Brookfield India REIT IPO, Top Q3FY21 Results, and Buzzing Stocks Today

Fri, 5 Feb Pre-Open

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Indian share markets scaled fresh lifetime highs and ended yesterday's session higher.

Benchmark indices extended their winning streak as healthy December quarter results, consistent FII buying, and hopes of status-quo stance in the Reserve Bank of India's February monetary policy, due today, kept optimism intact.

At the closing bell yesterday, the BSE Sensex stood higher by 359 points (up 0.7%).

Meanwhile, the NSE Nifty closed higher by 106 points (up 0.7%).

ITC, SBI and Bajaj Finance were among the top gainers.

Shares of Bajaj Finance and Shree Cement hit their 52-week highs.

The BSE Mid Cap index ended up by 1.5%. The BSE Small Cap index ended up by 1.2%.

Sectoral indices ended on a mixed note. Gains were largely seen in the power sector, banking sector and FMCG sector.

Telecom stocks and consumer durable stocks, on the other hand, witnessed selling pressure.

The Nifty Bank index clocked new closing high of 35,345, up 586 points or 1.7%. The index hit record high of 35,413 yesterday.

Gold prices for the latest contract on MCX were trading down by 0.8% at Rs 47,340 per 10 grams at the time of closing stock market hours yesterday.

Top Stocks in Focus Today

Among the buzzing stocks today will be Apollo Tyres.

Apollo Tyres reported a more-than-double increase in its consolidated net profit to Rs 4.4 billion in December quarter (Q3FY21) on the back of healthy operational performance and other income.

The auto tyres and rubber products company had clocked in a net profit of Rs 1.7 billion in the year ago period and had posted a net loss of Rs 2.4 billion in last quarter.

Total consolidated operating income rose 17.1% year-on-year (YoY) to Rs 51 billion. The company attributed the robust topline performance to strong demand recovery across segments in India, which was driven by strong growth in both replacement and OEM segments.

Consolidated margins were at a decade high at 19.2%, up 297 basis points (bps) quarter-on-quarter (QoQ) and 710 bps YoY. The margin performance was helped by recovery in topline, subdued raw material cost, and control over costs.

Bajaj Consumer Care share price will also be in focus today as the company's board has recommended an interim dividend at the rate of 600% which is Rs 6 per share of Rs 1 each of the company. The board has fixed February 12, as the record date for the purpose.

In its latest quarterly results, the company reported a 17% year-on-year (YoY) growth in consolidated net profit at Rs 5.7 billion in the December quarter (Q3FY21) on the back of healthy revenue. The personal products company posted 17% YoY jump in sales at Rs 2.5 billion.

The company's earnings before interest, taxes, depreciation, and amortisation (EBITDA) margins improved to 25.9% in Q3FY21 from 24.9% Q3FY20. The company said the market share recovery in Q2FY21 continued in Q3FY21 and has been consistently higher than last year across Q3FY20 for the company. Both urban and rural market share has seen strong share growth in Q3FY21.

SBI Q3FY21 Results: Lender Sees 6.9% YoY Drop in Standalone Net Profit

India's biggest public sector bank (PSB), State Bank of India, reported a 6.9% year-on-year (YoY) drop in standalone net profit at Rs 51.96 billion for quarter ending December 2020. The fall was largely driven by marginal increase in provisions against bad loans.

In the year-ago period, the lender had clocked a net profit of Rs 55.8 billion.

The lender reported operating profit of Rs 173.3 billion for the third quarter of this fiscal, as against Rs 182.2 billion in Q3FY20, translating to a 4.8% decline.

Net interest income (NII) was up 3.7% YoY at Rs 288.2 billion during the quarter as against Rs 277.8 billion in Q3FY20.

SBI's total gross advances increased 6.7% to Rs 24.56 trillion. Sequentially, the loan book grew 3%.

Meanwhile, deposits jumped 13.6% YoY to Rs 35.35 trillion.

IPO Buzz: Brookfield India REIT IPO Sees Strong Retail Investor Interest

In news from the IPO space...

The initial public offer (IPO) of Brookfield India Real Estate Trust was subscribed 36% at the time of closing stock market hours yesterday - the IPO's second day of bidding. The demand was driven largely by corporate and individual investors.

The issue received applications for 27.8 million units against the IPO size of 76.2 million units.

The portion set aside for institutional investor was subscribed 20.5%, and that of other investors including individuals witnessed subscription of 56.63%.

As per reports, the low turnout by institutional investors is in line with usual trends, as they typically bid for any IPO on the last day.

The Brookfield REIT issue - which is the third REIT to be launched in India - will close for subscription today.

The REIT includes five properties in Mumbai, Delhi-NCR and Kolkata that yielded Rs 4,551.4 million in the first six months of this fiscal year.

Before the IPO opened for public bidding, Brookfield REIT raised Rs 17.1 billion from anchor investors.

Sources said the anchor investment round saw participation from financial institutions such as HDFC AMC, SBI Life Insurance, Tata AIG, HDFC Life, Kotak Mahindra AMC and Bajaj Holdings.

REITs act an attractive dividend play as at least 90% of the net distributable cash flows shall be declared and paid once every quarter of a financial year by their manager.

So far, domestic markets have seen Embassy Office Parks REIT in 2019 and Mindspace Business Parks REIT in 2020, both trading at a premium over their issue price.

How this IPO sails through remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

Speaking of IPOs, in her latest video, Co-head of Research at Equitymaster, Tanushree Banerjee talks about the eerie similarities between the Game Stop mania and India's popular paint IPO.

What are the similarities and why should they concern you? Tune in to the video to find out:

Government Proposes Delicensing of Power Distribution Sector

In news from the power sector, as per an article in a leading financial daily, the government is proposing to delicense the power distribution sector allowing competition in the supply of last mile electricity connectivity to consumers.

Official sources said that the Power Ministry would soon move a draft bill proposing amendments in the Electricity Act that would remove the wording 'distribution licensee'.

Here's an excerpt from the article:

• What this will do is to maintain status quo of existing distribution entities but will now allow entry of other participants in a distribution area if it is able to manage infrastructure for supplying electricity to consumers.

In her Budget 2021-22 speech, Finance Minister Nirmala Sitharaman had said that a framework will be put in place to give consumers alternatives to choose from among more than one distribution company. She had said that there is a need to provide choice to consumers by promoting competition and breaking monopolies existing in power distribution sector.

As per the plan, the delicensing will provide for infrastructure sharing by existing power companies. This will give an option to monetise assets by existing players while allowing new players to strengthen infrastructure and start supplying electricity to consumers on demand.

With regard to initiation of direct benefit transfer (DBT) scheme in the power sector, sources said that the reform measure could be undertaken at the state level while the Electricity Act will wait for competition to settle into the distribution sector first before proposing the changes.

We will keep you updated on the latest developments from this space. Stay tuned.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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