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Currency, Market News, Markets - July 28, 2022

How are Exchange Rates are Determined?

What determines Exchange Rates?

 

Exchange Rate is the value of one country’s (nation) currency against another nation’s currency. In simple terms, it is a relative value between two currencies. Usually exchange rates are free floating depending on demand and supply in market. But there are exchange rates which have restrictions and are not based on floating rate. The other factor apart from demand and supply that determines exchange rate are interest rates, speculation and market sentiment , inflation rates, etc.

Type of Exchange Rate:

Currency Peg – Sometimes a particular country’s currency peg to that of other countries currency. For example – Hong Kong’s dollar pegs to US dollar in range of 7.65 to 7.80, than value of Hong Kong’s dollar will remain between the ranges of 7.65 to 7.80.

Free floating – This rate actually fluctuates due to the change in foreign exchange market. So, if there is any fall or rise in the foreign exchange market, it will affect free floating exchange rate.

Restricted currencies – This is not applicable to all the currencies, as only some countries have restrictions which limit their exchange to be within the country’s border and have value which is set by government.

Spot and forward – Spot price is basically current market value which is also known as cash value. Similarly, exchange rate have Forward rate, which are based on the expected currency rise and fall. Forward rate changes as expected change in market value.

Onshore and Offshore – Sometimes, exchange rate differs in their own country which is because of onshore and offshore rates. This situation occurs between country’s border versus outside its borders and fluctuates accordingly. For example, Chinese government has own structure and controls the currency. By setting a midpoint value for the currency, which allows the Yuan to trade in a band of 2% from the midpoint.

Quotation – Quotation is basically an exchange rate which is quoted using an acronym for the national currency which they represent.

 

What determines currency exchange rate ?

Other currency determined price of one currency. Therefore various factors mainly Fixed Exchange rates, Floating Exchange Rates and Managed Exchanged rates influences Currency rate. Floating exchanges rates and Fixed Exchanges rates are most commonly used to determine rate as Floating rate actually fluctuates due to the change in foreign exchange market. So, if there is any fall or rise in the foreign exchange market, it will affect free floating exchange rate.  Demand and supply are the main factor to determine it in open market operation.

If fixed rates are used by economy than this is not applicable to all the currency, as only some countries have restrictions, which limit their exchange to be within the countries border and have value which is set by government. Countries choose to peg where, a particular countries currency peg to that of other countries currency. For example, Hong Kong’s dollar pegs to US dollar in range of 7.65 to 7.80. Than the value of Hong Kong’s dollar will remain between the ranges of 7.65 to 7.80 usually done to maintain stable rates.

Major factors which determines exchange rates are:

Government – When there is too much volatility in Forex market, then government or regulatory body of that country may intervene and buy opposite currency to control downfall. For Example, if Rupee is depreciating against Dollar with a high difference, than RBI may come forward and buy Dollars.

Imports and Exports – Imports and exports play major role in exchange rates. Therefore, government always try to maintain balance between them. For example, if imports are increasing, it create more burden on that particular country’s economy resulting in rate fluctuation.

Interest Rates – Interest rates on government bonds attracts investors, but rate should be high enough to cover foreign market risk so that investor’s money is safe and credit ratings are stable. This will result in flipping rates in particular countries exchange rate.

Speculations and Market Sentiment – When the markets are moving, there is a lot of speculation about the expected changes into the currency rates which results in investments, redemptions of foreign investors. Through speculations, investors try to earn more profit.

Inflation Rates – Any change in inflation rates results change in exchange rates. Usually, country’s which have low inflation rate have seen appreciation in their exchange rate and vice versa.

Other factors that contribute in fluctuation of exchange rates are country’s political stability, debt holdings and overall performance of economy.

 

 

Importance of Financial Literacy. Why it is a must have today

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REC Board Greenlights ₹1.55 Lakh Crore Bond Fund!
Business, Uncategorized - July 28, 2022

How Green Bonds Work?

How Green Bonds Work?

 

Stakeholders around the world are worried that the Earth’s biodiversity is being destroyed irreversibly. People have a shared conviction that the natural world on Earth has been irreversibly harmed. This is true that we are all affected by climate change. It’s also true that the planet will soon vanish from dwindling natural resources, such as oil and other fossil fuels. It is therefore imperative that corporations begin to invest in environmentally friendly ventures. Business people all over the world are worried about future returns from investing in green projects. The green bonds idea has thus been implemented to help organizations, without exerting excessive pressure on their budgets, and control their push towards sustainability. After all, businesses prefer to be cost-effective rather than environmentally friendly.

 

What is it?

A green bond is mainly a debt financial instrument. It is not financially very different from other bonds. In this debt financial instrument, there is fixed income and pays as per coupon rate. These bonds are unique as they are used exclusively to finance green projects and green initiatives. This can be a new green project built from scratch or an existing project turned into environmentally friendly standards. In 2007, the European Investment Bank opened the world in issuing green bonds. At first, the major problem was issuance size as these bonds issuance size was very small. More investors and organizations have shown attraction in this financing instrument over a period of time. As a result, these bonds now have a healthy primary and secondary market.

 

Benefits:

Worldwide investors queue to purchase green bonds. All these can be seen by the fact that almost all the green bond issues till today’s date observed an over-subscription. The most obvious benefit of green bonds is that they provide financing at relatively small levels for environmentally friendly projects. Secondly, as part of corporate social responsibility, investors are willing to invest in these ventures. They could even point out that they have invested in improving the environment that gives them excellent goodwill in the local community and local market.

Finally, it is easy to track all the green projects that are carried out worldwide. This makes reporting easier in all global summits and provides data and by this world leaders can make choices rather to invest in these ventures or not. Investment in these ventures is subject to various tax cuts. These tax exemptions vary from country to country. However, almost every country that has signed environmental agreements such as the Paris Agreement tends to get tax benefits.

 

Issuance Process:

The first step in issuing green bonds is to identify the project. It is important that a third party examines and certifies the project. This ensures that the project is based on low emissions of carbon. The bond issuer has to define projects that obtain funds from the issuance of green bonds clearly. Things must also ensure that even activities that are not directly linked to the project and are not in any manner polluting the environment. The projects list must then be forwarded to a third party verifier. These companies are usually world-renowned credit rating agencies.

They test the details provided by the issuer and then confirm that the ventures/projects are indeed environmentally friendly. This certificate is required for bonds to be referred to as green bonds. The developer will keep track of the environmental effects of the project continuously. Even if the project in the middle of its operation is not compliant, the same must be reported to the standard board. In the absence of these details, legal action against the misrepresentation by investors can be undertaken.

 

Challenges:

Firstly, even though the issuer can receive funding at a lower interest rate, it needs to make a substantial investment at an early stage. Issuance of green bonds have long and tedious process. Multiple parties have to participate in the issuance process and all these parties must therefore be paid. This offsets the perks of financial support for smaller projects and small ventures. Green bonds can therefore be used cost effectively only if the project have a massive scope and bond issuance size is very big.

Furthermore, there is no simple grading scheme that determines project is completely green. For these problems, different agencies have multiple interpretations. A series of standard guidelines and terminologies is needed to develop green bonds. Bonds that provide greater environmental benefits will have greater tax benefits and less financing costs. Only then, the big companies and investors can invest funds enormously in these projects and ventures.

In a nutshell, green bonds are a revolutionary concept in order to fund environment friendly ventures and projects. Nevertheless, they are still in an evolving stage and must be further recognized.

Credit risk funds. Should you invest?

 

 

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Eternal Q2 FY26: Revenue Explodes, But Profit Takes a Hit As Costs Surge
Business, Currency - July 27, 2022

Forex Trading vs. Regular Trading.

Forex Trading Vs. Stock Trading.

 

The Forex Trading and Stock Trading market:

Forex Trading vs Stocks Trading will allow you to choose the best market suitable for an investor to trade. Traders frequently compare Forex versus Stock to see which market is better for trading. Even though it is interconnected, the forex market and the stock market differ greatly. In the minds of others, the forex market has specific features that make it much more appealing to trade. If you want to trade in the market, it is important to know which trading style is the best for you. But understanding the stock and expected market variations and similarities, often helps traders to make informed trade decisions. It is based on factors such as market conditions, liquidity in the market, and size.

 

Comparison between Forex and Stock Market:

 Both the Forex market vs. the Stock market, have advantages and disadvantages. It comes down to the importance of these features for you personally. Let us first look at an overview of each market, and then logically deduce about Forex Market trading Vs. Stock Market trading. There is no regulator body in the Forex market and is decentralized. Forex Market represents an international trading network of members all over the globe. Well-known Investment banks, several central banks, and commercial companies are the main players in the Forex market.

The stock market has a mixed group of buyers and sellers of stocks which includes individual investors to big companies. As the name suggests, shares of a company are offered in a share market in terms of ownership. These transactions are typical, through stock exchanges. Most corporations choose to float their stock shares to raise capital. The stock exchanges provide the buyers and sellers with a clear, transparent, controlled, and convenient marketplace to trade.

Trading on such exchanges has traditionally been carried out by “open outcry”. But the trend toward electronic trading is high in recent years. However, it is not larger than the Forex market, which is the world’s largest financial market. When the Forex market is weighed against the stock market, the Forex market has more weightage. Why are we interested in the size? The most important factor is, that the bigger the Forex market, the higher its liquidity.

 

The volume comparison:

The size of the Forex market is one of the main disparities between Forex and Stocks. It is a focused trade on pairs like AUD-USD, USD-JPY, EUR-USD, and GBP-USD. The stock market value including all the world’s financial markets is about 200 billion dollars a day on average. A large amount of trading will offer traders many advantages. High volume means that traders can typically make their orders faster and nearer to their desired rates. Although, all markets are vulnerable to shortages, at any price point more liquidity. Allowing traders to enter and leave the market.

 

The Liquidity comparison:

A high-volume market normally has high liquidity. Liquidity results in narrower spreads and lowered costs in transactions. In contrast to stocks on the stock exchange, large Forex pairs typically have relatively small spreads and small transaction costs, which are one of the key benefits of dealing in the Forex market over the equity markets.

 

The trading timing comparison:

The Forex market is a 24-hour market and has no central location. There is always a part of the globe which has the market open and is during business hours. The trading of a listed stock is limited and has specific timings. Stock traders have to stick to stock exchange hours. Several major exchanges have however implemented some form of extended business hours. Stock traders may participate during times of pre-market and post-market trading. This was once only the area of institutional investors. The development of electronic trading has also made retail investors more accessible. Extended trading hours remain significantly low and non-liquid. When contrasting volumes over 24 hours, Forex is again winning. If you want to trade at any given time, it’s easy to compare the Forex market vs. the Stock market and the Forex market is the clear winner.

 

The No commission Forex market:

The main advantage of the Forex market is that it does not involve brokers and does not have any commissions. Spread is the difference between the purchase and sells price which is income to the Forex intermediaries. There is no broker’s charge in the Forex market. Even Forex intermediaries get benefits if they bear risks.

 

The Market focus comparison:

Perhaps a significant difference in Forex markets vs. Stocks markets is the aim of the trader. When you look at a single share in the stock market, you can focus on a relatively small selection of variables. While you may be aware of broader trends in the market, factors affecting the company will be the major look outlook out along with market forces in its specific sector will be more important. Relatively small factors will be of major importance such as the business debt levels, cash flows of the firm and earnings outlook, etc.

The focus is broader with the Forex market. A currency represents the entire economy’s aggregate performance. Consequently, Forex traders are more involved in macroeconomics. The emphasis will be more on general indicators such as unemployment in the country, inflation, and GDP than on the output of the particular sector. If you exchange a Forex pair, you trade two currencies simultaneously. A fundamental trader, therefore, contributes not only to the output of one country but also to two.

 

The conclusion:

The fact of the matter is that of trade is, always stick to what works and go for what fits best for you. If you understand more about one business than the other and have good knowledge about one business then, of course, you are more interested in individual firms and trading stocks will make sense for you. When you think more about macroeconomics, Forex market trading can be better for you. If you don’t have a specific habit but are conscious of transaction fees, Forex market trading might be the way to go.

 

 

Delta Corp – Chances of jackpot for investors increasing

 

 

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Equity Right
Editorials, Equities, Markets - July 27, 2022

Government allows Indian public companies to directly list shares overseas.

Government allows Indian public companies to directly list shares overseas.

 

Government’s vision for betterment of Indian companies:

In late January 2020 Government of India communicated to media that they are planning to allow direct listing of Indian companies in foreign markets. This will help Indian companies to not only rely on domestic markets but they can also raise capital on large scale from various foreign markets which will help companies in diversification and growth. This move can directly help Indian companies in increasing their turnover and profits.

Till now Indian companies go for the depository receipts to attract investors globally but this is bit unfamiliar amongst the investors globally and been less attractive in recent years. A minimum of 15 Indian companies currently attract foreign investors via ADR’s and GDR’s. These companies includes Reliance Industry, HDFC Bank, Infosys and many others.

 

Green signal by Indian Government:

Finance Minister Nirmala Sitharaman had announced an economic package of ₹ 20 lakh crore under government’s Atma Nirbhar Bharat Abhiyan. This is done for the revival of Indian Economy. It is an umbrella of massive ₹ 20 lakh crore economic booster package. The government ensured to provide some relaxation in all the sectors.

To improve “ease of doing business” in India, government allowed Indian public companies to list their shares in foreign markets. This provision will help Indian companies for better valuations, rapid growth and expand their businesses on a large scale. This move will help Indian companies to get funds at a cheaper rate from various foreign markets. This will directly help Indian economy to recuperate in a speedy way.

Government noted private companies that listed Non-convertible debentures (NCDs) on Indian stock exchanges not to be considered as listed companies. It is also expected that this provision is to prevent Indian companies to register themselves in foreign markets like Singapore and London for raising a fund and going global.

 

Existing vs proposed rule:

The existing rule states that companies which are listed on Indian stock markets can only list their company in foreign markets. Whereas, new proposed rule states that there is no compulsion for it. Indian companies can list themselves directly in various foreign markets to raise capital.

Until now, only American Depository Receipt (ADR’s) and Global Depository Receipt (GDR’s) can collect capital from foreign market sources. At least 15 Indian companies follow this mechanism to raise capital from foreign markets. However, this is not much familiar amongst the global investors. To eradicate this the new provision will allow Indian companies to a fresh new issue of shares or sale of existing holdings.

 

Rules and regulation:

All the required rules and regulation for listing an Indian company at abroad will be notified soon by the government. Once the provisions to the Foreign Exchange Management Act (FEMA) and Company Law Regulations are passed. Media noted Indian foreign exchange control laws do not require free capital convertibility, and there are other regulatory limits on capital account transactions.

Nevertheless, this proposal has been under discussion for a couple of years between stakeholders and regulators, especially regarding the selection of foreign jurisdiction. SEBI had indicated in 2018 that this route would be open only to the financially sound companies, so that the mechanism could not be used for exploitation. Sources indicated that final rules in this respect would probably be based on the Financial Action Task Force’s recommendations.

Finance Minister Nirmala Sitharaman noted, this provision of direct listing. If Indian public companies are not available over the globe but will be allowed in permissible jurisdictions.

 

Precautionary measures:

However, the approval will not come without any protections. The Indian government is likely to go along with the recommendations raised by SEBI in 2018. This requires a direct listing of Indian companies in abroad. It had suggested 10 overseas jurisdictions, including the US, UK, Japan, China, Hong Kong and South Korea for Indian companies to list. The selection was based on the fact that these jurisdictions are part of the Financial Action Task Force (FATF), The Anti-Money Laundering Global Task Force (GTF-AML) and IOSCO.

SEBI also suggested that this provision should be available only for financially stable . This will aid  to minimize frauds and manipulation. The firms with a  paid-up capital of 10% will be allowed to list in the foreign market.

The provision of capital raising in an overseas market can also have an impact on the Indian currency market. Since the flow of overseas capital can put pressure on the Indian currency and may lead to volatility. RBI and SEBI can be jointly involved to check this.

 

 

 

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Dalmia Bharat Reports Disappointing Q3 Results, Sees Limited Short-Term Growth
Business, Equities, Market News, Markets, Research, Result Updates - July 27, 2022

UltraTech Cement Q1 Results: Profit falls 7% YoY to Rs 1,582 crore but beats estimates.

 

UltraTech Cement Q1 Results: Profit falls 7% YoY to Rs 1,582 crore but beats estimates.

 

UltraTech Cement reported net profit of Rs 1,582 crore for Q1FY23, 7.45% YoY lower than Rs 1,700 crores. However, the net profit managed to beat analyst expectations of Rs 1,214 crore. The bottom line fell by 35.6% QoQ from Rs. 2460.5 crores.

UltraTech’s revenue was higher by 28.2% YoY in the June quarter at Rs 15,163.98 crore as against Rs 11,829.84 crore reported in Q1 FY22. Revenue figure also managed to beat the Street as an ET NOW poll had estimated the figure at Rs 14,238 crores. The top line was down by 3.8% on a QoQ basis.

The company achieved capacity utilisation of 83% as compared to 73% during the quarter. Domestic sales volume increased by 19% YoY basis. The demand for cement was affected due to overall inflationary trends and lower labour availability in May 2022. However, the demand for cement grew in June 2022 on pre-monsoon construction activity.

The June quarter witnessed volume growth of 17% YoY and revenue growth of 34% YoY. The raw material cost increased 13% YoY. Domestic sales volume improved by 19% on a year-on-year basis.

The volumes saw strong traction over the low base of last year and the price hikes taken by the company enabled improvement in realizations which increased revenue growth. The profitability is affected by the rise in power and fuel costs.

Ultratech’s consolidated cement sales volume grew by 16.3% YoY to 25.04 MT in Q1FY23 led by healthy demand across segments like road infrastructure, realty and metro projects. Capacity utilization stood at 83% in Q1FY23 against 90% in Q4FY22. Blended realisations grew 10.2% YoY/6.4% QoQ to INR 6,056/ton as company took price hikes in key markets. Prices in Q1FY23 has gone up in double digits in Central/North, 5-6% in East/West and was flat in South.

The other income for the quarter slipped by 47% at Rs 108.7 crores as compared to Rs 205 crores in Q1 FY22. The other income during the March quarter was lower at Rs 92.4 crore.

The rise in the pet coke and crude prices resulted in a significant surge in the power & fuel cost for the company which jumped 595 bps compared to 26.5% as percentage of revenue in Q1 FY22. Compared to the March quarter, the cost of power & fuel is higher by 130 bps.

Other expenses increased by 24 bps to 12.2 percent of total revenue. The company saved on the costs of employees and freight & forwarding costs which decreased 74 bps and 69 bps respectively in Q1 FY22. The employee cost as percent of revenue increased by 22 bps while freight fell by 36 bps OoQ.

EBITDA declined by 6.4% YoY to Rs. 30,94.9 crores due to higher input cost. Though on QoQ basis EBITDA saw a marginal growth of 0.7%. EBITDA margin contracted by 755 bps YoY to 20.4%, though on QoQ basis margin expanded by 92 bps. Margin contraction on YoY basis was mainly due to 65.3% YoY rise in Power & Fuel costs along with 57.4% YoY higher raw material costs and 24.3% YoY higher logistics costs.

EBITDA margin contracted by 755 bps YoY to 20.4%, though on QoQ basis margin expanded by 92 bps. Margin contraction on YoY basis was mainly due to 65.3% YoY rise in Power & Fuel costs along with 57.4% YoY higher raw material costs and 24.3% YoY higher logistics costs. EBITDA/ton saw a decline of 19.6% YoY to INR 1,236, though on QoQ basis it grew by 11.4% as pet coke and fuel prices started softening from their peak.

The shares of the company are currently trading at Rs. 6539.90, up by 141.20 points or by 2.27% as compared to the previous closed at Rs. 6399.35. The stock opened at Rs. 6390.30. The market cap of the company is Rs. 189,000 crores.

 

 

 

 

 

 

 

Infosys reports a net profit of Rs.5,350Cr. in Q1 FY23. 

 

L&T Technology Services Ltd Q1 Results Update.

 

HUL Q1 FY23 Result Update: HUL beats estimates with Rs 2,381-cr net profit in Q1; revenue up 19.6%

 

 

 

 

 

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Liquidity is a major concern in the Indian Banking Sector
Business, Markets, Result Updates - July 27, 2022

Axis Bank’s net profit was up by 91% in Q1 FY23.

Axis Bank’s net profit was up by 91% in Q1 FY23.

Axis Bank reported a net profit of Rs. 4,125 Cr. in the June 2022 quarter, a jump of 91% from the June 2021 quarter at Rs. 2160 Cr. The advances stood at Rs. 7.01 lakh crore, up by 17% from June 2021. However, the advances were down by about 7.07 lakh crores from March 2022.

In Q1 FY23, NII increased by 20.9% year on year to Rs. 938 Cr. NIM stood at 3.6%, improved by 11 bps QoQ and by 14 bps YOY. The PPOP was at Rs. 588 Cr., with a decline of 8.2% YOY. The fee income was at Rs. 357 Cr. in June 2022, up by 34% YOY. The provisions for the quarter stood at Rs. 359 Cr. The street is disappointed with the loan growth for the June 2022 quarter, down by 7.5% QOQ and 43.5% YOY at Rs. 368 Cr. The gross slippage ratio was at 2.05%, declining by 20 bps YOY and 33 bps QOQ. 45% of the gross slippages were contributed by borrowers’ linked accounts, which were standard. The GNPA and NNPA ratios improved and stood at 2.7% and 0.64%, respectively.

The PCR ratio was at 77% for the quarter. We believe that the asset quality will be constant and improve in the near future. The cost to income ratio stood at 52.5% for the June 2022 quarter at Rs. 357 Cr. and we expect the ratio to increase due to investments in technology. While income growth is expected to improve, The bank is focused on the three core areas: deepening performance culture, strengthening the core and building for the future. It continues to invest in the SME space, extending its distribution and service across India. On Citibank customer business integration, Axis Bank is waiting for CCI approvals and expects to close transactions. 69% of the bank’s loan book is floating rates, which will rise in the policy tightening environment.

The stock price closed at Rs.719.05 and touched an intraday high of Rs.707 and a low of Rs.703. The market capitalization for the bank is Rs. 2.21 lakh cr. The 52-week high was at Rs. 866 and the 52-week low was at Rs. 618.25.

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Happiest Minds Technologies' net profit jumps by 57% in Q1 FY23.
Markets, Result Updates - July 26, 2022

Happiest Minds Technologies' net profit jumps by 57% in Q1 FY23.

Happiest Minds Technologies’ net profit jumps by 57% in Q1 FY23.

Happiest Minds recorded net sales of Rs. 328.92 crores in June 2022 compared to Rs. 244.61 crores in June 2021. The net profit stood at Rs. 56.34 crores in Q1 FY23, up by 57.68% sequentially at Rs. 35.73 crore because of lower other income. The free cash flows were recorded at Rs. 86.39 cr. The service business was driven primarily by Edu-tech, contributing 23.7%, BFSI, contributing 13.7%, and industrials, at 8.2%. Digital infrastructure/Cloud, AI/Analytics and SaaS had a contribution of 45%, 11.6%, and 21.5%, respectively.

EPS stood at Rs. 3.96 in June 2022, up from Rs. 2.51 in June 2021. EBITDA stands at Rs. 87.75 crore, up 32.65% from Rs. 66.15 crore YOY. The reported operating margin stood at 22.7% QoQ, down by 30bps due to lower utilization. 97% of the total revenue comes from digital business, and 93% is contributed by Agile. Europe and the USA witnessed positive growth on a QOQ basis, with healthy pipelines in digital services. 90% of the total revenue was repeat business. The IT tech added 5 new clients and now has 211 active clients in total. The smaller accounts of non-top 10 clients did well and contributed approximately 57.1% of the total revenue. The firm was able to increase business from existing clients while also adding two new clients to the Fortune 2000/Forbes 200 billion dollar corporation.

In the concall, the IT firm mentioned that 15% of the total revenue was from the new business and the remaining came from the existing operations. One of the large clients was cautious in the last quarter but has shown interest in investing more in its new features in the product platform. The firm intends to hire more than 500+ freshers and around 300+ will be joining by August 2022. Happiest Minds will continue to invest in new technology and maintain an EBITDA of 22% to 24% in the coming period. The management believes that they will maintain a CAGR of 25% over the next five years. They are optimistic about their future opportunities and focus on the annuity business. The management expects a multi-year tail wind in digital technologies, multi-hybrid cloud and automation.

We believe that the recent intake of freshers, constant investments in skill addition, currency depreciation, along with supply side challenges, wage hikes, increasing subcontracting costs, and higher intake will keep margins under check in the near term. The stock is currently trading at Rs.974.55, down by 24.05 points, or 2.41%. The stock touched a 52-week high of Rs.1568.00 and a 52-week low of Rs.785.60. The Bangalore-based firm’s market cap is at Rs.14258 crores.

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Kia India Posts 14.43% Yearly Sales Growth in May 2025
Business, Equities, Market News, Markets, Research, Result Updates - July 26, 2022

Wipro Q1 FY23 Result Update: Profit falls 21% YoY to Rs 2,563 crores.

 

Wipro Q1 FY23 Result Update: Profit falls 21% YoY to Rs 2,563 crores.

On 15th July 2022, Wipro reported its profit at Rs 2,563 crore, down by 20.9% year-on-year from Rs. 3,243 crores on account of higher employee-related costs pushed up the information technology services firm’s overall expenses. Total expenses for the June quarter increased by 22.9% to Rs 18,648 crore, with voluntary IT services attrition at 23.3%. On a sequential basis, the company’s net profit fell 16.96% from ₹3,083.7 crores in the March quarter.
The operating margin for Q1 FY23 is 15% as compared to 17.2% in Q1 FY22 and 17.2% in Q4 FY22. The low operating margin is because the company is investing in solutions and capabilities to strengthen its position as a strategic partner for its clients. In constant currency (CC) terms, IT services segment revenue increased by 2.1% QoQ and 17.2% YoY.
Revenue from operations grew by 18% to Rs 21,529 crore as against Rs 18,048 crore in Q1FY22. The revenue increased by 3.2% QoQ from Rs. 20860 crores.
The Earnings before interest and tax stood at Rs. 3085.6 crores, fell by 9.3% QoQ from Rs. 3402.9 crores and by 1.8% YoY from Rs. 3141 crores. EBIT margin fell 200bp QoQ to 15% due to lower utilization and higher investments in employees.
The total number of employees increased to 2.58 lakh with the addition of 15,446 employees during Q1 FY23. Wipro’s attrition rate stood at 2.3%.The closing strength of employees for IT Services was at 258,574, an increase of 15,446 QoQ.
Dollar Revenue was up 0.5% QoQ in CC term to USD 2,736mn. Rupee revenue grew by 3.2% QoQ to INR 215,286Mn, supported by growth in consulting and engineering services. Sequential growth performance was led by the consumer (+5% QoQ CC) & BFSI verticals (+2.4% QoQ CC), which grew above the company average, while manufacturing declined sequentially. Digital engineering and application grew faster (+3.5% QoQ) than iCORE. In IT Services. Organic growth witnessed softness in deal wins; BFSI, Consumer and Telecom Verticals are the key revenue drivers for the quarter. Wipro won 18 large deals in Q1FY23.Overall TCV of deals grew 32% YoY and ACV grew by 18% YoY. Deals were across verticals/geographies and the proportion of the deal wins are mostly new deals. The company’s order bookings grew 32% YoY in total contract value terms, powered by large transformation deals, and the pipeline today is at an all-time high. In terms of sector mix, Wipro earns 35.4% of its revenue from banking, financial services, and insurance, 18.5% in consumer, and 11.5% in health.

The Earnings Per Share for the June quarter was Rs. 4.69.
The shares of Wipro are currently trading at Rs. 414.80, up by 1 point or by 0.96% as compared to the previous close of Rs. 410.85. The shares opened at Rs. 410.50. The market cap of Wipro is Rs. 227,381 crores. The stock hit intraday high and low of Rs. 415.65 and Rs. 408.55 respectively.

 

 

Infosys reports a net profit of Rs.5,350Cr. in Q1 FY23. 

 

L&T Technology Services Ltd Q1 Results Update.

 

HUL Q1 FY23 Result Update: HUL beats estimates with Rs 2,381-cr net profit in Q1; revenue up 19.6%

 

 

 

 

 

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HUL Q1 FY23 Result Update
Business, Equities, Market News, Markets, Research, Result Updates - July 26, 2022

HUL Q1 FY23 Result Update: HUL beats estimates with Rs 2,381-cr net profit in Q1; revenue up 19.6%

 

HUL Q1 FY23 Result Update: HUL beats estimates with Rs 2,381-cr net profit in Q1; revenue up 19.6%

 

HUL reported a net income of Rs. 2,381 crores, up by 13.5% YoY from Rs. 2,097 crores. The net income increased by 3.4% QoQ from Rs. 30,640 crores. The company’s performance in the June quarter was led by market share gains in various categories and a jump in sales by volume even as reduced the weight of some packaged products.

The company’s revenue increased by 19.6% YoY to Rs. 14,357 crores in Q1 FY23 as against Rs 12,004 crores in Q1 FY22. The company reported 6.2% QoQ growth in revenue from Rs. 13,767 crores. The underlying volume growth was 6.0% YoY. The YoY revenue growth has been robust across segments. Home Care, Beauty & Personal Care (BPC), Foods & Refreshment (F&R) segments have seen YoY growth of 29.8%, 17.9%, 9.3%  respectively. BPC segment growth was ahead of market growth with premium segments seeing strong growth. Within the F&R segment, ice-creams had a strong quarter while coffee and foods performed well, and tea portfolio performance was stable.

EBITDA stood at Rs. 34,02 crores (+16.5% YoY/ +3.1% QoQ). EBITDA margins were at 23.3%, a decline of 69 bps YoY and 71 bps QoQ. The decline in gross margins was partly offset by pricing actions and optimizing all non-consumer costs.

Other income was higher in Q1FY23 due to higher commission from GSK and government grants. Employee costs declined on a YoY basis due to growth leverage and high base of Q1FY22 which had covid related expenses.

For the June quarter the EBIT stood at Rs. 3121 crores, up by 17.3% YoY and 3.2% QoQ. EBIT margins were flat YoY as the cost inflation was offset by cost savings, operating leverage from high growth and price increases. BPC EBIT margins declined 167 bps YoY impacted by the high inflation. F&R segment EBIT margins declined by 214 bps YoY due to adverse mix as ice-creams which is a lower margin category had a strong quarter.

HUL’s performance is a result of market outperformance, which in turn is a result of large players benefitting from inflation in commodity-sensitive categories and, continued work on category development (both formats and premiumisation). HUL gained market share in over 75%  of its portfolio during the quarter. Sales volumes jumped 6% YoY even as it reduced weights of of several of its packaged products to protect margins given the steep inflation in commodities.

During the quarter, the company took a 12 %  price increase across its portfolioThe company’s volume growth stood at 6% in the April-June quarter (on a high base of last year) as against a contraction of 5% for the industry. In the June quarter last year, the company’s volume growth was 9%.

HUL’s foods and refreshments category grew 9% in Q1, driven by performance in ice-cream, coffee and food solutions. The FMCG major logged a 6% volume growth for the quarter. The company’s Home Care segment delivered 30% growth driven by strong performance in Fabric Wash and Household Care and effective market development actions.  The Beauty & Personal Care segment reported growth of 17%. Hair Care increased in high double-digits, led by strong performance in the premium portfolio.

The EPS for the quarter is Rs. 10.1, up by 13.5% YoY and 3.4% QoQ.

The shares of the company are currently trading at Rs. 2,555, down by 68.6 points or by 2.61% as compared to the previous close of Rs. 2623.60. The shares opened at Rs. 2,625. The market cap of the company is Rs. 600,320 crores. The stock hit an intraday high and intraday low of Rs. 2,625 and Rs. 2,553 respectively.

 

 

 

 

 

Tata Metaliks Q1 net profit falls sharply to Rs 1.22 crores.

 

Jindal Steel & Power Ltd Q1 FY23 Result Update: Net profit jumps to Rs. 2,771 crores.

 

 

Oberoi Realty reported a decline in Book Value.

 

 

 

 

 

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Result Updates - July 26, 2022

JSW Steel's net profit declined to Rs. 839 crores in Q1 FY23.

JSW Steel’s net profit declined to Rs. 839 crores in Q1 FY23.

Net profit declined to Rs. 839 crores compared to Rs. 5900 crores in June 2021. The total revenue reported was down by 32% YOY and 19% QOQ to Rs. 38126 crore in June 2022. EBITA stood at Rs. 4,309 crore and the EBITDA margin declined by 29% to 11.3%. The fall in EBITDA was contributed to by the lower volume of sales, loan translation losses, NRV provisions, etc.

The domestic steel industry was impacted by global events and the imposition of a 15% duty on steel exports in May 2022. Exports fell by 26% from March 2022 to June 2022.crude steel production was at 5.77 million tonnes and saleable steel sales were at 4.449 million tonnes. It was up 12% YOY but down by 21% QOQ, mainly due to a sharp drop in export volume. The company’s average capacity utilisation for the quarter was 93% in June 2022 compared to 98% in March 2022. They have also planned the maintenance shutdowns that were scheduled for during the year. This lowered the average capacity utilisation.

Among the subsidiaries, JSW Steel Coated Products recorded an EBITDA loss for provisioning for inventory, while BPSL’s EBITDA was down by 55% QoQ. Acero Junction’s EBITDA plunged down 87% QoQ; however, Plate and Pipe Mill reported better numbers on strong shield demand for EBITDA, up 14% QoQ. Europe managed to get rail orders, thus securing the operating margin.

As the inventory is rising and demand is weak, coupled with few opportunities to export in the near term, the company has moderated its fabrication. We have slightly reduced our volume forecast for FY23, but management remains confident that lost volumes will be recovered in the coming quarters.JSW is finalising its deal with a few auto makers for a hike of Rs.900/t and is still negotiating with the major auto players. The company has also started to buy coal from Russia at a discount. However, Australia is the major source of coal for JSW.

We expect the excess finished steel inventory in the industry to prohibit any future price hikes. To evacuate the inventory, the companies will have to slow down production or export some quantities. This will be over by Q2 – Q3 FY23 and price hikes can be seen. We believe one more round of correction will happen in the steel industry. As it is a cyclical industry, weak quarters are expected due to monsoons, which supports our dip in the stock price.

The stock price closed at Rs. 596.65 on Tuesday and touched an intraday high of Rs. 599 and an intraday low of Rs. 581.60. The 52-week high for the company was Rs. 790 and the 52-week low was Rs. 520. The market cap was at Rs. 143 lakh crore.

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