IndiGo March Quarter Results, Falling Gold Prices, and Top Cues in Focus Today

Thu, 4 Jun Pre-Open

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Indian share markets ended on a strong note yesterday.

Extending gains for the sixth consecutive day, Indian stock markets edged higher on the back of high buying seen in banking and auto sector.

At the closing bell yesterday, the BSE Sensex stood higher by 284 points (up 0.8%).

Meanwhile, the NSE Nifty closed higher by 82 points (up 0.8%).

The BSE Mid Cap index ended up by 0.3%.

While the BSE Small Cap index ended up by 1.2%.

On the sectoral front, gains were largely seen in the banking sector and realty sector.

Telecom stocks and Power stocks on the other hand witnessed selling pressure.

Speaking of the current stock market scenario, note that the coronavirus impact has shaken markets worldwide. After all, 2020 has already seen one of the worst market crashes in history.

Will the 2020 Market Crash Be Worse than 2009?

Naturally, there is an atmosphere of fear all round.

Is it time to sell stocks now? Will the correction get worse?

History has shown that after years like the one we had just now, the next 3 years are good for the markets. In fact, these corrections are the rare times when you find businesses with solid fundamentals at reasonable valuations.

If you can find good businesses that can survive the current crisis, you will do well in the long run.

In his latest video, Rahul Shah, co-head of research at Equitymaster, talks about the stocks that can make you incredibly rich in 2020 and beyond.

He goes back to the year 2013 and come up with 3 groups of 3 companies each, with each group having businesses of a certain quality. He then shares the group that ends up giving much better returns and why so.

Tune in to find out more...

Top Stocks in Focus Today

Tata Motors will be in focus today. The company has been witnessing buying interest as it has resumed operations across all its manufacturing plants in the country with Jamshedpur facility also getting approval on May 27, 2020.

Reportedly, around 59% of company's passenger vehicle showrooms, covering 69% of the retail market, have commenced operations.

To further shore up the liquidity, the company has issued commercial papers of Rs 35 billion and also raised Rs 10 billion through non-convertible debentures (NCDs).

Vodafone Idea share price will also be in focus today. Stock of the company surged over 10% yesterday on the back of heavy volumes. Earlier this week, shares of the telecom operator soared 20% to hit a six-month high of Rs 7.87 on the BSE.

Note that shares of the company have rallied sharply in the past few days after the company said it was constantly evaluating various opportunities but there was no proposal before the board of the firm as yet.

The clarification came after reports surfaced that Alphabet Inc's Google was eyeing about 5% stake in the telecom company.

On Friday last week, Vodafone Idea said, "as part of the corporate strategy, the company constantly evaluates various opportunities for enhancing the stakeholders' value. As and when such proposals are considered by the board of directors of the company warranting disclosures, the company shall comply with the disclosure obligations."

March Quarter Results

Automobile components major Motherson Sumi reported a 68.4% decline in its consolidated net profit at Rs 1,356.6 million for the fourth quarter ended March 31, mainly affected by the coronavirus pandemic.

The company had posted a consolidated net profit of Rs 4,293.1 million in the corresponding period of the previous financial year.

The company's total revenue from operations in Q4FY20 stood at Rs 151.6 billion as against Rs 171.7 billion a year ago.

For the financial year 2019-20, the company's consolidated net profit stood at Rs 12.9 billion. It was Rs 21 billion in 2018-19.

The company said that the overall performance was affected by OEMs' (original equipment manufacturers) plant closures due to the coronavirus pandemic, especially in China and in parts of Europe.

The company's Chairman Vivek Chaand Sehgal said, "our consolidated revenues for this fiscal year have remained stable. Considering that global automotive sales have declined in the same period and that the coronavirus pandemic was already impacting China and parts of Europe in the fourth quarter, this is a strong performance under the circumstances."

Britannia Industries reported largely in-line numbers for the fourth quarter (Q4FY20) of the last financial year, despite the lockdown hitting revenue and profit growth by 7-10%.

The company stated that after the initial hiccups, the firm coped up well and witnessed 20% rise in revenues in April, and 28% in May, both year-on-year (YoY) aided by several measures.

Profit before tax (PBT) witnessed a marginal rise of 1.6% YoY. However, consolidated net profit rose 26.5% YoY helped by a lower tax outgo, with the firm migrating to the new tax regime.

Sequentially, it remained flat during this period.

As regards the impact of the pandemic on operations, Britannia stated the firm swiftly adopted to the changing landscape.

For the entire FY20, consolidated net profit rose 21% Consolidated revenues increased 5.4% in the last financial year.

Gold Sees Selling Pressure

Moving on to news from the commodity space, gold was witnessing selling pressure yesterday.

Losses were seen tracking weakness in international spot prices that fell on reducing safe-haven appeal amid signs of a recovery in business activity as governments restart their economies.

On the MCX, August gold futures fell 0.20% to Rs 46,470 per 10 grams yesterday.

In the international market, gold fell for a second straight session on Wednesday as stocks jumped on hopes for further stimulus and optimism about an economic recovery, thereby dampening demand for the safe-haven metal.

Strong Indian rupee against the US dollar also pressurized the yellow metal prices.

Speaking of gold, note that the interest in gold has gone up ever since stock markets crashed in March.

Gold prices in the international markets are getting close to its all-time high.

Last month, gold prices hit a new high of Rs 47,980 tracking rally in global rates amid increasing US-China tensions and expectations of further stimulus from central banks. With this, gold rallied to its highest since October 2012, driven by economic damage concerns, US-China tensions, and massive monetary and fiscal stimulus.

In one of his videos, Apurva Sheth, lead chartist at Equitymaster, compares gold and bitcoin. He explains, which is the better asset in this difficult economic situation.

Tune in to know more: Gold or Bitcoin: What Will You Go With?

IndiGo Reports Rs 8.7 Billion Loss in March Quarter

IndiGo reported a loss of Rs 8.7 billion in the January-March quarter versus a profit of Rs 5.9 billion in same period last fiscal.

Loss for the full year was Rs 2.3 billion compared to a net profit of Rs 1.5 billion the previous year.

Revenue for the March ending quarter grew just 4.5% to Rs 86.3 billion from Rs 82.6 billion a year earlier.

In a post-earnings conference call with analysts, CEO Rono Dutta said the airline made an operating profit in the month of January and February but a loss of Rs 3.8 billion for the month of March. The government suspended all airline operations on March 24 as part of a nationwide lockdown to prevent the spread of the Coronavirus.

Flights resumed from May 25 and airlines have on average been able to fill barely half their flights.

Dutta and the airline's chief financial officer Aditya Pande said the airline is taking various cash conservation and cost cutting measures to survive. They said salaries had been cut between 5%-25% for most staff and bonuses were deferred and leave without pay schemes implemented for May-July.

Apart from that, vendor contracts are being reworked. The company has also got to defer 50% of supplementary rentals for this year as those rentals are linked to how much aircraft fly and many will remain grounded for many months.

IndiGo incurred Rs 58.6 billion on supplementary rentals aircraft repair and maintenance for FY20, compared to Rs 36.8 billion a year earlier.

Pande said all of the above measures would help IndiGo save cash of Rs 30 to 40 billion over nine months.

We will keep you updated on how these measures help the company in the coming months. Stay tuned.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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

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