Auto Sector Sales in October, Q2FY20 Results, and Top Cues in Focus Today

Wed, 13 Nov Pre-Open

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On Monday, Indian share markets witnessed buying interest during closing hours and ended their day marginally higher.

At the closing bell, the BSE Sensex stood higher by 21 points (up 0.1%) and the NSE Nifty closed higher by 4 points (up 0.04%).

The BSE Mid Cap index ended up by 0.3%, while the BSE Small Cap index ended the day up by 0.2%.

On the sectoral front, gains were seen in the banking sector and oil & gas sector. IT sector and FMCG sector, on the other hand, witnessed selling.

Passenger Vehicle Sales Rise Marginally in October

Data from industry body Society of Indian Automobile Manufacturers (SIAM) showed total passenger vehicle sales in the domestic market increased 0.28% year-on-year (YoY) in October.

A total of 2,85,027 passenger vehicles were sold in October, as against 2,84,223 in the corresponding period a year ago. The marginal increase in passenger vehicles sales fuelled hopes of a recovery in the auto sector, which is struggling against low demand and thousands of job cuts.

Domestic car sales were down 6.34% to 1,73,649 units as against 1,85,400 units in October 2018.

Motorcycle sales declined 15.88% to 11,16,970 units in October as against 13,27,758 units a year earlier. Total two-wheeler sales in October declined 14.43% to 17,57,264 units compared to 20,53,497 units in the year-ago month.

Sales of commercial vehicles were down 23.31% at 66,773 units in October. Vehicle sales across categories registered a decline of 12.76% to 21,76,136 units from 24,94,345 units in October 2018.

In fact, barring utility vehicles, passenger carriers and quadricycles, all other vehicle categories witnessed decline in sales during the month.

How these numbers show up in the coming months remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

September Quarter Results

From the auto ancillaries sector, Amara Raja Batteries reported 370 bps improvement in EBITDA (earnings before interest, tax, depreciation and amortization) margin at 17.2% in the September 2019 quarter (Q2FY20).

The company reported its highest ever net profit of Rs 2.2 billion, up 82% on a year-on-year (YoY) basis. Profit before tax (PBT) increased 25% (YoY) at Rs 2.3 billion during the quarter.

However, operational revenue declined 3% to Rs 17 billion on YoY basis.

From the banking sector, Bank of Baroda reported nearly five-fold YoY growth in its net profit at Rs 7.36 billion for the second quarter ended September 30, 2019. The growth here was driven by higher other income.

The bank's net interest income (NII), or the core income a bank earns by giving loans, rose 10.09% YoY to Rs 70.2 billion in Q2FY20, while net interest margin (NIM) stood at 2.81%, up 19 basis points (bps) on a sequential basis.

The other income stood at Rs 9.4 billion as compared to Rs 1.3 billion in the same period last year.

Bank of Baroda's asset quality declined improved during the quarter, with gross non-performing assets (NPAs) ratio declining to 10.25% versus 11.78% in the year-ago quarter. Net NPA stood at 3.91% as compared to 4.86% in the corresponding quarter last year.

The bank's provisions stood at Rs 42 billion in the September quarter. This was up 6.9% YoY, of which Rs 34.2 billion was for bad loans.

From the automobile sector, Ashok Leyland reported a massive 92.6% YoY decline in its net profit for the quarter ended September 30, 2019.

The company posted a one-time loss of Rs 648 million in Q2FY20 against loss of Rs 193 million in the corresponding period last fiscal, due to expenses on voluntary retirement scheme and provision for obligation relating to a subsidiary.

Revenue from operations fell 48.4% YoY to Rs 39.2 billion while volumes dropped 44% YoY in Q2 to 28,938 units.

At operating level, earnings before interest, tax, depreciation and amortization (EBITDA) plunged 72.4% YoY to Rs 2.2 billion during the quarter.

Pharma Companies Recall their Products

Glenmark Pharma is recalling close to 2.2 lakh cartons of Estradiol Vaginal inserts in the US market due to faulty delivery system.

The company's US-based arm is recalling the lots of the product used for providing relief from menopause symptom.

According to the latest Enforcement Report by the US Food and Drug Administration (USFDA), Glenmark Pharmaceuticals Inc USA is recalling the product in various strengths which was manufactured at company's Goa manufacturing facility.

The ongoing voluntary class II recall is on account of defective delivery system with complaints for difficulty in pushing the plunger of the applicator.

The recall is nationwide within the United States, the USFDA stated.

As per USFDA, a class II recall is initiated in a situation in which use of or exposure to a violative product may cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health consequences is remote.

Similarly, the US-based arm of Aurobindo Pharma is recalling one lot of Ranitidine Tablets (150mg) at the retail level and 37 lots of Ranitidine Capsules (150mg), Ranitidine Capsules (300mg) and Ranitidine Syrup (15mg/mL) at the consumer level due to detection of NDMA (Nitrosodimethylamine) impurity in the finished product.

NDMA, a substance that occurs naturally in certain foods, drinking water, air pollution, and industrial processes, has been classified as a probable human carcinogen as per the International Agency for Research on Cancer (IARC).

To date, Aurobindo Pharma USA, Inc. has not received any reports of adverse events related to this recall, the US health regulator said.

Ranitidine is used to decrease the amount of acid created by the stomach and relieves heartburn associated with acid indigestion and sore stomach.

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