Trade Talk | Alex and Hiral highlight key stocks to keep on the radar as we go into trade today.
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00:00 Good morning and thanks so much for tuning in. This is Trade Talk on BQ Prime. My name
00:04 is Alex Mathieu and with me is Hiral Dharia. Morning, Hiral.
00:06 Good morning, Alex.
00:07 And happy Monday to you. Happy Monday to all of you as well. We're a little delayed on
00:11 the Trade Talk today, so let's jump straight into the action. As things stand, the Asian
00:15 markets pointing to a bit of a muted sentiment, but we're still looking at a positive start
00:21 for the Nifty 50, at least according to the gift Nifty. But let's jump straight into the
00:25 action as I pointed out. Reliance Industries, the annual report is out and there's a lot
00:30 to talk about. What, according to you, are the key takeaways here?
00:33 Thanks, Alex. So clearly, I'm just going to take you through a few of them and then we
00:37 have Vikas who will deep dive in the renewable part of it. Now, firstly, what they've said
00:42 is that the gross debt in FY23 has come in at 3.14 lakh crores. A standalone gross debt
00:50 of around 2.16 lakh crores is what they've seen so far. And Reliance Jio has around 36,800
00:56 crores, whereas retail has around 46,000 crores. Moving on, if you see in terms of where Reliance
01:04 Jio goes, what they have indicated is that Jio Financial Services will be listed soon
01:10 and clearly, I mean, RSIL will be renamed as Jio Financial Services. So that's the second
01:18 part of the update. And thirdly, in terms of where Reliance retail is concerned, they've
01:22 said that they've crossed a billion transaction benchmark in terms of FY23 and they will aim
01:29 to actually ramp up the FMCG business going ahead. So these are a few of the key takeaways
01:34 in terms of the headlines, Alex. But let's quickly head across to Vikas to give us a
01:39 lowdown in terms of what's the key announcement from the energy space. Vikas, good morning.
01:45 Can you take us through the key takeaways? Yeah, good morning, Hiral. As you rightly
01:50 said, the Reliance Industries Board has sought approval on a special resolution from the
01:56 shareholders where they are planning to set up integrated renewable energy power projects.
02:03 So this will be required for transmission and distribution, utilities, commercial, residential
02:08 space, mobility and transport, where any kind of renewable power projects, especially including
02:14 wind and solar, as well as battery energy storage systems will be set up. The company,
02:20 once it will get the approval from the shareholders, it can be registered by the Registrar of Companies
02:26 by Maharashtra. Although the structure of this is not yet clear, like whether it will
02:31 be a separate company, SPV level, how it will be set up, but this is what the company is
02:37 trying to do. As part of its target to go carbon neutral by 2035. This is much aggressive
02:44 as compared to India's plan by 2070. So a lot of investment is also required. The company
02:50 has already announced investment of 75,000 crores by 2030. And once it is clear or once
02:58 it validates about the scale and economy of it, they may even double it by 250,000 crores.
03:05 So this is what the company is planning under the renewable plans. They initially have a
03:11 target of 20 gigawatt by 2025. And this will be ramped up by five times to 100 gigawatt
03:19 by say 2030.
03:20 And this is what...
03:22 No, got it. And very key updates there specifically on the renewable plan there. And we've also
03:30 talked about several aspects of the other businesses. So reliance is clearly something
03:34 that you should focus on in trade today. But there are several others that you should also
03:39 focus on on the back of earnings. And one of them is from the FMCG space, Britannia
03:43 posting results after market hours on Friday. And Cesar joining in with the key highlights.
03:48 Cesar, from what I saw on the head on the face of it, it's a miss on the pack number.
03:52 But what can you tell us about the key details? Good morning.
03:55 Right. Morning, Alex. So Britannia has posted a 36% increase in net profit in the June quarter
04:02 but missed analyst estimates like you mentioned. The miss was mainly on account of increased
04:07 local competition. To stay ahead of the competition, Britannia said that it has taken several price
04:13 corrections. Now this is something that we have seen in the earnings fall for other consumer
04:18 companies as well, be it HUL, Darper, Marico as well as Nestle. So all of these companies
04:24 have called out the resurgence of local brands, which struggled in the aftermath of the quake
04:29 and now how they are getting on the top of FMCG giants. Now coming to the revenues, it
04:35 rose 8%. This was partly aided by robust distribution gains. The company stocked up its products
04:42 in the mom and pop stores across the rural markets and have also stepped up investments
04:47 behind its brands. So sales of chocolates and biscuits have clearly defied the inflation-led
04:52 volatility in demand that we have seen for branded consumer goods such as cooking oil
04:57 or tea. Operating profit rose 38% while margins grew 17.2%. Both of these parameters also
05:05 missed estimates. Now Britannia's post earnings fall with analysts is scheduled today. So
05:11 more details are expected to come post that. Thanks Esa for getting us the details. It's
05:16 going to be interesting to watch out for how Britannia reacts in trade today. But moving
05:20 on, Himansh is standing by with more updates in terms of earnings, specifically from the
05:24 financial space as well as some from the sugar pack as well. Himansh, good morning. What
05:29 do you have? So we have SBI and Bank of Baroda firstly. So SBI had a profit beat which was
05:36 led by lower credit costs and the corporate pipeline of standing at 3.5 trillion in loans
05:41 was driven primarily by the private sector demand. And the portfolio credit quality is
05:46 largely stable. Then we have Bank of Baroda which reported a mixed quarter with PAT jumping
05:50 88% year on year which is in line with analyst estimates while net interest margins declined
05:56 by 26 basis points. Then Tanjab Singh Bank, the upset in PAT was largely due to lower
06:01 other income noted this quarter along with higher provisioning. The bank has also improved
06:05 its credit quality largely over the previous quarters with gross non-performing assets
06:11 down by 4.54 percentage points over the last year. Delivery saw a revenue increase by 11%
06:18 over the last year and the net income stood at roughly a loss of 89 odd crores. Then you
06:24 have Balrampur Chini Mills where the profits grew by a solid 6 times and EBITDA margins
06:31 stood at 11.74%. Affil India also had a revenue increase of about 14.3% and the PAT was also
06:40 up 6.1% over the previous year standing at 66 odd crores. Aditya Birla Fashion, their
06:46 losses widened compared to analyst estimates and the company saw a slowdown across markets
06:51 and discretionary spends. The wedding category was especially impacted because of fewer wedding
06:55 dates and you know their athleisure and loungewear segment continues to be a drag. So those are
07:00 the earnings summed up for you guys. Thank you so much for that, Imanj. And the PSU banking
07:05 space is going to be something to watch out for. In fact, the PSU bank index dropped as
07:10 much as 8/10 of a percent over the last week as well. You saw cuts of about 4.5% on that
07:15 index. So watch out for that back. Varsha is joining in with more earnings. Varsha,
07:20 there's lots to talk about. What's on your list today? Yeah, so we've got a bunch of
07:23 companies who have reported earnings. So number one, we have Neogen Chemicals. Now, the increase
07:28 in revenue was in accordance with the addition of the new capacities in organic and inorganic
07:32 chemicals through brownfield expansion. While the PAT was impacted due to high finance costs
07:37 and depreciation costs due to ongoing expansion initiatives, plus the impact of initial costs
07:43 associated with restarting of Bewley Chemicals, which they have acquired. The next company
07:47 that we have is Mrs. Bechtel's Food Specialties. Now, there was good uptick in revenue, but
07:53 the PAT, there was uptick in PAT by about 173%. Now, biscuit segment revenue, there
08:00 was growth of almost 25%, while bakery segment had a growth of 26% compared to Q1 FY23. Also,
08:07 there was 3% decrease in material costs, which helped to aid in their EBITDA margins. The
08:13 next company that we have is Pneutex Chemicals. Again, the revenues were down, though there
08:17 was good uptick in volume growth, but due to low realizations, the revenues were down,
08:22 but the net profit was up 29% due to reduction in expenses, that is material cost. The next
08:28 company that we have is Gujarat Florochemicals. Now, again, there was due to low realizations,
08:35 the revenue was down, but companies optimistic on new fluoropolymers for industries like
08:40 EV, solar and semiconductor. The next company that we have is CE Infosystems, famously known
08:46 as MapMyIndia. Now, there was good uptick in revenue. Also, the PAT was up 32%. Now,
08:52 the company achieved highest ever quarterly revenue, EBITDA and PAT growth across all
08:57 the segments. Also, it saw a boost in its IoT business and in usage of consumer-facing
09:03 mappers, MapMyIndia app. The last company that we have is APL Apollo Tubes. Now, there
09:08 was good uptick in revenue, plus there was 60% growth in PAT. Now, the sales volume also
09:13 increased. Now, the company is moving from commoditized products, commodity products
09:17 to value-added products, which will help to increase their margins, which we can already
09:22 see in the recent quarter. Thanks, Varsha, for getting us the details.
09:25 That's going to be an interesting pack to watch out for. But moving on from reviews
09:29 to previews, you have GCPL from the FMCG pack that will be reporting numbers today. Sesa
09:35 is still with us to get us more details on it. Sesa, what are the key numbers that you
09:39 are watching out for and what are the key highlights we should be looking at?
09:43 So, if we look at the blue bug estimates, Goodrich consumer is expected to report a
09:49 12% increase in revenue. Net profit is estimated to increase by 13%. EBITDA is projected at
09:55 around 685 crore and margins are expected to grow at 19% to 20%. Now, the expansion
10:02 in margins will be driven by robust gross margin expansion. Again, like we have seen
10:07 in most consumer companies this quarter, a good part of the gross margin gain is likely
10:12 to be partially ploughed back into ad spend. So, Goodrich consumer in its quarterly update
10:19 also said that the India business recorded double-digit volume growth in the June quarter.
10:24 So, analysts are looking at about 11% to 12% growth here. As for the sales growth, the
10:32 company has said that it is likely to be in single digits because of price cuts. Now,
10:36 GCPL has also acquired Park Avenue and Kamasutra brands from Raymond. So, there would be a
10:42 one-off item of stamp duty paid here because of the slum sale transaction. Primary sales
10:51 for Raymond consumer, however, is expected to be weak on account of a cut-down in inventory.
10:56 We must remember here that Raymond consumer will be included only for about 6 to 7 weeks
11:02 of sales. In coming to the international business, it is likely to be impacted slightly because
11:08 of currency devaluation. The Indonesia business, which has been a laggard for several quarters,
11:15 has finally delivered steady performance in the previous quarter. So, analysts expect
11:19 the growth momentum to continue this quarter as well. Now, other things to watch out for
11:25 would be GCPL's investment in the grooming category, continuous development of new products,
11:32 as well as a focus on expanding the high-margin business.
11:35 Alright, thanks so much, Sessa, for those updates. Another counter that you should watch
11:39 out for and consumption as a whole is a theme that we are focused in on. We've got the
11:44 Pharma pack that is in focus and several business updates that you need to track. Of course,
11:50 we've also got a story on the website BKPRIME.com about whether or not you should start investing
11:54 in the Pharma stocks. So, watch out for that. We've got Monal joining in to tell us about
11:59 a few counters. Monal, good morning. What do you have for us today?
12:02 Morning, Alex. Yes, a bunch of action from the USFDA, CIPLA being the first one. The
12:10 Pithanpur unit from which one of the key respiratory products, the generic version of Adware, was
12:16 applied for has now finally been classified as an official action indicator. While this
12:21 is pretty much in line with what the management was expecting, as stated on their call, and
12:25 also what the analysts were anticipating, it would mean that this is going to delay
12:29 this key launch by, say, 24 months. They're expecting it to come out by the end of FY25.
12:38 Then on the other side, we have Aurobindo Pharma, which has received a clean chit from
12:43 the USFDA, no action indicated. Their plant at Cherla was recently inspected between July
12:53 28 to August 4. And the third that we have is Dr. Reddy's. The plant was inspected in
12:58 May at their Hyderabad API manufacturing facility. And now the inspection was concluded with
13:04 a voluntary action indicator. Now, this would mean that the company will receive certain,
13:11 it's been said that there are certain lapses at the facility, but they have to deal with
13:15 it themselves and it wouldn't be anything major. So, two positives and one negative.
13:19 Right. Thanks, Monal, for getting us the details. It's going to be interesting to watch out
13:23 for because all eyes are on the PharmaPak as well in terms of price movement. But moving
13:28 on, a lot of other counters that are in focus in today's session, we'll have Mika and Saloni
13:34 get us the details. Firstly, we have Mika. Good morning, Mika. What's on your list?
13:37 Yeah. So, first we have NDTV, which has been granted permission to uplink and downlink
13:41 four of their news channels, namely NDTV Rajasthan, NDTV Madhya Pradesh, NDTV Gujarati and Marathi.
13:48 Next we have AI Engineering. Its subsidiary, Vega Industries, has acquired 30% of the business
13:53 in the mining products and services private limited in Australia by entering in a share
13:58 purchase agreement. The acquisition cost is set at 7.86 million Australian dollars and
14:04 Vega ME has an option to acquire 40% stake in Vega MPS over the period of three years.
14:10 Next we have Army Organics, which has approved a preferential issue of up to 4,43,500 equity
14:15 shares on a private placement basis to raise around 51.84 crores. The issue price is fixed
14:21 at Rs. 1,169. Next we have ABB India, which is to consider a special dividend on their
14:29 August 11 board meeting. The next stock we have is Navin Florian International. Its subsidiary,
14:34 Navin Florian Advanced Sciences, has received a direction from the Gujarat Pollution Control
14:38 Board for closure of the operations of their industrial plant in GIDC, Dhej. The company
14:44 is also to pay an environment damage compensation of Rs. 1 crore. Besides the EDC, the financial
14:49 impact of the order is not currently ascertainable. Then we have the IPO updates of the currently
14:54 ongoing IPO. SBFC Finance was subscribed 7.09 times on the second day of the IPO. The H&I
15:00 portion was subscribed 12.95 times and the QIB portion was subscribed 6.71 times. The
15:06 company's IPO is a total offer size of Rs. 1,025 crore, of which Rs. 425 crore shares
15:12 will be allocated to an offer for sale. And then finally, we have Concord Biotech, which
15:16 was subscribed 58% on the first day of its IPO. The H&I portion was subscribed from 1.01
15:21 times and the QIB portion was subscribed for one person. The issue size is Rs. 1,550.6
15:25 crores at a price band of Rs. 704 to Rs. 711 currently.
15:31 Thank you so much, Meeka, for those updates. And I understand that there are a lot of numbers
15:35 being thrown at you. So, in case you missed any of that or you'd like to read it in more
15:39 detail, all of this is available on the website, bqprime.com. We generally set you up with
15:44 a story called Stocks to Watch and All You Need to Know. So, that's what you can look
15:48 at at leisure. In the meanwhile, we've also got Saloni joining in with more stocks you
15:53 need to look at. Saloni, morning. What do you have for us?
15:56 Morning. So, first, we've got news on Brookfield India Real Estate Trust. So, the company will
16:00 garner Rs. 400 odd crores by issuing 1.27 odd crore units at a price of Rs. 315.04 per
16:08 unit to the sponsor group entity Project Diamond Holdings on preferential basis. The company
16:13 also plans to raise Rs. 750 crore through the issuance of commercial papers to finance
16:18 acquisition of two commercial assets in Gurgaon and Mumbai. Then, we've got Kotak Mahindra
16:24 Bank which was fined Rs. 10 lakh by the NSC on Friday. The penalty was for the bank's
16:29 failure to upload securities pay-in details on clients within the prescribed timeline.
16:34 The bank cited operational delay due to heavy rains in Mumbai as the reason for the lapse.
16:39 Also, you should watch out for HFCL and Stolitech in today's session because the companies will
16:45 see impact due to the government's approval of a last-mile optical fibre-based broadband
16:50 connectivity plan for 6.4 lakh villages across the country under the Bharatnet project that
16:58 has an outlay of Rs. 1.39 crore. And two other companies that will be in focus that are Dixon
17:04 Technologies and Optimus Infracom. This is the result of India's DGFT issuing a new order
17:10 saying that the companies can import electronics such as laptops, tablets and other personal
17:15 computers without a license until October 31.
17:18 So yes, thank you so much Saloni for those updates. Just a small point, 1.39 lakh crore,
17:24 the lakh got missed out but all the same, significant updates there. One last point
17:29 that we'd like to make and that has to do with Paytm and news just coming in that an
17:33 entity 100% controlled by the promoter Vijay Shekhar Sharma is going to acquire 10.3% stake
17:39 in Paytm from Antfin Holding and that's a significant amount. This is a block deal that
17:46 will be done in just a short while at the market price. And with that, you will have
17:50 Vijay Shekhar Sharma's stake in the company either directly or indirectly rise to 19.42%
17:57 and Antfin Shareholding will fall to 13.5%. You should expect the stock to react.
18:02 And it's an interesting update because what I'm picking up is that this is going to be
18:06 an offshore transaction valued at $628 million but there is no cash transaction that actually
18:13 takes place. And this is going to be interesting from a stock perspective as well because Friday
18:17 session Paytm itself did close almost 3.5% to 4% higher. So today again, this would be
18:23 something where it will help build momentum.
18:25 Certainly. And the strategic nature of it as well. You'll see Vijay Shekhar Sharma's
18:29 stake going up quite significantly. He's been a very strong proponent of the company and
18:34 its operations. So we'll have to see what the market reaction to that is going to be.
18:38 We're completely out of time on this edition of Trade Talk though. It's been an absolute
18:42 pleasure bringing it to you from Hiral and myself and the team that put the show together.
18:46 Thank you so much for watching. Do stay tuned. Lots more coming up on BQ Prime.
18:49 Thank you.
18:57 [END]