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8 feb (5)

Barometers end on strong note; Nifty settle above 15,000.

Domestic equity benchmarks ended the session with strong gains on Monday. IT, auto and private banks rallied while PSU banks, FMCG and pharma stocks lagged.

As per provisional closing data, the barometer index, the S&P BSE Sensex, spurted 617.14 points or 1.22% to 51,348.77. The Nifty 50 index climbed 191.55 points or 1.28% to 15,115.80.

The broader market outperformed the benchmark indices. The S&P BSE Mid-Cap index rose 1.50%. The S&P BSE Small-Cap index gained 1.53%.

Buyers outpaced sellers. On the BSE, 1729 shares rose and 1306 shares fell. A total of 192 shares were unchanged.

Domestic shares were boosted by positive global cues. The rise in global risk-assets was induced by improving COVID-19 trends and statement from treasury secretary Janet Yellen, pushing for a stimulus bill. The comments from the treasury secretary came after weaker-than-expected U.S. jobs data on Friday highlighted the case for further stimulus.

Buzzing Index:

The Nifty Auto index rose 3.11% to 11,057.90, outperforming the other sectoral indices on the NSE. The index declined 1.32% on Friday.

Mahindra & Mahindra (up 7.38%), Tata Motors (up 6.65%), Bharat Forge (up 4.05%), Ashok Leyland (up 3.23%), TVS Motor Company (up 2.08%), Hero MotoCorp (up 1.75%), Eicher Motors (up 1.43%) and Maruti Suzuki (up 1.04%) advanced.

Earnings Impact:

Britannia Industries fell 1.84% to Rs 3476. On a consolidated basis, Britannia reported 22.3% rise in net profit to Rs 455.75 crore on 5.8% increase in net sales to Rs 3106.10 crore in Q3 FY21 over Q3 FY20.

Commenting on the performance, Varun Berry, MD said, General Trade, which is the largest channel for us, continues to grow at a healthy pace on the back of buoyancy in rural economy and recovery in urban markets. The other channels such as Modern Trade, Institutional business etc continue to face challenges with lower footfalls in stores and offices, schools, railway services coming back to normalcy gradually.

Essentials were at elevated levels of demand at the beginning of the year due to pantry up-stocking which has started to normalize with diversification of purchase basket of the consumers. We continue to focus our efforts on the basic building blocks of our business which include direct reach, rural distribution, range selling, higher throughput, salesmen productivity & invest in enhancing our brand equity through focused product campaigns.

On the cost front, we witnessed moderate inflation in the materials prices except Palm oil where we witnessed a significant increase. We neutralized the inflation by accelerating our cost efficiencies & sustained the new efficiencies that we witnessed during the Covid-19 induced lockdown. These measures helped us record a 260 bps increase in operating profit during the quarter vs. last year.

Going forward, we intend to accelerate the pace of Innovation & new launches, strengthen our distribution infrastructure and continue our focus on brand building to drive growths and market share.

Divi’s Laboratories fell 0.93% to Rs 3784.30. On a consolidated basis, the pharmaceutical company reported 31.1% jump in net profit to Rs 470.62 crore on a 21.9% rise in net sales to Rs 1,701.44 crore in Q3 FY21 over Q3 FY20. The company reported a forex gain of Rs 2.53 crore in the quarter ended December 2020 as against a forex gain of Rs 17.96 crore in the quarter ended December 2019.

VRL Logistics surged 10.93% to Rs 227.30 after the company’s board approved a proposal to buyback shares at maximum price of Rs 300 each. The aggregate consideration of the buyback shall not exceed Rs 60 crore. At the maximum buyback price and for the maximum buyback size,, the indicative maximum number of equity shares proposed to be bought back would be 20 lakh equity shares, which is 2.21% of the total number of paid up equity shares of the company.

The minimum amount to be utilized for the buyback shall be Rs 30 crore, being 50% of the maximum buyback size. The buyback price of Rs 300 per share is a 46.4% premium to Friday’s closing price.

VRL Logistics reported 54% jump in net profit to Rs 39.74 crore on a 1.1% rise in net sales to Rs 563.42 crore in Q3 FY21 over Q3 FY20.

Punjab National Bank (PNB) dropped 5.24% to Rs 38. The public sector bank posted a net profit of Rs 506.03 crore in Q3 FY21 compared with net loss of Rs 492.28 crore in Q3 FY20. The bank’s total income grew by 45.9% to Rs 23,298.53 crore in Q3 FY21 as against Rs 15,967.49 crore in Q3 FY20. Net Interest Income (NII) for Q3 FY21 grew by 28% to Rs 8,313 crore in Q3 FY21 over Q3 FY20. Global Net interest margin improved to 3.09% in Q3 FY21 from 2.49% in Q3 FY20.

On the asset quality front, the ratio of gross NPAs (GNPA) to gross advances stood at 12.99% as on 31 December 2020 as against 13.43% as on 30 September 2020 and 16.3% as on 31 December 2019. The ratio of net NPAs (NNPA) to net advances stood at 4.03% as on 31 December 2020 as against 4.75% as on 30 September 2020 and 7.18% as on 31 December 2019. On proforma basis, GNPA stood at 14.71% and NNPA stood at 5.65%.

The bank’s provisions and contingencies soared 31% to Rs 5432.60 crore in Q3 FY21 from Rs 4164.04 crore in Q3 FY20. The bank said it is holding aggregate provision of Rs 3,041.16 crore as on 31 December 2020. This includes Rs 446.04 crore on account of COVID-19 Regulatory Package Provision, Rs 75.13 crore on account of OTR done under Resolution Framework for Covid-19 related stress and Rs 2,519.99 crore (including Rs 430.63 crore for derecognized interest) on account of stay on fresh NPA classification by order of Supreme Court. PNB reported a provision coverage ratio of 85.16% for the quarter ended December 2020.

Mrs. Bectors Food Specialities shed 0.17% to Rs 410.25. The company reported an 85.4% jump in consolidated net profit to Rs 20.67 crore on 11.1% rise in net sales to Rs 225.75 crore in Q3 FY21 over Q3 FY20. EBITDA margin improved to 17.6% in Q3 FY21 from 14% in Q3 FY20.

Narayana Hrudayalaya fell 2.98% to Rs 493.55. On a consolidated basis, the company’s net profit jumped 30% to Rs 40.84 crore on a 4.4% decline in net sales at Rs 750.36 crore in Q3 December 2020 over Q3 December 2019. As on 31 December 2020, the consolidated net debt was Rs 532.60 crore representing a net debt to equity ratio of 0.51 (out of which, debt worth $42.7 million is foreign currency denominated).

Pfizer lost 0.41% to Rs 4497.90. The drug company’s net profit rose 1.6% to Rs 141.24 crore in Q3 FY21 from Rs 139.06 crore recorded in Q3 FY20. The drug major’s net sales grew by 10.3% to Rs 593.49 crore in Q3 FY21 from Rs 538.18 crore in Q3 FY20.

Gulf Oil Lubricants India (GOLIL) advanced 2.25% to Rs 711.70. The company’s net profit jumped 14.6% to Rs 64 crore on 14.2% increase in net sales at Rs 481.86 crore in Q3 December 2020 over Q3 December 2019.

On the back of significantly improved demand conditions across segments, both B2C and B2B and aided by improved OEM demands, Gulf Oil Lubricants India has delivered nearly 16% volume growth Y-o-Y (year-on-year) during Q3. Profit after tax (PAT) has grown inspite of rising pressure from input costs side but helped with continuing cost initiatives and margin management strategies initiated, the firm stated.

Glaxosmithkline Pharmaceuticals gained 2.14% to Rs 1462.10. The company reported consolidated net profit at Rs 156.51 crore in Q3 December 2020 compared with net loss of Rs 661.16 crore in Q3 December 2019. On a consolidated basis, net sales jumped 10.1% to Rs 857.20 crore in Q3 FY21 from Rs 778.59 crore in Q3 FY20.

Fortis Healthcare added 0.54% to Rs 168.30. The company’s consolidated net profit stood at Rs 53.88 crore in Q3 December 2020 as against net loss of Rs 69.32 crore in Q3 December 2019. On a consolidated basis, net sales rose 0.7% to Rs 1,177.03 crore in Q3 FY21 from Rs 1,168.92 crore in Q3 FY20. EBITDA grew 23.9% to Rs 200.60 crore in Q3 FY21 over Q3 FY20.

Stocks in Spotlight:

Bharat Petroleum Corporation (BPCL) advanced 1.20% to Rs 420.05, ahead of Q3 earnings today.

Hindustan Aeronautics (HAL) added 2% to Rs 1033.30. The company agreed to expand its partnership with Rolls Royce in India for collaboration in two significant areas. The two companies have agreed to expand their partnership in India for collaboration in two key areas: expanding the supply chain for both Civil and Defence Aerospace and establishing an authorized maintenance centre for Adour Mk871 engines to support Rolls-Royce’s global customers.

Separately, HAL informed that the company and Safran Aircraft Engines, France signed an MoU to explore opportunities for strategic business cooperation that leverage the complementary talents and capabilities of the both parties and support development of a robust ecosystem for aero-engines in India, consistent with the goals of the Government of India’s Make in India initiative.

BEML rose 3.78% to Rs 978. The state-owned firm on Friday, 5 February 2021, announced signing MoUs with eleven entities to explore and enhance the business in defence & aerospace sector.

Adani Enterprises jumped 5.52% to Rs 628.45. The company said its arm has completed acquisition of 23.5% equity stake in Mumbai International Airport (MIAL) from ACSA Global and Bid Services Division (Mauritius) for Rs 1,685.25 crore.

Global Markets:

Shares in Europe and Asia advanced on Monday, although earnings and coronavirus developments remain in focus.

In US, the Nasdaq and S&P 500 hit all-time highs on Friday on stronger-than-expected corporate results in the fourth quarter.

The Senate and House each passed a budget resolution on Friday, starting the reconciliation process that would allow President Joe Biden’s $1.9 trillion rescue package to get through the Democratic-held Senate with a simple majority. The package includes $1,400 stimulus checks, supplemental jobless benefits and COVID-19 vaccine and testing funds.

Meanwhile, U.S. President Joe Biden said his administration was prepared for “extreme competition” with China, though his approach would be different than his predecessor.

Treasury Secretary Yellen said that the U.S. can return to full employment in 2022 if it enacts a robust enough relief package. Investors are taking comfort from the continued rollout of vaccines and data suggesting a declining trend in infections in countries like the US and Germany.

Investment & trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.

CapitalStars Investment Adviser: SEBI Registration Number: INA000001647.

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