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Adani Ports sees volumes recovery in Q2, gears up for Concor acquisition

by 5paisa Research Team 29/10/2021

ADSEZ's operating performance in 2QFY22 led the EBITDA (ex-forex) to grow 19% YoY to Rs. 22.1bn. Port EBITDA grew +22% YoY with Port margins at 70% vs 70.7% YoY and 70.6% QoQ. Port EBITDA/T stood at Rs. 308 vs. Rs. 306 YoY and INR311 QoQ. In 2QFY22, topline grew ~22% YoY to Rs. 35.3bn, while Logistics revenue grew 21% YoY and margins increased to 26.3% vs. 23.1% QoQ and 22.5% YoY. SEZ revenue stood at Rs. 250mn vs Rs. 7.4bn QoQ and Rs. 210mn YoY, while port revenues grew by 24% YoY. Cargo volumes grew 21% YoY to 68.3mnT along with an increase of 23% YoY growth in Container, and 26% YoY growth in Coal. Volumes slipped 10% led by 28% QoQ drop in Coal volumes on account of higher coal prices. Net Debt stood at Rs. 31.3bn as of 1HFY22 vs. Rs. 28.5bn as of FY21 end.

Volumes at Mundra were flat YoY, Dahej grew at +30% YoY, Hazira at 17%, Dharma at 2% YoY, Kattupalli at -33% YoY. Reported PAT stood at Rs. 9.5bn down by 31% YoY as the company had to book an exceptional loss of Rs.4bn relating to non-receipt of SEIS income from government, post change in regulation. Overall for FY22, the volume guidance was maintained at 350-360mnT.
ADSEZ, overall, has targeted to reach 500 MMTPA in next 4years, and these will continue to grow to 200 from 60-70 currently and build a rail track of 2000km. The company has a targeted expansion to 300-350 MMTPA of capacity over the course of concession of 50 years at Dighi Port. 

The company’s annual capex target of Rs. 31-35bn comes on account of various ports, including capex in Sri Lanka terminal, Vijinjam, and logistics parks but doesn't include the impact acquisition in readymade warehousing segment. Company incurred capex of Rs. 19bn in 1HFY22 vs. Rs. 9bn YoY

Rail modal share at Mundra now stands at 35% vs. 31% and this is targeted to reach 38-39% by FY22 end. For its investment plan in Sri Lanka, the company plans to develop a total berth length of 1400mt i.e. 3.8mn Teus capacity terminal. The construction for the same starts in December 2021, and plans to complete Phase 1 construction in 24 months and the cost of Phase 1 & 2 is estimated at US $650mn. The management announced an appointed date of 1 April 2021 for the merger of Gangavaram Port and is expecting NCLT approval for its acquisition before the end of FY22. 
The company is gearing up for Concor acquisition and has been accumulating cash for the same. There has been a build-up of debt, however, net debt may remain at current levels of Rs. 31bn as management expects to fund the acquisition from next year FCF of Rs. 80bn as the acquisition process to start from April-22.

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Metal sector gains momentum in US, Europe and Indian markets while China markets faces the heat

by 5paisa Research Team 29/10/2021

In traders’ market, the domestic HRC prices slipped by 0.5% WoW to INR70,670/t on average while prices in the secondary market dropped Rs. 2,000/t last week on account of festive season but didn’t really cheer the buyer as the prices were still high. 

Domestic iron ore (63% grade fines) prices in Odisha are up by 20% MoM to INR7,000/t. The firm demand is confirmed by the positive trends in iron ore e-auction. This was double checked out with NMDC’s notification on prices bottoming out.  Landed price of imports still stays significantly above domestic prices, at a premium of 10–12% to the domestic HRC price.

Analysis from Q3CY21 results of SSAB, Erdemir, Posco and Russian companies suggests expectations of improvement in realisation/shipments in Q4CY21, prices may stabilize as restocking in the European market continues and energy prices are likely to stay relatively firm in the near term. The automotive sector is still impacted by the semiconductor chip shortage which may also impact the metal sector in near term. Despite demand uncertainty and an attempt to regulate commodity prices in China, there seems to be a limited downside to regional prices on account of exports remaining low.

Steel prices remain steady everywhere else except China which shows weakness in domestic steel prices in China owing to the government’s endeavours to regulate prices. The steel and aluminium prices and supply sides are also impacted by the plan for carbon emission peak by CY30. In Europe and the US markets, the spot prices have started gaining momentum again as restocking demand for Q1CY22 shipments gathers steam. Domestically, steel prices are consolidating after surging 10% in the past month. 

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An investment of Rs 2,000 pm would have made Rs 3 lakh in eight years

An investment of Rs 2,000 pm would have made Rs 3 lakh in eight years
by 5paisa Research Team 29/10/2021

If you had invested Rs 2,000 every month then by now your worth of investment would have been approximately Rs 3,80,000.

An individual can create huge wealth by investing via a Systematic Investment Plan (SIP). Mutual fund offers an investor two investment options such as SIP and Lump sum. SIP option is feasible to all types of individuals whether they have low income, moderate-income or high income as it can be started as low as Rs 100 or Rs 500 which vary according to the mutual funds. SIP aids an individual to make the habit of investing regularly.

Mutual funds offer various types of schemes such as debt-oriented schemes, equity-oriented schemes, hybrid schemes and other schemes which are divided into various categories. One of the prime benefits of investing via SIP is rupee cost averaging. Investors, who are at an early stage of earning, have a high-risk capacity as compared to mid-earning or pre-retirement and retirement stage investors. So, investors with high-risk capacity can invest the amount in equity-related schemes in their early stage and further, can shift some proportion to debt once they get decent returns from the equity markets.

Let’s look at an example:

If you had invested just Rs 2000 per month in any large-cap fund, for instance, Nippon India Large Cap Fund from the year 2013 till date, then what will be your worth of investment as of now?

 
Details:

Start date of investment: October 1, 2013

Worth of investment as of: October 1, 2021

Rate of return on SIP: 15.57% 

Term of investment: 8 years i.e., 96 months.

Per month SIP investment amount: Rs 2,000

Worth of investment as of October 1, 2021:  FV(15.57%/12,8*12,-2000,0,1) = 3,82,058

As you can see in the above calculation, the worth of investment will be Rs 3,82,058. So, you can create wealth by just investing Rs 2,000 every month. In all, invested amount is Rs 1,92,000 in 8 years, which is increased to Rs 3,82,058. As and when your earnings increase, you can increase your SIP amount from Rs 2,000 to Rs 3,000 or Rs 5,000 with whichever amount you are comfortable with. 

Investing an amount for a longer period helps investors to reap maximum returns as compounding is a boon in the longer term.

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Closing Bell: Markets close red for a third straight session, Sensex falls by 678 points, Nifty ends at 17671

Closing Bell: Markets close red for a third straight session, Sensex falls by 678 points, Nifty ends at 17671
by 5paisa Research Team 29/10/2021

Domestic benchmark indices ended the week on a weak note for the third consecutive day on October 29, 2021.

The Indian markets closed in red for the third day in a row on Friday, dragged by banking and financial services shares. Index heavyweight Reliance Industries came under selling pressure. Consistent selling by foreign institutional investors amid a downgrade of Indian equities by global investment bank Morgan Stanley dented the investor sentiments. During today's trade, the Sensex fell as much as 895 points and the Nifty index touched an intraday low of 17,613.

At the closing bell, the Sensex was down 677.77 points or 1.13% at 59,306.93, and the Nifty was down 185.60 points or 1.04% at 17,671.70. On the overall market breadth, around 1326 shares have advanced, 1836 shares declined, and 157 shares are unchanged.

Top losers in the Friday trading session were, Tech Mahindra, NTPC, Kotak Mahindra Bank, IndusInd Bank, Reliance and L&T. Top gainers of the day were, UltraTech Cement, Maruti Suzuki, Cipla, Dr Reddy’s Laboratories and Shree Cements.

Among the sectors, bank, IT energy, power and oil & gas indices closed in red, while buying was witnessed in the realty, pharma, metal and auto shares. In the broader markets, the BSE midcap and smallcap indices ended with marginal change.

On stock activity, shares of the Indian Railways' catering, tourism and online ticketing arm - Indian Railways Catering and Tourism Corporation (IRCTC) staged a strong recovery after the Ministry of Railways withdrew IRCTC convenience fee-sharing decision.

RBL Bank today went down as much as 15 per cent to hit an intraday low of Rs 172.10 a day after it reported September quarter earnings.

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Dr Reddy’s beats street estimates with 30% jump in Q2 profit

by 5paisa Research Team 29/10/2021

Dr Reddy’s Laboratories Ltd, one of the largest homegrown drugmakers, came up with strong results for the second quarter with double-digit growth in both revenue as well as profit.

Dr Reddy’s consolidated net profit rose 30.2% to Rs 992 crore from Rs 762.3 crore in the quarter ended September 2020, powered by a sharp jump in numbers from its proprietary products unit.

The company had clocked a net profit of Rs 571 crore in Q1. This translates into a 74% jump in earnings on a sequential basis.

Meanwhile, revenue for the second quarter rose 17.7% to Rs 5,763.2 crore from Rs 4,897 crore a year earlier and compared with Rs 4,919 crore in the quarter ended June 30.

Analysts were expecting revenue to grow in single digits to around Rs 5,100-5,200 crore while they expected profit to be under Rs 700 crore.

Dr Reddy’s share price was up 1% at Rs 4,621 apiece in a weak Mumbai market as of 3.30 PM on Friday.

Dr Reddy’s Q2: Other highlights

1) EBITDA margin rose to 27% from 20.7% in same quarter last year and 25.9% in Q1.

2) R&D expense proportion declined to 7.7% as against 8.9% in Q2 FY21 and 9.2% in Q1.

3) Global generics unit’s revenue climbed 19% to Rs 4,743 crore, powered by 50% growth in emerging markets (excluding India) to Rs 1,298.5 crore.

4) India revenue was up 25% to Rs 1,140.2 crore. European sales grew 10% to Rs 413.5 crore.

5) The mainstay North America unit saw a 3% growth over the year-ago period.

6) Pharmaceuticals and API business declined 2% to Rs 8,372 crore over Q2 FY21.

7) Proprietary business jumped on account of recognition of a licence fee associated with the sale of US and Canada territory rights for ELYXYB (celecoxib oral solution) 25 mg/ml to BioDelivery Sciences International, Inc.

Dr Reddy’s management commentary

GV Prasad, the company’s co-chairman and MD, said the company recorded an improvement in its financial performance across its businesses.

“While we continue to strengthen our core businesses of generics and APls, we are also making investments in our long-term growth drivers and deeper innovation capabilities,” he said.

“Our focus remains on meeting unmet patient needs around the world in keeping with our purpose,” he added.

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Larsen & Toubro reports stellar performance in Q2FY22 despite COVID challenges

by 5paisa Research Team 29/10/2021

L&T's 2QFY22 operational results were better than estimated, and the margins reported in both the segments were exceptional.  Core business performance was affected by COVID challenges and uncertainties, however, margins fared better and were unhindered. Despite COVID challenges, in 2HFY22, the company believes that the long term business prospects remain promising and expects traction towards the core business and GATI Shakti remains a key pivotal theme to revive and put the Indian Economy on a growth trajectory.

Operational performance reported better than estimated margins in both segments. Sales stood at 12% YoY (Rs. 348bn), core segment revenue stood at Rs. 228bn, up 12% YoY and segment revenue stood at Rs.  120bn (13%) YoY basis, EBITDA stood at Rs. 40bn, service margins stood at 18.2% (+80bps) YoY while core business margins stood at 8% (+56bps) YoY and Adjusted PAT was reported at Rs. 17.2bn, up by 56%, YoY basis.

Core business (ex-services) sales registered strong growth of 12% YoY while margins positively improved to 8% (+60bps) YoY basis as L&T adopted a calibrated approach in executing projects supported by cashflow availability and improvement in infrastructure segment. Domestic E&C segment grew by 27% YoY in 2QFY21 whereas Overseas E&C revenue declined by 22% YoY. The Infrastructure sector margins improved to 8.3% by 190bps YoY whereas margins in the Heavy engineering & defence, hydrocarbon and power sector remained under pressure and declined 140, 20, and 40bps YoY respectively, partially due to offsetting the margin improvement of the infrastructure segment. 

Execution has resumed at all sites, with sites operating with labour availability at pre-COVID levels. Execution can witness sharp pick up going ahead as productivity related challenges are broadly addressed, order backlog remains healthy 
and company has not seen any cancellations of awarded orders. 
During 2QFY22, delays in deliveries due to COVID heavily impacted the order inflow which stood at Rs. 421bn (up by +50% YoY), and working capital cycle for 2QFY22 stood at 22% vs 26.7% in 1HFY21, L&T extremely healthy ordering pipeline at Rs.6.8t which includes domestic orders worth Rs. 4.7t and international orders worth Rs. 2.1t. The backlog in orders stands at INR3.3t (+11% YoY) which provides strong revenue visibility and comfort on Core E&C revenue.
 

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