Tasty Bite Eatables: Justifying Its Premium Valuation
Tasty Bite Eatables reported superb results for the September 2017 quarter when revenues jumped 45% year-on-year (y-o-y), from Rs58 crore in the September 2016 quarter to Rs85 crore in the September 2017 quarter. The operating profit shot up 102% y-o-y to Rs15.7 crore on the back of an expanded operating margin which was up from 13.3% to 18.47%. Thanks to increased revenues and expanded...
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  • Will Nifty, Sensex Go Up ? – Monday closing report

    We had mentioned in Friday’s closing report that Nifty, Sensex might remain weak. The major indices of the Indian stock markets were in the negative for most of the time and closed flat over Friday’s close. If Nifty closes above 10,200, it has a chance of heading higher. The trends of the major indices in the course of Monday’s trading are given in the table below:

     

     
    Buying in IT (information technology), metals and healthcare stocks pushed the key Indian equity indices higher during the mid-afternoon trade session on Monday. According to market observers, a surge in stocks of IT major Infosys, along with other index heavyweights like Tata Motors, Bharti Airtel, HDFC and Hindustan Unilever added to the upward trajectory of the key indices. On the NSE, there were 562 advances, 946 declines and 53 unchanged.
     
    Indian shares opened higher on Monday tracking the gains in Infosys, which surged 3% after the company over the weekend said it has appointed Capgemini's Salil Parekh as Managing Director and Chief Executive Officer effectively from 8 January 2018. However, benchmark indices gave up some of their early gains as Reliance Industries, Larsen and Toubro and Sun Pharma came under selling pressure within minutes of opening trade, pointed out market analysts.
     
    The Reserve Bank of India (RBI) is expected to keep its key interest rate unchanged at its penultimate monetary policy review of the fiscal on Wednesday owing to higher inflation in October and a surge in oil prices, even as the reversal in the decline of GDP growth during the second quarter has eased pressure on the central bank to cut rates. At its previous bi-monthly policy review here in October, the RBI had maintained status quo on its repo, or short term lending rate for commercial banks, at six per cent, citing risks to inflation and uncertainties on the external and fiscal fronts. The central bank had earlier, in August reduced the repo, or its repurchase rate by 0.25% to 6%. According to the minutes of October's Monetary Policy Committee (MPC) meeting, Governor Urjit Patel said: "We have to be vigilant on account of uncertainties on the external and fiscal fronts; this calls for a cautious approach." Japanese financial services major Nomura said in a report that input cost pressures are marginally higher now, which along with higher food inflation is likely to push retail inflation slightly above the RBI's target of 4% in November and beyond. "We expect a hawkish hold from the RBI..and policy rates to remain unchanged through 2018," it said. If interest rates don’t go up in the medium term, there will be no sharp correction in the major indices in this context.
     
    Coal India Ltd (CIL) said coal supplies to power utilities increased by 9.2% to 290.59 million tonnes (mt) during April to November period of the current fiscal compared to 266 mt during same period last year. "On the back of higher rake loading, CIL's coal supplies to power utilities of the country posted a healthy 9.2% growth at 290.59 mt during April-November 2017 continuing the upward spiral. This translates to a robust 24.59 mt increase in absolute terms compared to 266 MTs during April-November 2016," the miner said in a statement. For November only, the growth in coal supplies to thermal power stations of the country was up by around 9% at 40.92 mt as against 37.56 mt supplied during year-ago month. The increased supplies saw the coal stocks at power stations going up by over two mt to around 10 mt at the end of November 2017 compared to closing stock of 7.9 mt in October 2017. The miner said it was gearing up to step up the supplies even further to pull the power stations out of the critical situation. Average rake loading per day to the power sector recorded a growth of 6.8% during the eight-month period of current fiscal. Coal India shares closed at Rs266.55, down -2.09% on the BSE.
     
    Bharti Airtel, one of India’s largest telecommunications service providers, announced on Monday that it has acquired a strategic stake in Juggernaut Books, a popular digital platform to discover and read high quality, affordable books and to submit amateur writing. The investment will enable Juggernaut to ramp up content acquisition and digital marketing and prepare for a subscription offering launch in the next few months. Badal Bagri, Chief Financial Officer, Bharti Airtel, said: "Juggernaut is an exciting digital platform and complements our content vision. We look forward to working with them and supporting the next phase of their growth journey."  Juggernaut's former investors include Infosys co-founder and current chairman, Nandan Nilekani and Boston Consulting Group India CEO Neeraj Aggarwal. Launched in April 2016, the platform has close to 1 million downloads across Android and iOS. Bharti Airtel shares closed at Rs487.80, up 0.94% on the BSE.
     
    IT (information technology) bellwether Infosys has appointed Salil S Parekh as its Chief Executive Officer and Managing Director with effect from January 2, 2018 for a five-year term, a regulatory filing by the company said. Parekh will be joining Infosys from Capgemini, where he was the member of the Group Executive Board. The company said UB Pravin Rao will step down as interim CEO and MD effective January 2, 2018 and will continue as Chief Operating Officer and a whole-time Director of the company. Infosys shares closed at Rs985.30, up 2.80% on the BSE.
     
    The top gainers and top losers of the major indices are given in the table below:
     
     
    The closing values of the major Asian indices are given in the table below:
     
  • User

    Will IPOs lead to sector-specific credit revival?
    After the muted performance till FY2015, Indian market for initial public offerings (IPOs) picked up with 70 and 106 companies listed in the last two years. This further gained momentum in the current fiscal with 112 companies already hitting the IPO market till October 2017. Rise in IPOs definitely presents a good picture for businesses and corporates as it represents a better option for
    raising money, especially in the current context, says a research report.
     
    In the report, State Bank of India (SBI) says, "The surge in the secondary market has encouraged many companies to hit the equity market for capital in search for better valuations. When the market rise it is the also the best time for promoters to raise money from the market."
     
    "From investors’ perspective, retail investors have shown an increased appetite for equity market, mutual funds and IPOs, owing to lowering of interest rate on bank deposits and ease of investment in market. Also, strategic investors like sovereign wealth funds view such issues as opportunities to deploy significant amount of money," it added.
     
    During FY2010 and FY2011, India Inc raised a whopping Rs46,121 crore and Rs49,438 crore, respectively. After this, the IPO market turned lukewarm. However, during just seven months of current fiscal, Indian companies raised Rs49,175 crore through IPOs. This amount is more than what India Inc raise between FY2012-FY2016 together.
     
     
     
    According to the report, between FY2010 and FY2018 (up to 31 October 2017), maximum amount of Rs43,921 crore has been raised by power sector, followed by insurance, mining, minerals and metals, finance and construction. Insurance sector has come to the market this fiscal with four companies alone raising Rs31,320 crore.
     
    Avenue Supermarts Ltd has proved to be the appetiser for the equity market after a lull of almost seven years when Coal India Ltd received a bid for Rs2,31,031 crore against its issue size of Rs15,199.44 crore in November 2010, SBI says.
     
    "This," the report says, "shows the market appetite and investor acceptance of equity as an asset class. 
     
     
    "We also compare the returns given by these companies attracting highest demand from the investors. Though all the scripts (in table above) have given excellent returns, there are some exceptions. For example, in recent year capital appreciation for Coal India seems to be very low despite high demand during listing. One of the reasons is that the scrips give excellent dividend yield," the report says.
     
    According to SBI, there are various reasons that can explain the recent splurge in the IPO market. Ease of listing criteria for micro, small & medium enterprises (MSME) has been one of the reasons for increasing number of companies approaching capital market. Furthermore, economic reform initiatives of the Government have boosted sentiments of the market, which in turn has led to improvement in doing business. This is further corroborated by the recent sovereign rating upgrade by the Moody’s.
     
    "The current upsurge will last as long as the upswing in market continues. Also, the performance of the companies which got listed in recent years will determine the future course for IPO market. If they give reasonably decent returns to investors with their average price remaining above their listing price then only it is going to remain attractive source of investment. However, it cannot be assumed to take place of debt financing through banks as the former depends on market sentiments which can be very volatile depending upon domestic as well as global developments," the SBI report concluded.
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