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

The National Asset Reconstruction Company (NARCL) is in the process of finalising its core team...

* Market Outlook

Indian markets are likely to open flat to positive tracking mixed global cues as fear of inflation has returned to haunt investors ahead of key US inflation data, due on Thursday.


* Markets Yesterday

• Domestic markets ended slightly lower on the back of mixed global cues tracking losses in BFSI and metal stocks

• US markets ended mixed amid optimism over an economic recovery, release of macroeconomic data and concerns over increase in inflation

 

* Key Developments  

• Gail’s operational performance is expected to improve in Q4FY21 on account of petchem and LPG segment. On the gas business front, gas transmission volumes are expected to be flattish YoY at 110 mmscmd with its EBIT at | 831.9 crore. For the gas trading segment, we expect EBIT at | 228 crore vs. EBIT loss of | 73.7 crore in Q3 on account of increase in spot LNG prices. On the LPG liquid hydrocarbon front, EBIT is expected to increase 54% YoY to | 814.9 crore due to higher realisation while petchem segment is expected to report EBIT of | 561.4 crore

• On a favourable base of Q4FY20 (revenue decline of ~9%), we expect Bata to report marginal revenue degrowth of 1% YoY to | 614 crore in Q4FY21E. On an adjusted basis, recovery rate is expected at ~84% of preCovid levels in Q4FY21E. Gross margins are expected to stay under pressure owing to a change in product mix. We expect EBITDA margins to decline 280 bps YoY to 19.6% (up 60 bps sequentially). PAT is expected to decline 16% YoY to | 31.4 crore

• Teamlease will report Q4FY21 numbers today. We expect revenues to increase 5.0% QoQ (at pre-Covid levels on a YoY basis). We expect general staffing to improve 5.1% QoQ mainly led by health headcount addition and NETAPP additions. In addition, we expect specialised staffing revenues to increase 5.0% QoQ due to healthy traction in IT staffing. We expect margins to remain flat QoQ while YoY we expect margins to improve 50 bps mainly led by rationalisation of core employee headcount, reduction in losses in other HR services and improvement in specialised staffing margins. Key things to watch in today’s conference call are outlook on general staffing & specialised staffing, outlook on other HR services profitability and long term margin trajectory

• According to media sources, India's power consumption grew 12.6%, to 25.36 BU in the first week of June. Power consumption for the same period a year ago was 22.53 BU. Peak power demand was recorded at 168.72 GW on June 7, up 15% from last year's 146.5 GW, which was recorded on June 6

• Reserve Bank of India has granted approval for re-appointment of Chandra Shekhar Ghosh, Managing Director & Chief Executive Officer of Bandhan bank, for a period of three years, with effect from July 10, 2021

• The National Asset Reconstruction Company (NARCL) is in the process of finalising its core team and has invited quotes from a professional recruitment agency to help it in the hiring process, as it gears up for launch in July this year, according to Business Standard

• The Mumbai bench of NCLT has approved Twin Star Technologies’ resolution plan for Videocon Industries. The approval comes with certain riders, one of them being that the dissenting creditors will have to be paid upfront. Twin Star Technologies is offering | 2,962 crore against Videocon’s overall debt of around | 46,000 crore, as reported in Bloomberg

• Bank of Baroda will conduct an e-auction of as many as 46 NPA accounts later this month to recover dues of | 597.41 crore, according to Business Standard

• According to The Economic Times, DRDO has invited an expression of interest for technology transfer of twodeoxy-D-glucose (anti viral & anti inflammatory; Indicated for moderate to severe Covid) from Indian pharmaceutical firms with drug license to manufacture active pharmaceutical ingredients (API), GMP certified manufacturing facility with in-house R&D for API's. Dr Reddy’s Laboratories already has an agreement with DRDO to produce 2DG with launch expected by June end

• According to Business Standard, Religare Enterprises (REL) will raise capital of | 570 crore through preferential issue of equity shares to existing shareholders like Burman family, Ares SSG Capital and selected new marquee investors. The funds will be used to grow businesses including lending and health insurance

• The government has asked Siam to launch E-100 (94% ethanol blend) compatible two-wheeler within one year. The government is also considering certain incentives for consumers & OMCs in ethanol blending fuel. It is also working to launch additional ethanol pump nozzles, underground tank, pipes & dispensing unit of ethanol blended gasoline

• The petroleum minister inaugurated 201 new CNG outlets owned by Gail and its subsidiaries. Also, two mobile refuelling stations for refuelling CNG vehicles in Raigad and Delhi geographical areas of MGL and IGL were launched. The minister also said that the government is aiming for composite energy retailing where all transport fuels will be available at single point

• Info Edge faced intermittent outages for its websites naukri.com, naukrigulf.com and firstnaukri.com on June 7, 2021. However, the company has said there is no material impact of the same on company's business

• Minda Corporation has announced a JV with South Korea's INFAC Elecs for offering multiple automotive antenna based applications in the Indian market via local manufacturing at Pune. The companies expect to serve the growing connected vehicle opportunity for needs like keyless entry, V2V and V2X communication via rod antenna, micro pole antenna, shark fin antenna, etc

• Michelin would be raising tyre prices in passenger car, light truck and motorcycle replacement markets by ~6% and in on-road and off-road CV tyres by ~8% effective June 18 to pass on sharp increase in input costs over the past few months. As a knock-on effect, we expect companies from our coverage universe Apollo Tyres and JK Tyre to also raise prices in coming times and thus buffer gross margin decline to an extent

• According to Mint, Trumeds has raised US$5 million (~| 36.5 crore) as a part of series A funding from Info Edge venture, Asha Impact and Indian Angel Network

• According to Times of India, SoftBank has sought Competition Commission of India's approval to invest US$400-500 million in Swiggy, valuing it at US$5.5 billion

• According to Exchange4Media News Broadcasters Federation (NBF) has written to BARC, requesting them to not terminate the end user license agreement (EULA) with news channels for non-payment of BARC fees. BARC charges broadcasters a flat fee and in addition to a percentage of the advertising revenue, as subscription fees

 

* Today's Highlights

Results: Gail, Bata, Teamlease Services, Star Cement

Events: Japan PPI YoY