Asian Paints Quarterly Results, Bandhan Bank's Acquisition, and Buzzing Stocks Today

Fri, 22 Oct Pre-Open

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Indian share markets ended on a negative note yesterday.

At the closing bell yesterday, the BSE Sensex stood lower by 336 points (down 0.6%).

Meanwhile, the NSE Nifty closed lower by 89 points (down 0.5%).

Kotak Mahindra Bank and Tata Motors were among the top gainers.

Asian Paints and Hindalco, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended down by 0.4% and 0.7%, respectively.

Sectoral indices ended on a negative note with stocks in the IT sector, metal sector and telecom sector witnessing most of the selling pressure.

Banking and finance stocks, on the other hand, witnessed buying interest.

Shares of Union Bank and Rail Vikas Nigam hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading up by 0.2% at Rs 47,586 per 10 grams at the time of closing stock market hours yesterday.

Speaking of the stock markets, India's #1 trader, Vijay Bhambwani, talks about India's fuel crisis and why it may ease off soon, in his latest video for Fast Profits Daily.

Tune in to the video below to find out more:

Top Stocks in Focus Today

Among the buzzing stocks today will be Vodafone Idea.

Vodafone Idea on Wednesday said its board has approved exercise of option of deferment of company's spectrum auction instalments for a period of four years.

The telecom operator informed this in an exchange filing.

Vodafone also said that other options offered in the said notification by DoT will be considered by the Board of Directors within the stipulated timeframe.

In line with the bold reforms announced for the telecom sector, the government had recently written to telcos, including Bharti Airtel, Vodafone Idea and Reliance Jio, asking them to convey by 29 October if they would be opting for four-year dues moratorium.

It had also given 90-day time to the operators to indicate if they want to opt for converting the interest amount pertaining to the moratorium period into equity.

Along with this option, the audited financial statements of the immediately preceding financial year (2020-21) may be submitted.

The government has offered the option to defer payment of the spectrum auction instalments due up to four years, with immediate effect, excluding the instalments due for spectrum auction 2021.

Last month, Bharti Airtel Chairman Sunil Mittal said the company will opt for payment moratorium offered in the telecom relief package and redirect the cashflow to aggressively build networks.

Result Corner

Asian Paints share price will be in focus today.

Asian Paints shares fell nearly 6% yesterday after the company reported a 28% year on year (YoY) decline in consolidated net profit for the quarter ended September to Rs 6 bn, which was sharply below analysts' estimate.

The paint manufacturer's consolidated revenues in the quarter grew by 32.6% YoY to Rs 71 bn.

The decline in the company's bottomline was largely due to a sharp spike in expenses during the quarter. Asian Paints' total expenses jumped 49% YoY to Rs 64.2 bn led by a 73% rise in the cost of raw materials.

The decline in bottomline came despite a 25% YoY fall in tax expenses and 67% jump in other income during the reported quarter.

Amit Syngle, MD and CEO at Asian Paints in a press statement said,

• Steep inflation seen in raw material prices, since the beginning of this calendar year, has been phenomenal and has impacted gross margins across all businesses in the quarter.
  
  The company will look at further price increases going ahead to mitigate the impact of 'this persistently high inflation'.

He also said the company is confident of turning around the situation in the coming quarter.

The company's board also approved an interim dividend of Rs 3.65 per share.

JSW Steel

JSW steel reported its highest-ever consolidated net profit after tax (PAT) at Rs 71.8 bn for the quarter ended 30 September 2021. This is an increase of 350% over last year period's profit of Rs 16 bn.

The company has also clocked its highest-ever quarterly revenue from operations at Rs 325 bn in the reporting period. It was Rs 192.6 bn in the same period of last year.

During the quarter, JSW Steel operated at a healthy capacity utilization of 91% across its steel-making operations. Saleable Steel sales for the quarter stood at 3.83 million tonnes (Indian operations excluding JVs), an increase of 10% quarter on quarter (QoQ).

The company registered its highest-ever consolidated quarterly operating earnings before interest, taxes, depreciation, and amortization (EBITDA) of Rs 104.2 bn, with an EBITDA margin of 32%.

JSW Steel said the standalone EBITDA margin was lower when compared with previous June quarter, mainly due to elevated raw material prices of iron ore, coking coal and other key inputs like power, natural gas and ferroalloys.

IDBI Bank

IDBI Bank on Thursday reported a 75% jump in net profit to Rs 5.7 bn for the second quarter ended 30 September 2021.

The LIC-controlled bank had earned a net profit of Rs 3.2 bn in the same period of the last fiscal.

However, the total income fell 10% to Rs 50 bn during the quarter, compared to Rs 55.7 bn in the year-ago period, the private sector bank said in a statement.

The net interest income grew 9% to Rs 18.5 bn during the reported quarter against Rs 17 bn a year ago.

The lender's stressed assets ratio also improved, with gross non-performing assets (NPAs) declining to 20.9% of gross loans as of 30 September 2021, against 25.1% a year ago. Net NPAs improved to 1.6% from 2.7%.

Provisions for bad loans and contingencies rose to Rs 4.3 bn for the September quarter from Rs 3.9 bn in the year-ago period.

As of 30 September 2021, the bank had Covid-19 related provisions of Rs 8.6 bn (other than provisions held for restructuring under Covid-19 norms). The provision made by the bank is more than minimum required as per the RBI guidelines.

Bandhan Bank to Acquire Controlling Stake in Future Generali Insurance

Bandhan Financial Holdings has offered to buy out Future group's stake and acquire a controlling interest in Future Generali India Life Insurance Company.

This company was formed by a three-way joint venture between the Future Group, Industrial Investment Trust (IIT) and Generali, an Italian insurance and asset management giant.

Bandhan Financial Holdings is a holding company of Bandhan Bank.

It is willing to pay a control premium to buy Future Group's 34% and another 17% stake in the unlisted company. Generali owns 49% in the JV while IIT holds 17%.

According to the agreement between the shareholders of the company, Generali will have a say in any such transaction.

Bandhan has made it clear that it would go for the deal only if it gets a majority vote. Generali also has the option to raise its stake with the Indian law now permitting an overseas partner to hold up to 74% in local insurance ventures.

As per reports, if this deal goes through, it would be a win-win for the Bandhan Group, which has cash for big-ticket investment and a distribution network to sell third-party products.

In August 2020, Bandhan Financial Holdings pared its stake in Bandhan Bank to 40% from 61% for a sum of Rs 106 bn. The holding company is expected to use part of the sum it received for the proposed insurance foray.

Last year, Bandhan had also shown interest in getting a controlling stake in Reliance Nippon Life Insurance.

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

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