Weekly Market Report: Dalal Street ends higher on broad rally; RIL, Adani Group, Bajaj Finance and ITC in news

Benchmark stock indices rallied during the week on positive global cues and better-than-expected earnings. For the week, the Sensex surged 2.39% to 59,307.15 and the Nifty 50 index jumped 2.27% to 17,576.30.

In broader markets, the BSE Midcap index rose 0.39% to 24,805.15. The BSE Smallcap index ended 0.15% higher at 28,566.82.

Top gainers among Nifty sectoral indices were PSU Bank [10.99%], Bank [3.76%], Energy [3.35%], Financial Services [2.76%] and FMCG [2.59%]. Top losers were Media [-0.89%] and Metal [-0.33%].

In the cash segment, FIIs were net buyers for Rs 1,324.4 crore and DIIs were also net buyers for Rs 3,569.4 crore during the week.

The Indian rupee tanked to a lifetime low of 83.26 against the US dollar during the week but recouped some losses to end at 82.68 on Friday.

Company News

Reliance Industries Ltd (RIL): The company said that net profit remained almost flat at Rs 13,656 crore during Q2FY23 from the year-ago quarter. The conglomerate’s revenue from operations rose 32% to Rs 232,863 crore from Rs 191,532 crore year-on-year (YoY). RIL’s outstanding debt as on September 30, 2022 was Rs 294,859 crore, while cash and cash equivalents stood at Rs 201,606 crore, the company said in a statement.

Meanwhile, RIL said that it will demerge its financial services business and list it separately on the stock exchanges under Jio Financial Services Ltd.

In other news, Reliance Jio’s 5G network network will be powered by Swedens’ Ericsson and Finland’s Nokia, the European telecom equipment manufacturers said. Both the suppliers have inked multi-year supply contracts with Jio for supplying 5G network equipment. Under its contract, Nokia will supply equipment from its AirScale radio portfolio to support different spectrum bands and self-organising network software. Jio will deploy a standalone 5G network, which will interwork with its 4G network and enable it to provide services such as machine-to-machine communication, network slicing, and ultra-low latency.

Adani Group: The group controlled by billionaire Gautam Adani is looking to raise at least $10 billion in new debt over the next year as his conglomerate seeks to refinance its high-cost borrowings and fund projects in the pipeline, Bloomberg reported citing sources familiar with the matter. The report said that the group plans to use multiple instruments including foreign currency debt and green bonds to raise up to $6 billion and swap its existing high-interest debt with lower-cost borrowings and deploy the rest for project financing, one of the people said. The effort could start as early as the ongoing December quarter, sources said.

Adani Transmission: The company said that it has won the BEST Undertaking’s tender for appointment of advanced metering infrastructure (AMI) service provider. Under the contract, 10.80 lakh smart meters and related communication & cloud infrastructure will be installed over a period of 30 months and maintained for the following 90 months. The company’s distribution platform shall implement the smart metering project on design-build-finance-own-operate-transfer (DBFOOT) basis.

Bajaj Finance: The NBFC said its profit grew by 88% year-on-year to Rs 2,781 crore for the quarter ended September FY23. Net interest income rose by 31% to Rs 7,001 crore during the same period with new loans booked up by 7% to 67.6 lakh YoY. Assets under management (AUM) grew by 31% YoY to Rs 2.18 lakh crore as of September FY23. Loan losses and provisions saw a significant decline to Rs 734 crore in Q2FY23 against Rs 1,300 crore in Q2FY22.

ITC: The diversified conglomerate reported a 20% rise in post-tax profit at Rs 4,466 crore for the quarter ended September 2022 as against Rs 3,697 crore a year ago. Sequentially, the profit rose 7.1% from Rs 4,169 crore recorded in June quarter this year. Standalone revenue (excluding excise duty) came in at Rs 16,130 crore for the quarter, an increase of 26.6% over Rs 12,731 crore same time last year. The company’s EBITDA jumped 27 % YoY to Rs 5,863.7 crore from Rs 4,615 crore.

Asian Paints: The company said its consolidated sales increased by 19.8 % to Rs 8,430.60 crore in Q2FY23 from Rs 7,036.51 crore in Q2F22. Profit before depreciation, interest and tax (PBDIT) increased by 35.7% to Rs 1,227.70 crore from Rs 904.45 crore in the year-ago period. The company will pay an interim dividend of Rs. 4.40 per equity share of the face value of Re 1 (Rupee One) each for FY23. The record date has been fixed as 1st November, 2022, and dividend will be paid to shareholders from 10th November.

Besides, Asian Paints has approved the setting up of manufacturing facility for vinyl acetate ethylene emulsion (VAE) and vinyl acetate monomer (VAM) in India. An amount of approximately Rs 2,100 crore will be invested by the company over a period of 3 years, including the cost of land to be acquired. The installed capacity of the said manufacturing facility would be 1 lakh tons per annum for VAM and 1.5 lakh tons per annum for VAE. VAM is a key input for manufacturing VAE.

Axis Bank: The private sector lender reported a standalone net profit of Rs 5,330 crore, up 70% for the quarter ended September 2022, as against Rs 3,133 crore in the year-ago quarter. The lender’s net interest income (NII) grew 31% year-on-year to Rs 10,360 crore from Rs 7,901 crore in the last year quarter. The net non-performing asset ratio came at 0.51% was lower than 0.64% a quarter ago and 1.08% a year ago. Robust growth in net interest income and pre-provision operating profit also helped boost profitability.

ACC: The cement manufacturer reported a consolidated net loss of Rs 87.32 crore in Q3 September 2022 as against a net profit of Rs 450.21 crore in Q3 September 2022. The Net sales rose 7.04% to Rs 3910.49 crore in Q3 September 2022 in the same period last fiscal. During the quarter ended 30 September 2022, cement volume grew by 4% compared with the same quarter last year. Ready Mix Concrete volume grew over 10% in the reported quarter over the same quarter last year. Power and fuel expenses in Q3 September 2022 stood at Rs 1,317.53 crore, up 67.14% YoY. EBITDA tanked 97.75% YoY to Rs 16 crore in Q3 September 2022, largely due to steep rise in fuel cost. EBITDA margin was 0.4% in Q3 September 2022 as against 19.5% in the corresponding quarter last year.

Ambuja Cements: The company’s standalone revenue stood at Rs 3670.40 crore in third-quarter of CY2023 as against Rs 3993.45 crore in the preceding quarter. Standalone net income stood at Rs 137.89 crore in the reported quarter compared with Rs 1,047.90 crore in Q2 2023. EBITDA was at Rs 304.33 crore in the reported quarer as against Rs 684.54 crore in the preceding quarter. The company follows January to December as its financial year.

UltraTech Cement: The company reported a decline of 42.09% in its consolidated net profit at Rs 758.70 crore for the second quarter ended on September 30, 2022. The company had posted a net profit of Rs 1,310.34 crore in the same period a year ago. Its revenue from operations rose 15.61% to Rs 13,892.69 crore during the quarter under review as against Rs 12,016.78 crore in the corresponding period last fiscal. The second quarter is traditionally a weak quarter for the cement sector, with lower demand due to monsoon season and low construction activity.

Bharat Dynamics: The company has signed a MoU with Dassault Aviation for integration of the former’s weapons systems like Astra and Smart Anti-Airfield Weapon on Rafale aircraft. Bharat Dynamics launched three new products including an anti-tank guided missile and two vehicle-mounted weapon systems. Shares of Bharat Dynamics jumped 4% in intraday trade on Friday and over 11% this week.

Separately, Electric vehicle maker Triton Electric India has issued a letter of intent to defence public sector unit Bharat Electronics for the procurement of battery packs for its semi-truck project in India at an estimated value of Rs 8,060 crore, according to a regulatory filing. The 300 kilowatt lithium-ion battery packs are to be delivered by Bharat Electronics (BEL) to Triton in 24 months commencing from January 2023, the filing stated.

UPL: The company has approved transfer of crop protection business on slump sale basis as a going concern to UPL Sustainable Agri Solutions (UPL SAS), a wholly owned subsidiary. The company has also approved transfer of Advanta seeds business on slump sale basis to Advanta Enterprises, a wholly-owned subsidiary. Adarsh Farm Services business will be transferred to its subsidiary Nurture AgTech Pvt. The company’s board also gave its nod for investment in UPL Sustainable Agri Solutions, Advanta Enterprises by PE investments, subject to regulatory approvals.

A wholly owned subsidiary of the Abu Dhabi Investment Authority (“ADIA”), Brookfield and TPG’ to invest Rs 1,580 crore (~US$ 200 million) for 9.09% stake in UPL SAS – India Agtech Platform at an equity valuation of ~Rs 17,380 crore (~US$ 2.2 billion). KKR to invest US$ 300 million (~Rs 2,460 crore) for 13.33% stake ‘Advanta Enterprises – Global Seeds Platform’ at an equity valuation of ~US$ 2.25 Bn (~Rs 18,450 crore). A wholly-owned subsidiary of the Abu Dhabi Investment Authority (“ADIA”) & TPG to hold 22.2% stake in UPL Cayman, which will be the Global Crop Protection Platform (ex-India). According to the company’s exchange filing, these investments are independent transactions for which separate agreements have been agreed pursuant to negotiations between each of the investors and UPL Ltd.

Canara Bank: The lender said its standalone net profit surged 89.51% YoY to Rs 2,525.47 crore on 16.88% YoY rise in total income to Rs 24,932.19 crore in Q2FY23. The bank’s net interest income grew 18.51% YoY to Rs 7,434 crore in Q2FY23. Meanwhile, the non-interest income rose 13.05% YoY in Q2FY23. The ratio of net NPA ratio reduced to 2.19% in Q2FY23 as compared with 2.48% in Q1FY23 and 3.21% in Q2FY22.

Nestle India: The FMCG company said its net profit rose 8.26% to Rs 668.34 crore in the quarter ended September 2022 as against Rs 617.37 crore in the same period last year. Revenue increased 18.15% to Rs 4566.60 crore in the quarter ended September 2022 as against Rs 3864.97 crore in the year-ago period. Meanwhile, the board of directors have declared second interim dividend for 2022 of Rs 120 per equity share, which will be paid from November 16, 2022.

Besides, the company launched direct to consumer (D2C) platform – www.mynestle.in. Initially, MyNestle will be launched in Delhi NCR and will be expanded to other parts of the country.

HDFC: The NBFC is likely to be out of the Nifty 50 index by Dec-Jan as the merger with HDFC Bank may be completed a few months earlier than expected, The Economic Times reported citing analysts. Pidilite Industries and Ambuja Cements are among the top contenders to replace HDFC, the report said.

IndusInd Bank: The private sector lender reported a net profit of Rs 1,787 crore in the June-September quarter, up 60% from the same period last year, aided by higher income and lower provisions. The bank’s total provisions during the period stood at Rs 1,141 crore, a 33% decline from a year earlier. The lender also reported a net interest income (NII) of Rs 4,302 crore in Q2 FY23, a rise of 18%. Its net interest margin stood at 4.24%, higher than the preceding quarter. The bank reported an 18% growth in overall advances from a year ago to Rs 2.6 trillion at the end of September FY23. The net NPA ratio fell to 0.61% from 0.67% in the prior quarter and 0.80% the year-ago period.

AU Small Finance Bank: The lender reported a 23% rise in its net profit at Rs 343 crore in the July-September quarter on healthy growth in loan disbursals and consistent fall in bad loans. It had posted a net profit of Rs 279 crore in the same period in the year ago fiscal year. Bank’s net interest income grew by 44% to Rs 1,083 crore during July-September period of FY23, as against Rs 753 crore in same period of last fiscal. Total income of the bank was up by 40.3% YoY at Rs 2,240 crore in the reported quarter.

Delhivery: Shares of the logistics company fell 18.52% to Rs 384, extending losses for the second straight session. Shares of Delhivery have slumped more than 30% in this week. The stock hit a record low of Rs 377.05 in intraday on Friday. The shares got listed at Rs 493 per shares on its stock market debut, a premium of 1.23% to its IPO price of Rs 487.

PVR: The theatre operator’ consolidated revenue fell 30% QoQ to Rs 686.72 crore in Q2FY23 from Rs 981.4 crore in the prior quarter. Net loss stood at Rs 71.23 crore in the reported quarter as against a net profit of Rs 53.38 crore in the second quarter of FY23. EBITDA fell 55% to Rs 153.65 crore in the reported quarter from Rs 341.57 crore in Q2FY23.

Global Markets

Wall Street ended with gains as investors’ sentiments were boosted by strong quarterly results and hints that the Federal Reserve might slow down the pace of interest rate hikes. For the week the Dow rallied 4.9%, the S&P 500 surged 4.7% and the Nasdaq soared 5.2%

On the economic front, manufacturing production rose in September. Manufacturing output rose 0.4% in September, the Federal Reserve said on Tuesday. The output was upwardly revised to 0.4% in August and it increased 4.7% from a year earlier.

Japanese equities ended lower during a choppy week as investors were concerned over global recession and further currency weakening. The benchmark Nikkei 225 ended the week 0.7% lower at 26,891, while the broader Topix index fell 0.8% to 1,882.

Meanwhile, Japan’s core inflation, excluding the impact of tax hikes, hit 3% in the last three decades.

China’s stock markets recorded a weekly losses on worries over economic growth. The broad, Shanghai Composite Index fell 1.1%, the CSI 300 index dropped 2.6% and the Hang Seng slumped 2.3%.

Meanwhile, China’s statistics agency said that that it would postpone releasing third-quarter gross domestic product (GDP) and other key indicators, including monthly readings of industrial production, fixed asset investment, and retail sales.

The People’s Bank of China kept its interest rate unchanged at 2.75%, according to a statement. The central bank announced it would keep its one-year rate unchanged for a second month and injected 500 billion yuan through medium-term lending facility.