BPCL March Quarter Results, Privatisation of State-Run Banks, and Top Cues in Focus Today

Fri, 5 Jun Pre-Open

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Indian share markets ended their trading session marginally lower yesterday.

Benchmark indices snapped their 6-day winning streak yesterday and edged lower tracking mixed global cues.

Sectoral indices ended on a mixed note with stocks in the banking sector and finance sector witnessing most of the selling pressure.

Telecom stocks and IT stocks on the other hand witnessed buying interest.

At the closing bell yesterday, the BSE Sensex slipped below the 34,000-mark and ended down by 129 points.

Meanwhile, the NSE Nifty ended down by 32 points.

The BSE Mid Cap index and the BSE Small Cap index ended on a flat note.

Asian stock markets finished on a mixed note as investors assessed the prospects of economic recovery from the coronavirus pandemic.

European share markets edged lower after a strong rally this week, as investors focused on a European Central Bank meeting where policymakers are expected to provide more aid for the battered euro zone economy.

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.

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...

March Quarter Results: BPCL Posts Loss of Rs 18.2 Billion

Bharat Petroleum Corporation (BPCL) reported a consolidated pre-tax loss of Rs 29.6 billion for the March quarter of FY20.

In the year-ago quarter, the company had reported a profit before tax of Rs 49.6 billion.

On a standalone basis, the pre-tax loss was Rs 20.7 billion compared to a profit of Rs 45.9 billion in Q4FY19.

BPCL's consolidated loss after tax for the period was reported at Rs 18.2 billion against a profit of Rs 31.3 billion a year ago.

BPCL's average gross refining margin (GRM) for the full year of FY20 was at US$ 2.50 per barrel, against US$ 4.58 per barrel in FY19.

In an exchange filing, the company said the whole of oil industry witnessed a significant drop in crude oil prices and general fall in demand for products in the aftermath of Covid-19.

BPCL's crude throughput declined 0.23% sequentially to 8.39 million metric tonnes. Sales volume, too, fell 9% in the same period to 11.24 million metric tonnes.

The company further said that there was a significant fall of 55% in demand for petroleum products during April. Even with relaxations in May, sales were lower by 30%, YoY.

BPCL reported an exceptional loss of Rs 10.8 billion due to crude oil prices sliding drastically during the quarter. The fall in prices meant refiners who bought the existing stock at a higher rate ended up selling it cheaper, resulting in inventory losses for oil retailers.

To know more, you can read BPCL's latest result analysis on our website.

MAS Financial Services reported a 14% drop in consolidated net profit to Rs 357.1 million Q4FY20.

The NBFC major's consolidated profit before tax stood at Rs 480.2 million in Q4FY20, declining 26% from Rs 650 million in Q4FY19.

The company's sales for the quarter rose 10.74% year-on-year (YoY) to Rs 1,824.1 million in Q4FY20. Sales stood at Rs 1,647.2 million in the year-ago period.

Total tax expenses slipped 47.4% to Rs 123 million in the quarter under review.

The company has made special contingent provision of Rs 203.3 million due to Covid-19 for the total on book assets of Rs 33,254.9 million.

The company's assets under management (AUM) rose 11.76% to Rs 59.7 billion in the March quarter.

PSBs Sanction Loans Worth Rs 103 Billion to MSMEs

The Finance Ministry said that public sector banks (PSBs) have disbursed Rs 38,927.8 million in the first two days of the month under the Rs 3-lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector hit hard by the coronavirus-induced lockdown.

Meanwhile, PSBs have sanctioned loans worth Rs 103.6 billion under the 100% ECLGS starting June 1.

Last month, the cabinet had approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25% through ECLGS for the MSME sector.

Under the scheme, 100% guarantee coverage will be provided by National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers, in the form of a guaranteed emergency credit line (GECL) facility.

For this purpose, a corpus of Rs 416 billion was provided by the government spread over the current and the next three financial years.

Note that this scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat package announced by Finance Minister Nirmala Sitharaman last month.

Speaking of the stimulus package, note that investors were disappointed by the measures announced. Indian stock markets had crashed over 3% as the measures announced failed to provide any near-term relief.

However, it is interesting to note that unlike the previous stimulus packages, this one is no longer a tiny fraction of India's GDP.

This is the largest stimulus package ever announced by India.

At about 10.2%, it is among the biggest stimulus packages announced over the past few months by governments all around the world. This is evident in the chart below:

Now, executing the package, keeping India's long-term economic interests in mind, will be the key.

Govt. Starts Discussion to Privatize Some PSBs

In a major move, the central government is said to have begun discussions on privatizing one or more public sector banks (PSBs), acting on a proposal made by the nation's apex think tank body NITI Aayog.

As per the reports, Bank of Maharashtra, Indian Overseas Bank and the Punjab & Sind Bank could be the three candidates which may be considered for the exercise which could mark a watershed moment for the banking sector in India.

It should be noted that all three of the banks have been kept free of any consolidation exercise so far.

Reportedly, the NITI Aayog's proposal is said to have been aimed at avoiding future possibilities of government bailouts of the banks by use of taxpayer money.

The proposal thus advises the government to allow long-term private capital into the banks.

To further strengthen the banking industry of the nation, NITI Aayog has also advised the government to allot banking licenses to select industrial houses with the caveat that they would not be allowed to lend to group firms.

How this pans out going forward remains to be seen.

Meanwhile, I recently reached out to Tanushree Banerjee, who is closely tracking the banking sector in the current scenario. .Here's her view on the sector...

• The Covid-19 lockdown has hit cash flows of both individual borrowers and corporates. This, in turn, will impact their loan repayment capability.
  
  The RBI's repo rate cut came as a temporary lifeline for Indian companies with debt on books. It will offer both companies and retail borrowers some breather. If banks use this phase judiciously, it may save the NPA ratios from worsening significantly.
  
  However, only the banks that have adequate capital and provisioning cushion may be able to tide over the economic crisis. Eventually, another round of consolidation in private sector banks, like the one after 2002, cannot be ruled out.

Tanushree's latest StockSelect recommendation is one such midcap bank.

You can read the entire report here (requires subscription).

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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