Samvat 2076, Q2FY20 Results, and Top Cues in Focus Today

Tue, 29 Oct Pre-Open

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Samvat 2076 Begins on a Positive Note

The Samvat 2076 began on a positive note for Indian share markets as the auspicious Muhurat trading session on Sunday ended on a strong note.

While the BSE Sensex closed higher by 192 points (up 0.5%), the NSE Nifty ended higher by 43 points (up 0.4%).

Stocks from the auto sector, healthcare sector and IT sector were the most in demand.

The BSE Mid Cap Index and the BSE Small Cap Index also gathered steam with both indices ending higher by 0.7% and 1.2%, respectively.

Stocks such as Tata Motors share price, Yes Bank share price, Infosys share price and Mahindra & Mahindra share price were the top gainers in today's trading session, while Maruti Suzuki share price, Bharti Airtel share price and TCS share price were the top losers.

From the Results Corner...

ICICI Bank share price was in focus today as the private sector lender reported a jump of 247% in its profit before tax (PBT) for the July-September 2019 quarter (Q2FY20). The bank posted Rs 43.6 billion of PBT, compared to Rs 12.5 billion in the year-ago quarter.

Net profit, however, dipped by 27.9% year-on-year (YoY) to Rs 6.6 billion.

The bank said that excluding the impact of a one-time additional charge of Rs 29.2 billion on account of the re-measurement of the accumulated deferred tax (DTA), net profit would have been Rs 35.7 billion on a standalone basis.

The bank's net interest margin (NIM) improved to 3.64% during the quarter under review in Q2FY20 from 3.33% a year ago.

Net interest income (NII) increased by 26% to Rs 80.6 billion from Rs 64.2 billion in the year-ago quarter.

Deposits grew by 25% to Rs 6.96 trillion at the end of September 2019 from Rs 5.59 trillion a year ago. The low-cost current account savings account (CASA) deposits grew at 14.6% and term deposits by 34.9% on a YoY basis.

Its total advances increased by 13% YoY to Rs 6.13 trillion at end of September 2019 from Rs 5.44 trillion at the end of September 2018. The domestic loan growth at 16% YoY was driven by retail.

Retail loans grew by 22% YoY, while SME loan book grew by 29.9%.

The bank's asset quality improved with the Gross NPA ratio decreasing from 8.54% in Q2FY19 to 6.37% at end of Q2FY20.

The net non-performing asset (NPA) ratio decreased from 3.65% in September 2018 to 1.6% in September 2019.

Provisions, excluding taxes, declined by 37% to Rs 25.1 billion in Q2FY20 from Rs 39.9 billion in Q2FY19.

Tata Motors posted a consolidated loss of Rs 2.2 billion for the quarter ended September 30 against a loss of Rs 10.5 billion in the same period last year.

Consolidated revenue of the company declined 9.15% to Rs 647.6 billion during the quarter under review against Rs 712.9 billion last year.

Speaking of quarterly results and corporate profits, economic growth (GDP) and corporate profit growth hardly go hand in hand.

Over the past few years, the share of corporate profits to GDP has steadily declined.

State Bank of India (SBI) reported a standalone net profit of Rs 30.1 billion for the September quarter (Q2FY20), up 218% YoY. The public sector bank had logged a profit of Rs 9.5 billion in Q2FY19.

The bank's consolidated profit came at Rs 34.8 billion on sale of partial investments in subsidiary SBI Life Insurance Company.

The bank reported a net interest income (NII) of Rs 246 billion, up 17.7% YoY from Rs 209.1 billion logged in Q2FY19.

SBI's operating profit zoomed 31% to Rs 182 billion from Rs 139.1 billion. Domestic credit growth was at 8.43% at the end of September quarter mainly driven by retail-personal advances (up 18.9% YoY).

The public lender's asset quality also improved with the gross non-performing assets (GNPA) coming in at Rs 1.61 lakh crore, down nearly 5% QoQ, from Rs 1.68 lakh crore reported in Q1FY20.

GNPA ratio stood at 7.19% for the quarter under review, down 276 bps YoY and 34 bps sequentially.

Net NPAs came in at Rs 599.4 billion for Q2FY20. The same was Rs 656.2 billion in Q1FY20, and Rs 948.1 billion in the corresponding quarter of the previous fiscal.

Provision Coverage Ratio (PCR) significantly improved to 81.2% as on September 30, 2019 from 70.7% last year. Sequentially, PCR improved by 189 bps.

Fresh slippages halved to Rs 88 billion from Rs 160 billion on a quarterly basis. For the quarter ended September 2019, the bank made provisions of Rs 9.9 billion.

Supreme Court and Vodafone-Idea's Appeal

Vodafone Idea share price will be in focus today as after the Supreme Court (SC) on Thursday rejected telecom companies' appeal against the government's definition of Adjusted Gross Revenue (AGR). The apex court will later decide on the timeframe for the operators to pay.

Shares of the company hit new all-time lows of Rs 3.66 on Friday, plunging 35% in two trading days last week on back of the above news.

The Cellular Operators Association of India (COAI) had in 2005 filed the first case, challenging the government's definition on calculation of AGR.

It had contended that the components of AGR, which the government was trying to include, were contrary to the Telegraph Act and the recommendations made by the Telecom Regulatory Authority of India (TRAI).

Reports state that the total dues to be paid to the government amount to Rs 926.4 billion.

After the Supreme Court's decision, Vodafone Idea released a statement saying, "clearly this judgment has significantly damaging implications for India's telecom industry, which is already reeling under huge financial stress and is left with only four operators."

According to rating agency CARE Ratings, the decision comes as a major step back to the incumbent telcos as it implies higher payments when the industry is facing price-war and intense competition.

Reports also state that the demand/penalty imposed on the telecom industry will prove to be catastrophic as the industry is in deep financial distress.

Operators like Reliance Communications, Aircel, Telenor and Tata Teleservices have already closed down or are in Insolvency and Bankruptcy Code (IBC).

How this all pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

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