September Quarter Results, IPO Buzz, and Top Stocks in Action Today

Thu, 24 Oct Pre-Open

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On Wednesday, Indian share markets traded rangebound throughout the day and ended marginally higher.

The BSE Sensex closed higher by 95 points to end above 39,000-mark. HCL Technologies and Maruti Suzuki were among the top gainers.

While the broader NSE Nifty ended up by 16 points to end at 11,604.

Among BSE sectoral indices, automobile stocks gained the most, followed by IT stocks and consumer durable stocks.

Top Stocks in Action Today

Larsen & Toubro share price will be in focus today as its arm LTHE has won a mega project from Hindustan Petroleum Corporation (HPCL).

As per the company's scheme classification, the mega project bagged by L&T Hydrocarbon Engineering Ltd (LTHE) is worth over Rs 70 billion.

Dr Reddy's share price will also be in focus today as the company has received Establishment Inspection Report (EIR) from USFDA, for the Formulations Manufacturing facility at Shreveport, Louisiana, USA, indicating closure of the audit and the inspection classification of this facility is determined as No Action Indicated (NAI).

Market participants will also track Alembic Pharma share price, Bandhan Bank share price, and Colgate share price as these companies will announce their Q2FY20 results later today.

Key September Quarter Results

From the banking sector, Axis Bank incurred a loss of Rs 1.1 billion for the quarter ended 30 September, due to a one-time hit of Rs 21.4 billion as the value of future relief through deferred tax assets (DTA) will fall because of the corporate tax rate cut.

Adjusted for this extraordinary item, net profit would have surged 156% to Rs 20.3 billion from Rs 7.9 billion a year earlier.

Asset quality improved as the bank wrote off Rs 31 billion in the second quarter of FY20. Gross non-performing assets as a percentage of total assets stood at 5.03% in the September quarter compared with 5.25% in the June quarter.

The bank added fresh bad loans worth Rs 49.8 billion in the second quarter compared to Rs 48 billion in the previous quarter. Corporate slippages stood at Rs 28.6 billion.

Operationally, the bank's performance improved with net interest income growing 17% year-on-year to Rs 61 billion. Net interest margins stood at 3.51% at the end of September quarter.

Meanwhile, RBL Bank's standalone profit after tax (PAT) plummeted 74% year-on-year (YoY) at Rs 540 million due to higher provisioning for bad loans.

Net interest income increased by 47% YoY to Rs 8.7 billion in Q2FY20. Profit before tax fell 67% YoY.

Provisioning cost rose by 281% or nearly three times YoY to Rs 5.3 billion from Rs 1.4 billion reported in the corresponding quarter of the previous fiscal.

Asset quality of the bank worsened during the quarter with gross non-performing assets (NPA) ratio increasing from 1.4% a year-ago to 2.6% in Q2, and net NPA ratio jumping to 1.56% versus 0.74% last year.

From the automobile sector, Bajaj Auto reported 22% growth in profit at Rs 14 billion, aided by a tax expense reversal of Rs 1.8 billion due to the recent lowering of corporate tax rate.

Revenue from operations dipped 4% year-on-year to Rs 77.1 billion. Operating margin also dipped to 16.9% from 17.9% a year earlier.

From the IPO Space...

Ujjivan Small Finance Bank has received market regulators go ahead to raise Rs 12 billion through an initial public offer (IPO). The bank, which had filed draft papers with the regulator in August, obtained its observations on October 16.

As per the draft papers, the bank is proposing to undertake IPO of equity shares of face value of Rs 10 each, comprising a fresh issue of shares aggregating up to Rs 120 billion.

Microfinance lender Ujjivan Financial Services is the holding company of the bank.

The proposed issue includes reservation of equity shares aggregating up to around Rs 1.2 billion for subscription by eligible shareholders of Ujjivan Financial.

The proceeds of the issue will be utilised towards augmenting the company's capital base to meet future requirements.

Ujjivan Financial Services had raised Rs 3 billion in February from investors, including HDFC Life and Sundaram MF, in a pre-IPO placement. The funding valued the company at around Rs 20 billion.

Ujjivan Small Finance Bank will join listed peers like AU Small Finance Bank after the IPO.

From the Commodity Space...

Oil prices declined on Wednesday, holding below US$ 60 a barrel on data showing a bigger-than-expected rise in US crude stocks, but the prospect of deeper output cuts by OPEC and its allies offered support.

US crude stocks rose by 4.5 million barrels to 437 million barrels in the week ended October 18, compared with analysts' expectations for a gain of 2.2 million barrels, data from industry group the American Petroleum Institute showed.

The Organization of Petroleum Exporting Countries (OPEC) is mulling whether to deepen production cuts amid concerns of weak demand growth next year.

OPEC and other oil producers including Russia, a group known as OPEC+, have pledged to cut production by 1.2 million barrels per day (bpd) until March 2020. OPEC and other non-members are scheduled to meet again in December.

Meanwhile, easing trade tensions between China and the United States, the world's two largest economies and biggest oil consumers, were also helping to cushion overall sentiment for oil.

US President Donald Trump said earlier this week that efforts to end the trade war with China were going well.

As per the economic schedule released by Vijay Bhambwani, here are the important events due later today:

• Germany - October Manufacturing & Services PMI
• USA - Core Durable Orders September (M-o-M)
• EU - Interest Rate Decision

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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