ONGC & IOC's Big Capex Plans, Jubilant FoodWorks' Decent Q3 Show, and Buzzing Stocks Today

Thu, 3 Feb Pre-Open

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Indian share markets ended on a strong note yesterday.

Benchmark indices smoothly extended gains during the day amid buoyed market sentiment and budget euphoria.

At the closing bell yesterday, the BSE Sensex stood higher by 696 points (up 1.2%).

Meanwhile, the NSE Nifty closed higher by 203 points (up 1.2%).

IndusInd Bank and Bajaj Finserv were among the top gainers.

Tech Mahindra and UltraTech Cement, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended up by 1.1% and 1.5%, respectively.

Sectoral indices ended on a positive note with stocks in the banking sector, finance sector and consumer durables sector witnessing buying interest.

Shares of Sun Pharma and AU Small Finance Bank hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading down by 0.3% at Rs 47,810 per 10 grams at the time of closing stock market hours yesterday.

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Top Stocks in Focus Today

Among the buzzing stocks today will be HDFC.

Mortgage lender HDFC reported an 11% rise in its standalone net profit for the third quarter ended December 2021 at Rs 32.6 bn compared to Rs 29.3 bn in the same quarter last year.

Its total revenue from operations rose to Rs 117.8 bn from Rs 117.1 bn year on year (YoY). The net interest income (NII) for the quarter ended 31 December 2021 stood at Rs 42.8 bn compared to Rs 40.1 bn in the previous year. Its Net Interest Margin (NIM) came at 3.6%.

As at 31 December 2021, the assets under management (AUM) stood at Rs 6.2 tn against Rs 5.5 tn in the previous year, and individual loans comprise 79% of the AUM. On an AUM basis, the growth in the individual loan book was 16% and growth in the total AUM was 12%, the company said.

In December 2021, the corporation recorded its second highest monthly individual disbursements ever. This is despite the fact that the previous year entailed concessional stamp duty benefits in certain states which was not there in the current year.

The demand for home loans and pipeline of loan applications continues to remain strong. Growth in home loans was seen in both, the affordable housing segment as well as in high end properties. The increasing sales momentum and new project launches augurs well for the housing sector, it added.

Jubilant FoodWorks share price will also be in focus today.

Food services company Jubilant FoodWorks on Wednesday reported a 9.8% YoY jump in its December quarter profit to Rs 1.4 bn, falling short of the Street's estimates.

Standalone revenue from operations grew 13% YoY to touch Rs 11.9 bn during the quarter under review, the company that operates the Domino's Pizza franchise in India said in an update to the stock exchanges.

The company's board approved a stock split of 1:5 to increase the liquidity of equity shares and encourage participation of small investors by making it more affordable, it said in a filing.

Growth was driven by improved recovery in the dine-in channel, well supported by a continued strong momentum in delivery channel. When compared to the pre-covid period of the financial year 2020, Domino's system sales recovered 112.9%, the company said.

This, it said, can be attributed to recovery in delivery and takeaway channels by 128% and 148.2%, respectively.

The company reported a 13.9% jump in quarterly earnings before interest, taxes, depreciation, and amortization (EBITDA) at Rs 317.4 m. This was despite consumer goods companies reporting significant inflationary headwinds during the quarter. Gross margins contracted 60 bps sequentially.

The company added 75 new Domino's stores in the December quarter. This is the highest ever number of new store openings by any franchisee in any quarter in any market. The company forayed into 17 new cities during the quarter, it now reaches a total of 322 cities across India, it said.

Tata Teleservices Cancels Plan to Allocate Equity to Government

Tata Teleservices on Tuesday said it has decided not to opt for conversion of interest related to AGR dues into equity, as the interest amount eligible for such conversion has turned out to be far lesser than the company's own calculations.

Initially, the company had decided to go for conversion of interest on AGR dues into equity and had also communicated its decision to the telecom department.

In response, the telecom department told the company that the NPV (net present value) of the interest, which is eligible for conversion into equity, is only Rs 1.95 bn as against the company's calculation of Rs 8.5 bn, Tata Teleservices said in a regulatory filing.

The company added that it is "not desirous of opting for conversion of interest into equity".

Last month, Tata Teleservices had said it will opt for conversion of the interest amount on AGR dues into equity and post-conversion, the government's holding in the company is expected to be around 9.5%.

Note that the telecom sector got a big relief when the government last year approved a blockbuster relief package that included a four-year break for companies from paying statutory dues, permission to share scarce airwaves, change in the definition of revenue on which levies are paid and 100% foreign investment through the automatic route.

The government had also given telecom companies the option to convert the interest amount pertaining to the moratorium period into equity.

ONGC, IOC, Others to Spend Rs 1.1 tn Capex in FY23

State-owned oil firms such as ONGC and IOC will invest over Rs 1.1 tn in the next fiscal year starting April as they supplement the government's massive spending programme to spur economic growth.

Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation (IOC), GAIL India, Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Oil India (OIL) will together make a 7.4% higher capital expenditure in the fiscal 2022-23.

The capex spending of Rs 1.1 tn in 2022-23 compares with a revised estimate of Rs 1.04 tn for the current fiscal year that ends in March, according to Union budget documents.

In the Union Budget for 2022-23, the government continued on its path of supply-side economics and plans to boost investments, thereby increasing jobs and consumption instead of directly announcing any monetary relief to the lower end of the population.

None of the oil PSU gets any subsidy support from the government. The government has provided a small Rs 40 bn subsidy on domestic cooking gas (LPG) in the next fiscal. The subsidy outgo in the current fiscal has been put at Rs 34 bn, lower than Rs 124.8 bn budgeted at the beginning of the fiscal, the documents showed.

ONGC has planned a capital expenditure (capex) of Rs 299.5 bn in the fiscal 2023, while IOC has an outlay of Rs 285.5 bn for the next year.

GAIL will invest Rs 75 bn in the expansion of pipeline grid and petrochemical plants.

On the other hand, privatization-bound BPCL's Rs 100 bn planned investment includes Rs 81.2 bn in refinery and fuel marketing and another Rs 5 bn in petrochemicals. This compares with spending of Rs 105 bn in the current fiscal.

HPCL has a total outlay of Rs 145 bn for the next fiscal.

How this pans out remains to be seen. Meanwhile, stay tuned for more updates from this space.

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