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ICICIdirect Research Posted on 09:06am 10-Jun-2021

The Gail CMD said natural gas consumption in April and May was down 10-15% compared to 50% dip last year...

* Market Outlook

Indian markets are likely to open flat to positive on the back of mixed global cues as investors continue to remain on the edge ahead of US inflation data and ECB policy meeting

* Markets Yesterday

• Domestic markets ended lower tracking losses across sectors amid mixed global cues

• US markets ended lower amid concerns over rising inflation and the earlier tapering of the asset buying programme by the Federal Reserve


* Key Developments  

• For Q4FY21, we expect SAIL to report sales volume of 4.27 million tonnes (MT), up 14% YoY, 3% QoQ. Topline is expected to come in at | 22354 crore, up 38% YoY, 13% QoQ. EBITDA is likely to come in at | 6405 crore, up 26% QoQ. EBITDA/tonne for Q4FY21 is likely to come in at | 15000/tonne compared to | 12089/tonne in Q3FY21. During the quarter, there could be provision for employee wage revision, which could partially offset gains due to increase in steel prices

• Star Cement’s Q4FY21 performance was below Street estimates due to weak margins. While revenues grew 9.8% YoY (41.8% QoQ) to | 610.9 crore, EBITDA margins contracted sharply by 523 bps YoY (277bps QoQ) to 18.4%. This led to EBITDA fall of 14.5% YoY to | 112.7 crore. PAT came in at | 81.5 crore for the quarter

• India's fuel demand fell 11.3% MoM to 15.1 MMT in May. It was down 1.5% YoY. Petrol and diesel demand dipped ~17% MoM each. On a YoY basis, it increased 12.4% and 0.7%

• Non-life insurers have reported an 11.35% YoY rise in gross direct premium income in May 2021, as the insurers collected premiums of | 12,316.5 crore compared to | 11,061.02 crore in May 2020. However, sequentially the premium collected by non-life insurers in May dropped 28.84% compared to April. Among non-life insurers, premium income of general insurers rose 7.17% YoY to |10,822.7 crore in May but contracted by 32.13% from the previous month. Standalone health insurers, on the other hand, reported a 66% YoY jump in premiums to | 1,406.44 crore in May. Compared to last month, their premium income has increased by almost 12%

• Tata Motors will consider issuing NCDs worth | 500 crore at its board meeting on June 14th. Separately, according to ET Auto, the company has discontinued some variants of its popular Nexon UV to simplify product choices

• The Cabinet has approved allotment of 5 MHz spectrum in 700 MHz band to Indian Railways for public safety and security services at stations and in trains. With this spectrum, Indian Railways has envisaged providing Long Term Evolution (LTE) based mobile train radio communication on its route. The estimated investment in the project is more than | 25,000 Crore. The project will be completed in the next five years

• According to Economic Times, Tech Mahindra is looking for acquisition in Europe to upgrade its capabilities in cloud computing, 5G, SAP and Salesforce. The company is also planning to hire 250 employees in Nordic region over next 18-24 months

• Wipro has approved the proposal for issuance of US dollar denominated notes in an aggregate principal amount of up to US$750 million (| 5475 crore).The net proceeds of the notes are intended to be utilised for refinancing existing debt, general corporate purposes and/or for any other purpose permitted by law

• Sterlite Tech has informed stock exchanges that it has formed a partnership with Vocus Group, a specialist fibre and network solutions provider in Australia. Vocus Group Ltd is Australia’s specialist fibre and network solutions provider, connecting all mainland capitals with Asia and the US. This deal will strengthen STL’s presence in the Australian market, helping network creators deploy high capacity nationwide networks faster

• Tata Communications in its investor day revisited (and revised some of) its strategic growth path. On the medium term financial targets, there were few upgrades with a) RoCE target of 25-30% (vs. 20% target earlier), b) EBITDA margin of 23-25% (earlier guidance: 22-25%), c) maintaining optimal debt (vs. debt reduction guidance earlier) and d) double digit data revenues target remained same as before

• Accelya has announced an offer for sale of 21.81 lakh shares (14.62% of paid up capital). The floor price is | 910 per share. Total 10% of share sale shall be reserved for retail investors

• Affle has announced 100% acquisition of Jampp, a programmatic mobile marketing company. Jampp is a global platform that started in 2013 in Latin America (LatAm). Its largest teams continue to be based there. Affle will acquire the company for US$41.3 million (~| 301 crore). The consideration US$15 million contingent consideration to be paid over three years. The company had a revenue of US$29.5 million (~| 215 crore) and EBITDA of US$0.04 million (| 0.29 crore) in CY20

• Affle has also entered into a definitive agreement to subscribe to equity shares of Bobble AI and acquire 1,674 fully paid-up CCPS (Series C1) for a consideration of | 22 crore. The company has also acquired equity ownership of Boble AI through a secondary transaction at an aggregate consideration of | 12 crore. This will increase its holding in Bobble AI to 17.7% from 8%

• Under Pradhan Mantri Awas Yojana -Urban (PMAY-U), the government has approved 708 proposals for the construction of 3.61 lakh houses recently. With this, as on date, the total number of sanctioned houses under PMAY(U) is now 11.24 crore and so far, 82.5 lakh have been grounded for construction of which 48.31 lakh have been completed/delivered. Total investment under the mission is | 7.35 lakh crore, which has central assistance of | 1.81 lakh crore of which | 96,067 crore of funds have been released

• The Gail CMD said natural gas consumption in April and May was down 10-15% compared to 50% dip last year. Also, the company is planning to bid for 400 MW capacity along with Bhel in Solar Energy Corporation of India (Seci) tender in order to build clean energy portfolio, according to Mint

• TCI Express’ new sorting centre (1.5 lakh sq ft) at Pune has become operational after receiving relevant regulatory approvals. Total cost incurred, including purchase of land, is ~| 35-40 crore. In the next phase, the company will focus on integration of automation and technological upgradation, with additional investment of | 20 crore and anticipated to be completed in the later part of FY22

• According to The Business Standard, NHAI has received the approval of Sebi to launch its maiden InVIT to raise | 5,100 crore last week and is expected to get launched in a month. In future, the authority plans to offer 19 projects worth | 35,000 crore under the InvIT model

• Media reports say that VVDN Technologies, home-bred telecom contract manufacturer, is planning to make large investments under the production-linked scheme (PLI) to expand manufacturing and hire employees. It also expects "new business" coming from global telecom and networking companies for contract manufacturing

• According to The Economic Times satellite players’ sans OneWeb have opposes proposal to share 28 GHz spectrum with telcos. They say such move will impact their data download speed and geographical reach

• According to The Economic Times, Jio has integrated with WhatsApp to offer mobile recharge, payments to users and other support services

• Raj Kumar Bhargava and Lalit Bhasin have resigned as independent directors of Asian Hotels West, which is the owner of Hyatt Regency, Mumbai.

• According to The Economic Times, Indian refiners are carrying out maintenance work leading to shutdown for some period. The companies are expecting a fuel demand revival in coming months

• Suresh Prabhu has joined Persistent Systems as Chief Delivery Officer for industry verticals. In this role, he will be responsible for the delivery organization across Software & Hi-Tech, Banking Financial Services and Insurance, Healthcare and Life Sciences, and Emerging vertical. He has over 30 years of experience. He joins Persistent from Epicor Software, where he was responsible for the development and delivery of on-premise and SaaS solutions across multiple industries including manufacturing, distribution and retail

• According to filing in exchange, PE firm Advent International Corp has exited from Crompton Greaves Consumer Electricals by selling its remaining stake (~ 5.4%) at a price of | 400.4. A total | 1348 crore deal include names of leading buyers such as SBI mutual fund, Ashoka India opportunity fund, Mirae Asset Mutual fund, SBI Life, ICICI Pru Life, etc

• Creditors to Reliance Home Finance (RHF) have commenced voting on bids for the company, which could lead to resolution of the | 11,200 crore debt. The voting process is likely to be completed by June 15, according to The Economic Times


* Today's Highlights

Results: SAIL, NHPC, Century Plyboards, eClerx, Shankara Building Products, Sanghi Industries, Mayur Uniquoters, Hind Rectifier

Events: US CPI YoY