Sensex Today | Share Market Live Updates: Sensex nearly flat, Nifty at 21,900; IT down 1%; PSU Bank, Realty climb 2%

Benchmark indices were witnessing volatile trading as IT stocks felt the pressure of profit booking among punters. However, the broader market was seen holding onto its gains.

At 3 pm, Sensex was down 45.59 points or 0.06% at 72,140.50 and Nifty was up 15 points at 21,929.55.

The IT index was down over 1%, while PSU Bank was up 2% and Realty nearly 2%.

In a remarkable rally, shares of Life Insurance Corporation (LIC) registered a new lifetime high of ₹1,048 apiece in today’s trade, maintaining their strong upward momentum for the fourth consecutive trading session.

After facing challenges in the first ten months of CY23, the stock swiftly rebounded in November, concluding the subsequent two months with remarkable gains. Notably, on January 23, the company’s shares exceeded the IPO price of ₹949 per share for the first time post listing. Subsequently, the stock has consistently maintained its upward trajectory, setting new record highs with each passing day. (Read the full story here.)

Rating: ACCUMULATE

Target Price : INR 185

Upside : 16%

CMP : INR 160 (as on 06 February 2024)

Fashion segment posts positive surprise

BPC revenue and earnings growth plateau in Q3FY24

FSN E-Commerce Ventures (NYKAA IN) online BPC segment posted in-line GMV growth of 24.6% YoY, on: 1) festive season boost, 2) positive impact of November sale and 3) strong growth in gross merchandise value (GMV) of its premium product portfolio (250+ brands – three-year GMV CAGR of 50%); revenue growth was lower at 19% YoY, due to increased discounts. However, GMV growth, near term, may pare further on 1) increased competitive intensity in BPC (Tira and quick commerce players) and 2) lower advertising revenue by brands (ad revenue grew just 3.2% YoY in 9MFY24), aligning with our view in our report (refer Sustains BPC leadership). Profitability woes persist as margins have largely plateaued out in BPC for now, as management focus is to drive better growth and expand the online BPC category, even if it comes at the cost of more discounts. NYKAA’s online BPC EBITDA surged at a CAGR of 68% (FY21-23), per our assessment, but it may see a CAGR of 29% in FY24E-26E), on lower ad revenue growth and higher discounts.

Fashion segment – Traction continues

NYKAA’s fashion business (28% GMV contribution in Q3) saw another healthy quarter in profitability – Contribution margin (as percentage of revenue) grew 250bps QoQ (up 480bps YoY in 9MFY24) to 10.7% on: 1) higher revenue from existing customers, 2) private label expansion (11.5% contribution to fashion GMV) and 3) lower marketing expense. Growth in online fashion was strong as GMV surged 39.8% YoY, equally led by growth in order volume and AOV. Per our assessment, consolidated losses for Fashion and others business have pared down marginally from INR 2,280mn in 9MFY23 to INR 2,010 in 9MFY24, led by focus on efficiencies in fashion and eB2B.

Valuations: Maintain Accumulate; TP pared to INR 185

Revenue from NYKAA’s core BPC segment may see a CAGR of 22.0% in FY24E-26E, slightly lower than our prior expectations, on increased competitive intensity from quick commerce companies/competitors in online BPC. With no big improvement in profitability, BPC is already trading at premium valuations of 68x/40x FY26E EV/EBITDA and P/E respectively, which offers marginal upside from current levels for BPC. Expect online fashion business to turn EBITDA positive in FY26, which may better segmental valuation and drive re-rating. We up our valuation multiple for the fashion business due to healthy growth and good execution on profitability. We pare SoTP-TP to INR 185 from INR 200, post a cut in earnings estimates due to BPC, which may be partially offset by the positive impact from online fashion business. We value BPC at 45x one-year forward EV/EBITDA and Fashion business/others at 4x/1.5x one-year forward EV/sales respectively.

As per Pharmatrac, a pharmaceuticals market research company, domestic pharma market growth has improved to 9.5% YoY in January 2024, continuing with its stable performance from December 2023 (9.2% YoY). Volume growth remained muted at 2.1% YoY. Thus, price remains the major driver. Volumes have started to grow albeit at a slow pace after being flat in H2CY23.

Elara Securities’ view

We expect growth for the Indian Pharma Market (IPM) to slightly improve versus CY23 level, while remaining range-bound in CY24/FY25 – volume growth may pick pace, while price increase may moderate. We continue to believe that organic growth expectation built into pharma stocks (which we believe is in 11-14% range) may disappoint. This could be a risk, specifically for companies with high domestic-business contribution to overall profit.

Cardiac/Anti-Infectives/CNS drive IPM growth

In January 2024, the pick-up was led by Cardiac (11.7% growth YoY), Anti-infectives (11.7% growth YoY), CNS (11.6% growth YoY), Anti-Diabetic (10.8% growth YoY) and Pain (10.6% growth YoY). Among smaller therapies, Oncology grew 20.5% YoY in January 2024. Ophthalmic, Respiratory, Gynae and VMN reported lackluster growth, thus dragging down overall IPM growth in January 2024.

Top-three therapies drive volume growth

Volume growth stood at 2.2% for the quarter ending January 2024, led by healthy volumes in top three therapies of Gastro (7.3% growth YoY), Cardiac (3.2% growth YoY), and Anti-Infectives (3.2% growth YoY). Amongst smaller therapies, Oncology exhibited 24.5% volume growth YoY in January 2024. Volume growth in January 2024 was dragged down by VMN (2.8% decline YoY), Respiratory (2.6% decline YoY), Gynae (1.5% decline YoY) and Derma (1.3% decline YoY) therapies.

Glenmark/Intas/Sun Pharma drive IPM growth

In January, Glenmark (20% growth YoY), Intas (19.6% growth YoY), Sun Pharma (14.9% growth YoY), Torrent (13.7% growth YoY), and Alkem (13.6% growth YoY) exhibited strong outperformance against IPM. Ipca, Cipla, Abbott, Mankind, and Lupin were the other notable companies outperforming IPM. Pfizer (3% decline YoY), GSK Pharma (1% decline YoY), Emcure (4.5% growth YoY), and Dr. Reddy’s Labs (6.5% growth YoY) dragged down the IPM growth.

AWACS data does not usually correlate with the companies’ reported numbers on a quarterly basis, and should not be extrapolated to reported growth.

Rating: ACCUMULATE | CMP: Rs1,134 | TP: ₹1,225

Q3FY24 Result Update – Steady operating performance

Quick Pointers:

ARPU at ₹208; net subscriber addition was at 3.3mn.

Capex incurred in Q3 stands at Rs92.7bn.

Bharti Airtel reported EBITDA/PAT of Rs198.1bn (+1.5%QoQ; PLe Rs198.9bn) and Rs24.4bn (+82%QoQ; PLe Rs15.4bn). India mobile revenues were up 3.3%QoQ and EBIDTA margin was stable at 55.1%. ARPU grew 2.5% QoQ to Rs208 (PLe Rs205) with 7.4mn growth in 4G subscribers (overall net addition was 3.3mn). Africa mobile Revenue/EBITDA remained flat QoQ, while Enterprise revenue grew 1.7% QoQ, while there was a muted growth in EBITDA with a 57bps fall in margins. Home services (fixed line + broadband) had an ARPU decline of 2% while DTH ARPU grew 2.5%. We maintain our positive stance on the sector, due to falling competitive intensity, given weak financial position of peers. Maintain ‘Accumulate’ rating at SOTP based TP of Rs1225 based on 11x FY26 EV/EBITDA for India mobile multiple, 6x FY26 EV/EBITDA for Airtel Africa, enterprise segment at 9x FY26 EV/EBITDA, 3x FY26 EV/EBITDA for DTH and 6x EV/EBITDA for home services.

4G subscriber addition of 7.4m sustains India mobile business: India mobile Q3 Revenue/ EBITDA were Rs216.3bn (+3.3%QoQ) and Rs119.2bn (+3.7%QoQ). Q3 4G net customer addition continue to remain impressive at 7.4mn (20.8mn in 9MFY24). ARPU came in strong at Rs208 (+2.5% QoQ, 7.5%YoY). We expect moderate growth in ARPU in near term. We estimate FY24/25/26E net subscriber adds at 13/14/14 mn each along with ARPU of Rs215/225/236.

Poor Africa performance: Q3 Africa revenues and EBITDA were at $1.2bn (flat %QoQ) and USD608mn (-2%QoQ). While total subscribers grew by 3.5mn, ARPU grew by 2.7%QoQ to $2.6 maintaining EBITDA margins at 49.1%.

Steady improvement in enterprise and home services EBITDA: In Q3, the enterprise segment grew marginally by 1.7% QoQ to ₹51.9bn while EBITDA remained flat due to 57bps decline in margins to 39.7% at Rs20.6bn. Home services revenue grew steadily by 4.2% QoQ to Rs12.7bn and EBITDA was at Rs6.3bn (+5.1% QoQ) and margins came in at 50.2%. Although ARPU decreased by 2% QoQ to Rs583 (Q2: ₹595), subscriber base was up 5.2% QoQ to 7.3mn. DTH EBITDA was up 1.7% QoQ to ₹4.3bn, while ARPU grew 2.5% to Rs163. Subscriber base was also up 2.5% and totaled to 16.1mn.

Concall highlights: 1) Q3 performance was impacted by currency devaluation in Africa. 2) In Q3, net additions in postpaid stood at 0.9mn. 3)Capex incurred in India in Q3 stands at Rs77.5bn across 5G roll outs, rural expansion and data centres. 4) Growth in ARPU was on account of conversion of prepaid to postpaid and premiumisation of customers. 5)47% of net additions were for Airtel Black. 6) Capex is expected to be elevated in FY24 and will be moderated in FY25.

Nestle India on Wednesday declared an interim dividend of ₹7 per share while announcing its earnings for the quarter ended December 2023.

In a regulatory filing, Nestle India said that its board of directors has approved the declaration of a third interim dividend of ₹7 per equity share of the face value of Re 1 each for the Financial Year 2023-24. The company has also fixed the Record Date for the dividend as February 15.

Nestle India’s net profit in Q4CY23 rose 4.4% to ₹655.6 crore from ₹628.1 crore in Q4CY22. Nestle India follows the January-to-December financial year.

The Maggi noodle maker’s revenue from operations for the December quarter increased 8.1% to ₹4,600 crore from ₹4,256.8 crore, YoY. Total sales growth during the quarter was at 8.3%, while domestic sales growth was at 8.9%.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 10.2% to ₹1,077 crore from ₹976.9 crore, while EBITDA margins rose 50 bps to 23.4% from 22.9%, YoY.

Benchmark indices were witnessing volatile trading as IT stocks felt the pressure of profit booking among punters. However, the broader market was seen holding onto its gains.

At 2 pm, Sensex was down 12.23 points or 0.02% at 72,173.86 and Nifty was up 11.55 points or 0.05% at 21,940.95.

The IT index was down over 1%, while PSU Bank and Realty were up over 2%.

Rating: BUY | CMP: ₹180 | TP: ₹210

Q3FY24 Result Update – Focus on profitability to supersede market share

Quick Pointers:

High base and election to impact industry demand and up discounts in 1HCY24

Fundamental drivers strong, sharp recovery post elections expected

Ashok Leyland’s (AL) 3QFY24 EBITDA margin at 12% beat PLe (10.7%) due to reduced COGS. AL should further build on the margins achieved in 9MFY24 and post higher margins in 4Q thus giving us confidence in its medium term target of reaching mid-teen. We build EBITDA margin of 12% in FY26E, leaving further scope if AL is able to achieve its medium term target. AL guided for softness in volumes in the run-up to elections in 4QFY24 and 1QFY25 and a sharp ramp-up post that. AL noted that factors like overall economic activity, freight demand, replacement demand are positive; along with action on scrappage side. AL noted discounting could increase for the industry for couple of quarters but it will not sacrifice profitability for market share; and focus on product, service differentiation and network expansion.

We believe AL is well placed to sustain its recent market share gains led by 1) strong demand for modular AVTR trucks, 2) network growth and 3) product launches. LCVs will benefit from filling of white space, growth in end markets and network growth. Price hike, benign input cost, operating leverage and cost control will lead to margin expansion (EBITDA margin +c390bps over FY23-26E). We change our FY24/FY25/FY26 EPS estimates by -3%/-4%/0.4% to factor in 3QFY24 results and management commentary on volume and margin sustainability. Maintain ‘BUY’ with TP of ₹210 on Mar-26E EV/EBITDA of 11x (includes ~ ₹12 for HLF) and roll over to Mar-26.

Revenue inline; beat on EBITDA margins again: Revenue grew by 2.7% YoY, driven by flat volume and higher realisation, exceeding PLe and in line with Bloomberg consensus estimates (BBGe). EBITDA margins at 12.0% was above PLe (10.7%) and BBGe (10.9%) led higher gross margins while employee and other operating expenses were largely in line. Interest expenses were higher than expected and other income was lower than expected and partially impacted PAT, which again beat estimates.

Key takeaways: (1) Ashok Leyland noted the influence of state elections on its 3Q volume performance, anticipating the trend could extend into 4Q & 1QFY25 due to high comparative base YoY and run-up to the national elections. However, AL remains optimistic about a rapid rebound in demand following the election given the underlying factors like economic activity, freight demand and replacement demand are positive. AL has made progress by adding new touchpoints and service centers, particularly in the North, East, and Central zones, which could lead to further growth in these regions. (2) AL continues to invest in Switch, while still looking to onboard good investment partners in the medium term. AL sees by 4QFY25 Switch India should become cash neutral and self-sustaining. First batch of electric LCVs will be delivered within the next few months. (3) Increase in ASP of the industry, cost control, and lower commodity prices helped margin, a trend likely to continue in 4Q. (4) Aftermarket sales at grew by 30% YoY; power solution business volumes grew by 24% YoY. AL aims to scale up non-auto revenues like defense and others in future. It aims to reach Rs. 9bn to ₹10bn in defense revenue in FY24.

Rating: BUY | CMP: ₹180 | TP: ₹210

Q3FY24 Result Update – Focus on profitability to supersede market share

Quick Pointers:

High base and election to impact industry demand and up discounts in 1HCY24

Fundamental drivers strong, sharp recovery post elections expected

Ashok Leyland’s (AL) 3QFY24 EBITDA margin at 12% beat PLe (10.7%) due to reduced COGS. AL should further build on the margins achieved in 9MFY24 and post higher margins in 4Q thus giving us confidence in its medium term target of reaching mid-teen. We build EBITDA margin of 12% in FY26E, leaving further scope if AL is able to achieve its medium term target. AL guided for softness in volumes in the run-up to elections in 4QFY24 and 1QFY25 and a sharp ramp-up post that. AL noted that factors like overall economic activity, freight demand, replacement demand are positive; along with action on scrappage side. AL noted discounting could increase for the industry for couple of quarters but it will not sacrifice profitability for market share; and focus on product, service differentiation and network expansion.

We believe AL is well placed to sustain its recent market share gains led by 1) strong demand for modular AVTR trucks, 2) network growth and 3) product launches. LCVs will benefit from filling of white space, growth in end markets and network growth. Price hike, benign input cost, operating leverage and cost control will lead to margin expansion (EBITDA margin +c390bps over FY23-26E). We change our FY24/FY25/FY26 EPS estimates by -3%/-4%/0.4% to factor in 3QFY24 results and management commentary on volume and margin sustainability. Maintain ‘BUY’ with TP of ₹210 on Mar-26E EV/EBITDA of 11x (includes ~ ₹12 for HLF) and roll over to Mar-26.

Revenue inline; beat on EBITDA margins again: Revenue grew by 2.7% YoY, driven by flat volume and higher realisation, exceeding PLe and in line with Bloomberg consensus estimates (BBGe). EBITDA margins at 12.0% was above PLe (10.7%) and BBGe (10.9%) led higher gross margins while employee and other operating expenses were largely in line. Interest expenses were higher than expected and other income was lower than expected and partially impacted PAT, which again beat estimates.

Key takeaways: (1) Ashok Leyland noted the influence of state elections on its 3Q volume performance, anticipating the trend could extend into 4Q & 1QFY25 due to high comparative base YoY and run-up to the national elections. However, AL remains optimistic about a rapid rebound in demand following the election given the underlying factors like economic activity, freight demand and replacement demand are positive. AL has made progress by adding new touchpoints and service centers, particularly in the North, East, and Central zones, which could lead to further growth in these regions. (2) AL continues to invest in Switch, while still looking to onboard good investment partners in the medium term. AL sees by 4QFY25 Switch India should become cash neutral and self-sustaining. First batch of electric LCVs will be delivered within the next few months. (3) Increase in ASP of the industry, cost control, and lower commodity prices helped margin, a trend likely to continue in 4Q. (4) Aftermarket sales at grew by 30% YoY; power solution business volumes grew by 24% YoY. AL aims to scale up non-auto revenues like defense and others in future. It aims to reach Rs. 9bn to ₹10bn in defense revenue in FY24.

Tata Steel announced that it has successfully amalgamated five of its nine strategic businesses, in line with its long-term strategy and commitment to simplify its business portfolio. In an exchange filing on Wednesday, the company said the integration of the five businesses was underway after it completed the regulatory processes.

The five companies being integrated are Tata Steel Mining Ltd, Tata Steel Long Products Limited, S&T Mining Company Limited, The Tinplate Company of India Ltd, and Tata Metaliks Limited. (Read the full story here.)

Rating: REDUCE | CMP: Rs736 | TP:Rs631

Q3FY24 Result Update – Strong export-led growth & margin expansion

Quick Pointers:

Exports revenue grew strongly by 59.1% YoY to Rs3.3bn.

Q3FY24 order inflow was strong at Rs23.7bn (vs Rs7.8bn in Q3FY23), leading to a record high order book of Rs58.5bn (2.0x TTM revenue).

We revise our FY24/25/26E EPS estimates by +5.6%/21.1%/20.5% factoring in strong margin expansion and healthy demand outlook, we assign ‘Reduce’ rating owing to steep run-up in stock price with a revised TP of Rs631 (Rs367 earlier). GE T&D India (GETD) reported healthy quarterly performance with 8.0% YoY revenue growth and EBITDA margin improvement of 561bps YoY to 11.5%. Strong profitability enabled the company to become debt free with a cash position of Rs1.6bn this quarter. Increasing focus on energy transition globally is leading to expansion of the power market, creating a significant opportunity for GETD. HVDC transformers (LCC & VSC), STATCOM, digital substations, etc. will be the key drivers of future growth. Margins are expected to sustain at current levels of 11%+ owing to increased execution leading to operating leverage along with improvement in process efficiency.

We believe 1) healthy order pipeline in power market, 2) robust order book (Rs58.5bn), and 3) management’s focus on margin improvement augurs well for strong revenue & profit growth. The stock is trading at a P/E of 57.6x/43.9x FY25/26E. We roll forward to Dec-25 and value the stock at a P/E of 40x Dec-25E.

Strong export sales and margin expansion drive healthy quarter: Revenue rose 8.0% YoY to Rs8.4bn (PLe: Rs9.8bn) driven by strong growth in export sales (up 59.1% YoY to Rs3.3bn), while domestic sales fell 10.2% YoY to Rs5.1bn. Gross margin expanded by 590bps YoY to 36.3% (PLe: 33.0%). EBITDA grew 110.6% YoY to Rs965mn (PLe: Rs.966mn). EBITDA margin increased by 561bps YoY to 11.5% (PLe: 9.9%) led by gross margin expansion. Adj. PAT grew almost 8.8x to Rs493mn vs Rs56mn in Q3FY23 (PLe: Rs616mn), driven by strong operating performance, lower interest costs at Rs70mn (vs Rs118mn in Q3FY23) and a significantly lower effective tax rate at 32.4% (vs 61.6% in Q3FY23).

Robust order book at record high of Rs58.5bn: Q3FY24 order inflow came in at Rs23.7bn (vs Rs7.8bn in Q3FY23), driven by robust inflows in domestic orders at Rs12.9bn (vsRs2.5bn in Q3FY23) as well as export orders at Rs10.8bn (vs Rs5.3bn in Q3FY23). Key orders bagged during the quarter include 1) supply of HVDC Transformers for a project in South Korea from UK Grid Solutions (a GE Group company) worth ~Rs8bn, 2) supply of 765 kV Power Transformers and Shunt Reactors for various transmission system projects in India from Power Grid Corp. of India, and 3) supply of 420kV GIS for STAGE III (2X660 MW) of NTPC Talcher Thermal Power Project from BHEL. Order book stands strong at Rs58.5bn (2.0x TTM revenue) with a mix of Private/State Utilities/Central Utilities at ~72%/8%/20%.

The pre-election budget announced last week may have disappointed some for its lack of big-bang announcements, but the Centre has astutely raised allocations for some key welfare schemes for 2024-25. That marks a reversal of the recent trend of spending cuts that had followed the generosity seen in the covid years.

In the last two years, the government’s vigorous capital expenditure allocation had come at the cost of welfare schemes. But this is not the case for the upcoming year. The total budget of ₹2.27 trillion for centrally-sponsored schemes is 8.9% higher than what the Centre plans to spend in 2023-24 (for reference, the overall budget size of the government is pegged to rise 6.1%). Rural welfare was especially taken care of, with the outlay for some of the key schemes for jobs, irrigation and housing among others witnessing a combined 12.6% increase, as against a decline of 5.2% in 2023-24 and 2.0% in 2022-23, a Mint analysis showed. (Read the full story here.)

Rating: REDUCE

Target Price : INR 345

Downside : 4%

CMP : INR 358 (as on 06 February 2024)

Lower traded fertiliser volume drives EBITDA

Revenue drop led by gas costs and lower traded volumes

Chambal Fertilisers (CHMB IN) reported mixed Q3, with EBITDA at INR 6.3mn (down 6% YoY), lower than INR 6.9bn estimated. But PAT at INR 4.6bn (up 42% YoY) was in-line due to higher-than-expected share of profit from JV (at INR 558mn versus expectations of INR 100mn). Topline declined 48% to INR 43bn due to 23% reduction in gas price and 77% reduction in traded fertilizer volume to 118,000 tonnes. CPC sales grew 7% YoY in a tough environment.

Subsidy levels to decide traded fertilizer volume

The management indicated in the conference call that traded fertilizer business managed to break-even in Q3 despite steep reduction in subsidy. Revision in Nutrient based subsidy (NBS) is on the anvil but till the time subsidy is not raised, sale of Di-ammonium Phosphate (DAP) by the industry is unviable. Volume for the traded fertilizer business hereon may be strategic depending on the prevailing subsidy rates. Other factors such as portfolio approach and keeping the channel satisfied may also be considered before budgeting on traded fertilizer volume.

Valuation: Downgrade to Reduce with a higher TP of INR 345

CHMB is evaluating its entry into Nitric acid value chain post completion of the Technical Ammonium Nitrate project. The will trim concerns on capital allocation. Till the TAN plant starts in H2FY26, profitability may be led by energy efficiency projects and growth in crop protection.

Profitability trajectory of the traded fertilizer business is hinged on the prevailing NBS subsidy mechanism. We up our EBITDA/PAT estimates by 5%/8% for FY24E on better-than-expected profitability in traded fertilizer business and by 2.5%/10% for FY25E on better profitability from Urea business. Downgrade to Reduce from Accumulate due to 23% run up in stock price in the last 3 months with a higher TP of INR 345 from INR 314 on 10x FY25E EPS of INR 34.5.

Benchmark indices were in the red, dragged down by IT stocks. However, the broader market was seen holding onto its gains.

At 1 pm, Sensex was down 156.36 points or 0.22% at 72,029.73 and Nifty was down 30.30 points or 0.14% at 21,899.10.

The IT index was down over 1%, while Auto and Private Bank were were under pressure.

India’s Quick Service Restaurant (QSR) chain market is set to post a market size CAGR of 32% during FY23-27, well ahead of its F&B industry growth rate of 19%, and ahead of global counterparts.

Within organized QSR, KFC India posted 30% CAGR during FY19-23 as compared to its peers across categories that have grown by a mere 17% during the same period.

Elara Capital remains selectively positive on India’s QSR sector and prefers Devyani International and Sapphire Foods India due to their focus on KFC, which is heavily underpenetrated in India versus pizza franchises. (Read the full story here.)

Rating: REDUCE

Target Price : INR 2264

Downside : 2%

CMP : INR 2300 (as on 06 February 2024)

Scaling new summits

Highest-ever quarterly sales performance led by strong launches

Godrej Properties (GPL IN) reported quarterly sales of INR 57bn with volume at 4.34mn sqft. Booking value was up 14% QoQ and 76% YoY. Despite the 17% QoQ and 2% YoY drop in sales volume, booking value was robust, primarily led by high realization in NCR market where GPL launched Godrej Aristocrat in Q3. This was GPL’s most successful ever launch, achieving a booking value of INR 26.67bn and high average realization of INR 19,700/sqft.

GPL also launched Godrej Ananda in Bengaluru, which achieved good traction resulting in INR 5.74bn booking value. In total, it launched eight new projects/phases in Q3 across five cities. Among regions contributing to sales, NCR posted the highest booking value of INR 33bn, followed by MMR with INR 10bn. For Q3FY24, Godrej recorded a revenue of INR 3,304mn, up 68% YoY but down 4% QoQ. Net profit rose 6% YoY but dropped 7% QoQ to INR 623 mn.

Expect FY24 sales guidance to be surpassed

In Q4, some major projects set for launch are Sector 89 and Noida Sector 146-B in NCR, Kandivali and Vikhroli in MMR and Old Madras Road in Bengaluru. Pre-sales for Q4 may be per current run-rate of around INR 50bn, on track to achieving INR 140bn sales guidance. In 9MFY24, GPL already achieved a sales value of INR 130bn, surpassing 106% of the total booking value for the entire FY23. FY24 pre-sales may demonstrate ~50% YoY growth but long-term, it is targeting a 20% growth rate.

Valuation: Revise to Reduce with a higher TP of INR 2,264

GPL’s sales velocity in four key markets has been healthy and may improve further, led by its strategy to enter other micro markets and given its strong launch pipeline. It continues to implement its robust business development plan, thus the consequent increase in debt levels warrant close monitoring, near term.

GPL is currently trading at 1.37x of NAV. Due to the recent ~23% run-up in the stock in the past three months, we revise GPL to Reduce from Accumulate with a higher TP of INR 2,264 from INR 1,811 based on 1.35x (unchanged) one-year forward NAV and roll over to FY26E.

Shares of Indian IT companies have seen an upward trend over the last three months, particularly in December, following the Federal Reserve’s December 2023 release, which hints at the possibility of three rate cuts in the calendar year 2024, implying a reversal in the rate cycle after aggressive hikes since March 2022.

Since the anticipation of rate cuts began building up after December, the Nifty IT index has witnessed a significant rally of over 17.5% to date. (Read the full story here.)

JK Tyre & Industries Ltd share price slumped over 5% on Wednesday’s session due to profit booking after a strong upward trend, according to analysts. JK Tyre share price has gained over 80% in the last six months, as per trendlyne data. Amidst high sales, JK Tyre & Industries Ltd reported impressive Q3 results on Tuesday. JK Tyre share price today opened at ₹535.25 apiece on BSE and touched an intraday high of ₹535.25 and an intraday low of ₹505.15. (Read the full story here.)

Nestle India Ltd is going to report its December quarter financial performance today. The December quarter will be fourth quarter for the company that was following January-December financial year.

The Consumer goods manufacturers see a weak outlook as demand has remained generally tepid during the Quarter gone by. The festival season demand was lower than the street expectations, while rural demand also has not caught pace yet. (Read the full story here.)

V-Mart Retail share price jumped over 15% on Wednesday’s trading session following strong Q3 results aided by good festive demand. V-Mart Retail share price opened at ₹2,200 apiece on BSE and touched an intraday high of ₹2,410 and an intraday low of ₹2,187.10.

As per the exchange filing, the company recorded Q3FY24 revenues of ₹889 crore, up 14% year-on-year (YoY) and 4% YoY in same-store sales. For the quarter ended December, the company’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) climbed by 15% to ₹120 crore and its profit after taxes (PAT) increased by 41% YoY to ₹28 crore. During the quarter, the company launched 20 new shops and closed 3 locations, bringing the total number of outlets in India to 454. (Read the full story here.)

Benchmark indices slipped into the red at noon, dragged down by IT stocks. However, the broader market was seen holding onto its gains.

At 12 pm, Sensex was down 211.95 points or 0.29% at 71,974.14 and Nifty was down 44.70 points or 0.27% at 21,871.05.

The IT index was down 1%, while Auto, Bank, Pharma, Healthcare and Oil&Gas indices were also in the red at noon.

Spectrum Electricals, a manufacturer of electrical, automotive, and irrigation components, garnered significant attention in 2023 for its remarkable market performance.

The company’s share price surged a massive 1,252% over the year, significantly outperforming peers and the benchmark Nifty’s 14.4% increase. In January 2023, the stock was priced at ₹84, and had risen an astounding 1,252% by year-end. This means that an initial investment of ₹10,000 would have ballooned to ₹1.2 lakh. (Read the full story here.)

Renewable energy and electric mobility company Gensol Engineering Limited said it has raised a ₹900 crore in equity capital through warrants convertible into equity shares on a preferential basis.

In a statement on Wednesday, Gensol said the fundraise saw participation from Elara India Opportunity Fund, Aries Opportunities Fund, and Tano Investment Opportunities Fund, among others. (Read the full story here.)

The biscuit manufacturer posted a 40 percent year-on-year decline in its consolidated net profit at ₹556 crore for the quarter ending December 31, 2023, in contrast to the ₹937 crore it had reported in the corresponding quarter of the previous year, missing market estimates. In sequential terms as well, Britannia’s profit experienced a 5 percent decline, amounting to ₹587 crore. However, revenue from operations increased slightly to ₹4,256 crore from ₹4,196 crore in the corresponding quarter las year. Analysts’ projections had anticipated a year-on-year revenue growth of 3 percent, reaching ₹4,303 crore for the quarter. The company disclosed an EBITDA of ₹821 crore for the quarter, with margins registering at 19.29%.

The flagship company of The Oberoi Group reported revenue from operations of ₹770 crore for the third quarter ended December 31, a year-on-year jump of 28%. It reported a profit after tax of ₹230 crore, up 55% over the corresponding period of the previous fiscal. EIH reported EBITDA of ₹353 crore, up 56.3% year-on-year.

Benchmark indices were in the green after momentarily slipping into the red.

At 11 am, Sensex was up 92.21 points or 0.13% at 72,278.30 and Nifty was up 44.55 points or 0.2% at 21,973.95.

SBI and Axis Bank were leading the charts on Sensex, while IndusInd Bank, Power Grid Corp. and Infosys were down.

Rating: ACCUMULATE

Target Price : INR 850

Upside : 16%

CMP : INR 734 (as on 06 February 2024)

Bumpy road near-term

Subdued demand environment in Q3 hit growth

Century Plyboards’ (CPBI IN) Q3 net sales rose 6.1% YoY to ~INR 9.37bn, led by strong growth in medium density fiberboard (MDF), up 12.5% YoY, while other segments of plywood (up 5.9% YoY) and laminates (up 2.6% YoY) saw muted growth. Subdued demand for wood panel segment hit plywood and laminates growth. Volumes in MDF (up 15% YoY) and Particle Board (up 18% YoY) were robust but realization was hit by higher import competition. The management anticipates continued slow pace in the wood panel market until the commencement of deliveries for the current surge in new launches in ongoing real estate projects, starting 2025.

MDF/Particle Board – BIS norms to prop up volumes and margin

CPBI anticipates softer Q4 as plywood and laminates are projected to post single-digit growth, while MDF may exhibit >20% volume growth. However, MDF’s realization may decline by 7-8% in H2FY24E due to the presence of cheaper imported products. The implementation of BIS standards for MDF and Particle Board from 11 February 2024, is anticipated to diminish import competition. This is likely to enhance CPBI’s volumes, though the positive impact on realizations and margins may be realized with a delay of six to nine months.

Profitability to be under pressure in Q4

Q3 EBITDA margin contracted 320bps YoY to 11.3%, led by contraction in margin across segments. While timber prices may remain firm, higher investment behind the new launch of Sainik laminates and lower realization due to increased competition for MDF and Particle Board will continue to keep margin under pressure for Q4.

Valuation: revise to Accumulate; new TP at INR 850

We cut FY25E/26E earnings estimates 8%/2% to factor in lower revenue and profitability. We revise CPBI to Accumulate from Buy as the stock has run up 19% in the past three months, with higher TP of INR 850 (from INR 800), on 35x FY26E P/E as we roll-forward to FY26E.

Indian government bond yields drifted lower in early trades on Wednesday, as sentiment remained positive a day ahead of the Reserve Bank of India’s last monetary policy decision for the current financial year.

India’s benchmark 10-year yield was at 7.0672% as of 10:00 a.m. IST, following its previous close of 7.0904%.

“The market is taken over by bulls after the budget and there are expectations building up that the central bank would provide a dovish guidance, setting the stage for easing in the next financial year,” a trader with a state-run bank said.

The RBI is expected to hold the key interest rate steady on Thursday, according to a Reuters poll, although policymakers’ commentary remains key amid easing inflationary pressures and a fiscally prudent federal budget announcement last week.

The central bank may strike a dovish tone, post a healthy budget and largely comfortable global narrative, but it will fall short of any stance change and there may be no material change in the assessment of macro variables, Emkay Global said.

Traders will also keenly await guidance on the banking system liquidity, especially after the central bank’s aggressive withdrawal of cash from the system so far this month.

The RBI conducted two separate overnight variable rate reverse repo auctions on Tuesday and will conduct a similar operation later in the day.

The persistent upward trajectory of mid-and small-cap stocks continues to capture investors’ attention, even as these stocks achieve unprecedented levels. Building upon their robust performance in CY23, where they significantly outperformed large-cap stocks, mid-and small-cap stocks are maintaining their momentum into CY24.

In today’s trading session, the Nifty Midcap 100 index reached a new all-time high of 49,359 points, while the Nifty Small Cap 100 also marked a historic peak of 16,653 points. In the current year so far, the Midcap index has gained nearly 7%, while the small cap index has surged nearly 10%. (Read the full story here.)

Gabriel Pet Straps IPO listing price today: Gabriel Pet Straps share price made a tepid debut on BSE SME today. On BSE SME, Gabriel Pet Straps share price was listed at ₹115, which is 13.86% higher than the issue price of ₹101.

Gabriel Pet Straps IPO opened for subscription on Wednesday, January 31, and closed on Friday, February 2. Gabriel Pet Straps Limited IPO price band was set at ₹101 apiece. Gabriel Pet Straps IPO lot size consisted of 1,200 shares. Investors could bid for a minimum of 1,200 shares and in multiples thereof. (Read the full story here.)

The current economic reforms have also been supporting the growth of businesses. All things considered, GDP is predicted to be resilient and steady even though shocks to the food and oil supplies can keep inflation high, says Sachin Jasuja, Head – Equities, Centricity.

In an interview with MintGenie, Jasuja said that the best way is to build a portfolio including both, with the right mix, according to the market conditions, valuations, and economic conditions after considering the risk appetites in a staggered manner. (Read the full story here.)

Benchmark indices were in the green after momentarily slipping into the red.

At 10 am, Sensex was up 220.71 points or 0.31% at 72,406.80 and Nifty was up 74.50 points or 0.34% at 22,003.90.

E.I.D. Parry India Ltd has recorded a consolidated profit after tax for the October-December 2023 quarter at ₹216.52 crore.

The Chennai-headquartered sugar manufacturer had registered a consolidated PAT at ₹481.60 crore, in the corresponding quarter of last year.

The consolidated profit after tax for the nine-month period ending December 31, 2023 stood at ₹1,323.27 crore, as against the ₹1,540.84 crore a year ago.

The total income during the quarter under review on a consolidated basis slipped to ₹7,811.32 crore, from ₹9,855.36 crore registered in the same period of last year.

For the nine-month period ending December 31, 2023, the consolidated total income was recorded at ₹24,036.90 crore, as compared to ₹28,417.74 crore registered during the same period of the last fiscal.

Nykaa share price jumped nearly 6% in early trade on Wednesday after the company reported strong Q3 results with net profit nearly doubling. Nykaa shares rallied as much as 5.95% to ₹170.05 apiece on the BSE.

FSN E-Commerce Ventures, the parent company of beauty and fashion retailer Nykaa, on Tuesday reported a net profit of ₹16.2 crore in the quarter ended December 2023, a rise of 98% from ₹8.2 crore in the year-ago period, driven by strong demand during the festival and wedding seasons. (Read the full story here.)

After two years of robust growth led by higher prices, India’s packaged consumer goods industry may finally catch its breath in 2024, at a time clouds are gathering over the consumption sector.

Makers of soaps to shampoos and biscuits to beverages may grow at 4.5-6.5% in value terms this year, market researcher NielsenIQ (NIQ) said, sharply lower than 8.4% in 2022 and 9.3% in 2023. Nielsen, which follows a calendar year, did not share its outlook on volumes growth.

In the December quarter, the FMCG industry reported a 6% year-on-year (y-o-y) growth in value terms, driven by a 6.4% rise in volume. However, both volume and value growth fell sequentially during the quarter. The trend was seen in both urban and rural markets, where volumes grew y-o-y but dipped sequentially. (Read the full story here.)

The Centre will allocate a substantial part of the budgeted capital expenditure for fiscal year 2024-25 (FY25) to the energy sector, as the country strives to meet rapidly growing demand and achieve climate goals, Prime Minister Narendra Modi said on Tuesday.

The interim budget, presented on 1 February, pegged a capex of ₹11 trillion for next year, marking an increase from FY24’s budgeted ₹10 trillion. (Read the full story here.)

The Association of National Exchange Members of India (ANMI) has given its in-principle approval to the proposal of extending trading hours for index futures, a report said.

The Brokers Industry Standards Forum (ISF) will send a formal letter to capital markets regulator Securities & Exchange Board of India (SEBI) in this regard, CNBC-TV18 reported quoting sources.

The Brokers Industry Standards Forum includes ANMI, Commodity Participants Association of India (CPAI) and BSE Brokers Forum (BBF). (Read the full story here.)

Indian benchmarks opened in the green on Wednesday.

Sensex was up 317.43 points, or 0.44%, at 72,503.52 and Nifty was up 113.30 points, or 0.52%, at 22,042.70 at market open.

Indian benchmark indices opened in the green on Wednesday.

Sensex was up 290.63 points, or 0.40%, at 72,476.72 and Nifty was up 83.85 points, or 0.38%, at 22,013.25 during pre-open.

Tata Steel, NTPC, Power Grid Corporation of India, ITC and IndusInd Bank were the top gainers on Sensex.

Retail investors who invest directly in stocks, as opposed to investing through mutual funds, appear to have come of age if their transactions on the secondary market are anything to go by. Market experts say retail investors have in recent times tended to sell at highs and buy at lower levels, a reversal of their past behaviour.

So far this fiscal (April-December 2023), direct retail investors have net sold shares worth ₹1.68 trillion, coinciding with a roaring rally in mid-, small- and large-cap stocks. Their selling comes after being net buyers of a combined ₹1.09 trillion in April-December 2021. In the same period (FY24), the Nifty Midcap 150 Index rallied 50% to 17,077.05, the Nifty Smallcap 250 by 60% to 14,041.30 and the Nifty returned 25% to touch 21,731.4 on 31 December 2023. (Read the full story here.)

Indian shares are set to open higher on Wednesday, looking to build on their gains in the previous session and tracking the rise in their Asian peers on China’s efforts to protect its markets.

India’s GIFT Nifty was trading at 22,122 points as of 8:15 a.m. IST, suggesting the NSE Nifty 50 will open above its close of 21,929.40 on Tuesday.

Asian markets gained after China announced measures to curb short-selling and expand stock-buying by state-owned funds to protect its markets. Wall Street equities closed higher overnight.

India’s NSE Nifty 50 and BSE Sensex advanced on Tuesday, helped by information technology on hopes of a soft landing of the U.S. economy and supported by a sustained rally in oil and gas stocks.

The Canara Bank board will consider the stock split of the company on February 26, the bank informed the exchanges on February 7.

For Ashok Leyland, the financial year 2024 is mainly about the stellar margin performance. For the second consecutive quarter, the commercial vehicle manufacturer has clocked a sequential improvement in Ebitda margin.

For perspective, in the December quarter (Q3FY24), Ashok Leyland’s Ebitda margin, a key measure of profitability, improved to 12%, up from 11.2% in Q2, and 10% in Q1. With this, the company is poised to clock the guided double-digit margin for the full year. This also suggests it is moving in line with its medium-term target of reaching mid-teen margin. (Read the full story here.)

Clawing back from the pandemic years hasn’t been easy for the domestic hospitality industry. But last year, as tourism and business travel picked up, India’s hotels had a bit of a revival.

India’s organised hotels industry added 14,000 rooms in 2023, its largest addition ever, hospitality consultancy Horwath HTL Consultants said in a new report accessed exclusively by Mint. This year, it’s expected to add even more–23,000 rooms. (Read the full story here.)