopes of additional fiscal stimulus in the US
• US markets ended lower amid a soft earnings show and uncertainty about the additional Covid-19 relief bill
* Key Developments
• PV bellwether Maruti Suzuki's Q1FY21E performance is expected to be weak. Total dispatches for the quarter were at 76,599 units, down 81% YoY (domestic down 82.1%, exports down 66%). ASPs for the quarter are expected to improve QoQ amid sequential improvement in product mix (UV at ~17% of total volumes vs. ~13% QoQ). Total operating income is expected at | 3,718 crore, down 81.1% YoY. We expect EBITDA loss of | 381 crore tracking negative operating leverage. Consequent loss after tax is expected at | 438 crore
• Dr Reddy's Q1FY21E revenues are likely to grow ~12% YoY to |4305 crore, mainly due to 8% growth in US formulations driven by currency tailwinds and strong traction from PSAI segment on a lower base. Domestic growth, on the other hand, is likely to be muted due to Covid-related volatility partially offset by deferred sales from Q4FY20. EBITDA margins are likely to expand 79 bps YoY to 20% mainly due to lower employee expenses. Net profit is expected to decline ~23% YoY to | 520 crore,
• For Bharti Airtel, reported ARPU is likely to witness ~2% QoQ decline at | 151 as the company had extended its prepaid validity for low cost users till May 3, 2020. Indian wireless revenues are expected to witness 2.2% QoQ decline at | 12,665 crore. India's non-wireless revenues traction may remain robust, especially broadband and enterprise. Consolidated revenues are expected to be up 0.5% QoQ at | 23,835 crore. We expect sequentially flattish India EBITDA margins at 42.7% as higher network operating cost will be offset by lower admin and S&D expenses. Reported EBITDA margins are expected at 43%, flattish QoQ. Expected loss at bottomline level is ~| 240 crore
• We expect Phoenix Mills' (Phoenix) revenues to de-grow 71.7% YoY to | 174.3 crore on account of weak residential real estate segment (nil expected to be recognised in the quarter vs. | 207.1 crore recognised in Q1FY20) and impact on retail and hospitality portfolio due to waiver and near closure, respectively. On the core portfolio front (retail, commercial and hospitality business), we expect revenues to de-grow 42.7% YoY since retail and hospitality segments are expected to be impacted the most amid rental waiver offers by the company for malls during lockdown and insignificant occupancy in the hospitality segment. The EBITDA margin is expected to contract 760 bps to 40% in Q1FY21E. At the PAT level, we expect losses given the sharp decline in operating profit
• IndusInd Bank reported mixed set of numbers wherein muted topline growth was offset by healthy operational performance. The bank informed that 16% (including MFI) of the book was under moratorium as on June 2020 as compared low single digits during March 2020. In terms of moratorium breakup, 19% of retail book and 9% of corporate book opted for the moratorium. GNPA ratio inched up 8 bps QoQ to 2.53% while NNPA ratio was down 5 bps to 0.86%. Provisioning stood at | 2259 crore (~114 bps of advances). The bank has provided | 500 crore as floating provisions during Q1FY21. As on 30th June 2020, total contingent provisions stands at | 2566 crore (~130 bps of advances) which includes total Covid provisions of | 1203 crore. Credit growth was subdued at ~ 2.4% YoY to | 198069 crore. NII was up 2.4% QoQ to | 3309 crore, primarily on the back improvement in margins to 4.25%
• Ultratech Cement reported good set of numbers for Q1FY21 at operational levels with EBITDA margin expansion of 119bps YoY to 26.5%. Volumes for the quarter declined 32% YoY to 13.6MT. However, better sales realisations (up 7.7% QoQ) and stricter cost controls helped company to reduce overall strain on earnings due to lockdown impact. While revenues declined 33% YoY to |7374 crore, EBITDA declined by 30% YoY to |1955 crore due to better margins. However, one-off expenses of |157 crore pertaining to reversal of VAT incentives of earlier years led to PAT decline of 36% for the quarter.
• Orient cements revenue for Q1FY21 declined by 40.4% YoY to |410 crore due to an impact of lockdown. Accordingly, EBITDA and PAT also declined by 34.3% YoY and 54.2% YoY to | 98 crore and |25.6 crore respectively. On the positive side, EBITDA margins for the quarter improved by 231bps YoY to 24% due to better sales realisations
• South based Hotel player Oriental Hotels reported weak set of numbers for Q1FY21 with revenue drop of 89% YoY to | 7.5 crore for the quarter. The hotel business impacted severely due to complete lockdown. EBITDA loss came in at | 21 crore while net loss stood at | 23.4 crore for the quarter. The company is currently operating only few hotels with minimal occupancies as cities like Chennai and Madurai is under lockdown at present.
• Quess Corp reported Q1FY21 numbers. The company's revenues declined by 20% QoQ mainly led by decline in general staffing (down 22% QoQ), Conneqt (down 25% QoQ) and IFM (down 21% QoQ). EBITDA declined 23% QoQ and EBITDA margin declined from 6% to 5%. The General Staffing EBITDA declined from 5.1% in Q4FY20 to 3.7% in Q1FY21.
• Info Edge has entered into agreements to invest about US$ 6.33 million ( ~₹47 crore) in Bulbulive Shopping Network Pte Ltd for 17.82% stake. Bulbul is a video and livestream led commerce platform that aims to make online shopping engaging and social while offering consumers the opportunity to discover new products. Bulbul's revenues ₹4.5 crore for FY20
• IndusInd Bank has raised ~| 2495 crores via issuing 4.8 crore preferential shares to Route One Master Fund, ICICI Prudential Life, Tata Investment Corporation, AIA Company at price of | 524 per share. In addition, the bank has also raised ~| 792 crore via issuing 1.5 crore preferential shares to the promoter companies including Hinduja Capital Ltd and IndusInd International Holdings at a price of | 524 per share
• Jaguar Land Rover has appointed Mr. Thierry Bollore as its new CEO effective September 10, 2020. Mr. Bollore was most recently CEO of French auto OEM Groupe Renault and has extensive previous experience with French tyre manufacturer Michelin and French global automotive supplier Faurecia. His previous experience has largely been in areas of manufacturing, supply chain, quality control and strategy. Erstwhile CEO Prof. Sir Ralf Speth would continue as Non-Executive Vice Chairman of the company.
• As per media sources, the Power Ministry has floated a cabinet note to relax discoms' borrowing limits, the | 90000 crore-10 year loan package announced towards clearing outstanding dues for losses up to 31 March, will now cover losses till June, with the package corpus expected to reach | 1,25000 crore
• Tata Steel flagged-off the 1st raw material consignment of ferrous scrap on the 24th of July for trials at its steel recycling plant being set-up in Rohtak in Haryana. The first state-of-the-art Scrap Processing Plant of 0.5 MnTPA (million tonne per annum) capacity, (which is being set-up in Rohtak, Haryana), is scheduled to be commissioned soon. The National Steel Policy envisages a 300 MnTPA steel production in India by FY30 and steel recycling will play a pivotal role in attaining this ambition.
• Zee TV has launched a new channel in the Amharic language of north-east Africa
• As per media reports, refiners are reducing capacity utilisation due to lower demand and weaker refining margins with capacity utilisations of IOC and BPCL are at 80-85% and 70%
• As per media reports, Petronet LNG's Kochi terminal's utilisation to improve to 40-45% post commissioning of Kochi- Mangalore pipeline due to potential industrial customers in Mangalore area
• As per media reports, certain industrial customers of natural gas have opposed PNGRB's unified tariff mechanism and claimed that it favours customers located far away from LNG terminals
• Media reports indicate multiplexes will reduce ticket prices by 10-15% post cinemas reopening
• Media reports indicate merger between Sony and Viacom 18 will be announced by mid-August with Sony having majority stake at 74% and Viacom 18 at 26% in the JV
* Today's Highlights
Results: Maruti Suzuki, Bharti Airtel, Dr Reddy, Mahindra Lifespace, SIS, GSK, Colgate, Sagar Cement, Mastek, Navin Fluorine, Phoenix Mills, MM Forging, Kanpur Plastipack, Indigo Airlines, Chambal Fertilisers, Kewal Kiran
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