Previous Day Market Update
Sensex closed at 54843.98 up by 318.05 points
Nifty closed at 16,364.40 up by 82.15 points
CPI inflation for Jul-21 fell to a 3-month low of 5.59%, sharply lower than the 6.26% recorded in the month of Jun-21. The big driver of lower inflation was food inflation which fell from 5.15% to 3.96%. The rate of price spike in vegetables fell sharply. However, fuel inflation remained elevated with petrol inflation at 23.70% and diesel inflation at 22.71%. Even health services inflation was higher MOM. This easing of supply chain curbs was also evident in the fall in core inflation in July. This is inside RBI outer limit of 6%.
Tata Steel reported record net profits of Rs.8,907 crore for the Jun-21 quarter as against a net loss of Rs.4,416 crore in the Jun-20 quarter. The top line was up 108% at Rs.53,372 crore, helped by strong steel volumes as well as robust steel prices. The steel deliveries at the beleaguered Tata Steel Europe was up 17.4% at 2.33 MT in the Jun-21 quarter while India deliveries were up 41.6% at 4.15 MT. Comparatively, the revenues beat street estimates while the EBITDA and net profits were slightly short of the consensus.
The index of industrial production or IIP for Jun-21 was up 13.6% as the base effect began to taper. The 3 principal components of IIP viz. mining, manufacturing and electricity grew 23.1%, 13% and 8.3%. The current number still has a strong base effect implied in it. IIP comes with a one-month lag, but other high frequency indicators like e-way bills and tractor sales have been robust. PMI Manufacturing rebounded to expansionary zone; GST collections bounced back while rail freight also hit a record 18.3% growth.
Yes Bank hit a 52-week low of Rs 11.89 on 12 August and has almost halved from its 52-week high of Rs.20.83 in Dec-2020. Interestingly, Yes Bank had returned to profits in the Jun-21 quarter after heavy losses in the Mar-20 quarter. Gross NPAs of Yes Bank stand at 15.6% due to heavy restructuring of loans. Markets were disappointed with NII falling 26.5% at Rs.1,402 crore in the June quarter. Currently, shares of most investors are still subject to the mandatory 75% lock-in. Most brokers are bearish on Yes Bank.
Hero MotoCorp, India’s largest manufacturer of two-wheelers, reported 6-fold rise in standalone net profits at Rs.365 crore for Jun-21 quarter. Profits were sharply lower by 58% on sequential basis. On a low base, revenues from operations were up 85% at Rs.5,487 crore in Jun-21 quarter. EBITDA margins for the quarter stood at 9.4%. The good news is that, despite the resurgence of the pandemic, Hero Motor sold over 1 million motorcycles and scooters in the Jun-21 quarter. Rising commodity costs is a big challenge.
Travel app Ixigo filed DRHP with SEBI for its proposed Rs.1,600 crore IPO. Ixigo is an AI based travel app and is backed by marquee names like Sequoia Capital, Elevation Capital and Micromax. The IPO is likely to have a fresh issue component of Rs.750 crore and an offer for sale or OFS of Rs.850 crore. While Elevation Capital and Micromax will gain partial exit through the OFS, the fresh issue proceeds will be used by Ixigo for organic and inorganic growth. Listed peers, Easemytrip and IRCTC, have done very well.
Proxy advisory firm, SES of PNB-Carlyle fame, raised concerns over the proposed sale of Apollo Hospitals pharmacy and associated businesses to a wholly-owned subsidiary. SES has raised concerns over fair valuation and conflict of interest. The pharmacy division is proposed to be transferred to Apollo HealthCo. SES opines that the plan to subsequently bring investors into Apollo Health to scale up digital healthcare could dilute shareholder interests. SES has red-flagged cross holdings and conflict of interest in the deal.
India can pat itself on the back for its green energy push as India crossed the 100 GW milestone of installed renewable energy capacity. This is nearly one-fourth the total installed power generation capacity of 384 GW. Today, India stands fourth in terms of renewable energy capacity. India had taken the green thrust despite its per capita emissions being one-third of the global average. India targets 450 GW of renewable capacity by 2030. Currently, 100 GW is installed, 50 GW under installation and 27 GW under tendering.