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Quick Service Restaurants Bounce Back, Relief for Indian Banks and Top Stocks in Action
Wed, 16 May Pre-Open

On Tuesday, share markets in India opened firm, remained volatile and ended the day in the green.

The BSE Sensex closed higher by 8 points to end the day above the 35,200 mark at 34,216. While the broader NSE Nifty ended the day higher by 2 points to end at 10,718.

Among BSE sectoral indices, banking stocks rose the most by 1.3%. This was followed by realty stocks at 1.1%. ICICI Bank and Indian Bank were among the major gainers.

On Tuesday, share markets in India  witnessed positive trading activity during the morning trades, tracking the Karnataka state elections. The markets were decidedly positive in the morning session as the polls showed a decisive BJP victory. However, they soon gave away a 400-point gain as the Congress and allies chipped away at the BJP seats. Volatile election activity meant the stock markets closed the day flat. Sectoral indices were mixed, with stocks in the IT sector and stocks in the metal sector leading the gains, while stocks in the realty sector lost the most.

At the closing bell yesterday, the BSE Sensex stood lower by 13 points (down 0.1%) and the NSE Nifty closed lower by 5 points (down 0.1%). The BSE Mid Cap index ended down 0.8%, while the BSE Small Cap index ended down by 0.7%.

Top Stocks in Action Today

Tata Steel share price will be in focus today. The stock of the company was among the top gainers on the bourses yesterday after the National Company Law Tribunal (NCLT) approved the company's bid for the debt-ridden Bhushan Steel.

From the pharma sector, Lupin share price will be in focus today as the company reported a consolidated net loss of Rs 7.7 billion in its March 2018 quarterly result.

Hindustan Unilever Ltd share price will also be in focus today. The stock of the company touched its 52-week high level yesterday after the company posted strong earnings for the quarter ended March.

Quick Service Restaurants on a Roll

The quick service restaurant (QSR) industry is finally getting back on the growth track. A part of the growth can be attributed to the low base caused by notebandi induced slowdown. However, the redeeming factor is that the players have been making a conscious effort to boost sales.

Firstly, QSRs are aggressively coming out with offerings that are more affordable and easier on the pocket of consumers. For instance, food offerings such as pizzas and burgers are being launched at attractive price levels. There is a push on new schemes and innovative offerings for an extended period. QSRs have also revamped their menu to offer healthier and local food options to consumers.

Secondly, food service operators have been raising the convenience and accessibility factor by pushing online sales through websites and apps. They also tying up with food aggregators such as Swiggy to increase their online presence.

These efforts have finally begun to yield results. For the March 2018 quarter, Jubilant FoodWorks, present through Domino's and Dunkin Donuts brands in India, reported the highest sales growth of 26.5% during the quarter. Even Yum, that owns Pizza Hut and KFC restaurant brands, registered strong sales growth of 21% and 19%, respectively in the quarter.

With rapidly increasing competition, QSRs need to stay ahead of the curve to grow their business.

Respite for Indian Banks

The country's banks have been battling to resolve the bad loan burden that hit their balance sheets hard. Armed with the Insolvency and Bankruptcy Code, forty of the largest bad loan accounts are being dealt with in the bankruptcy courts.

On a positive note, the rigorous balance sheet clean-up has improved the prospects of the Indian banks emerging stronger thereby strengthening confidence in the country's long-term sovereign growth story. Therefore, Moody's raised the country's sovereign rating in November for the first time in 14 years and upgraded the rating for three lenders, including State Bank of India and Indian Railway Finance Corporation.

As a rub-off effect, Indian banks are now able to secure syndicated loans from international lenders at low interest rates. Banks such as Axis Bank, IndusInd Bank, State Bank of India and Yes Bank have been the beneficiary of cheap funds from the foreign shores. As per Business Standard, there has been a 77% increase in foreign currency loans raised by the Indian banks this year as compared to last year. This comes at a time when there has been a slump in foreign loans extended to banks in the Asia Pacific region.

The bad loan resolution scheme may appear to be stringent and debilitating in the short run, but it promises to improve balance sheet strength and credit worthiness of Indian banks in the long run.

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