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Britannia misses estimate as Q2 profit crumbles 23% on costlier inputs

by 5paisa Research Team 08/11/2021

Biscuit maker Britannia Industries reported a higher-than-expected decline in net profit for the quarter ended September 30 as costlier inputs weighed on its earnings.

Consolidated net profit declined 23% to Rs 384 crore in the second quarter from the year-ago period and slid 1.5% on a sequential basis.

Consolidated sales rose 5.9% to Rs 3,553.68 crore from Rs 3,354.35 crore in the second quarter last year. Sales rose 6% compared to the numbers clocked in the three months ended June 30.

Analysts had factored in lower profit but they were expecting it to decline 10-15% while they had projected around 4-5% rise in sales during the quarter.

The company’s share price rose 1.6% to close at Rs 3,708 apiece on the BSE in a strong Mumbai market on Monday. The company declared its financials after trading stopped for the day.

Britannia Q2: Other highlights

1)  EBITDA fell 17.4% year-on-year to Rs 558 crore and the margin declined 430 bps to 15.5%.

2) Cost of raw materials rose 8.2% year-on-year to Rs 1,914.72 crore, higher than the sales growth and puncturing earnings during the quarter.

3) Stock in trade and cost of inventory and work in progress rose to Rs 340 crore from Rs 197 crore in Q2 last year.

4) It launched Milk Bikis Classic in Tamil Nadu and expanded the presence of a snack product, Potazos, across the country. This quarter also saw the launch of Treat Stix and Marble Cake in wafers and cake categories.

Britannia management commentary

Varun Berry, managing director at the company, said the impact of the second wave of Covid-19 started receding during the quarter, and the economic activity started picking up.

“However, inflationary trends remained rampant around the globe, across sectors. Our growth of 6% this quarter over a high base of last year and a 24-month growth of 21% in the current year is a testimony to our strong building blocks and commitment of our people,” he said.

Berry said that, in line with its strategy, Britannia continued its focus on increasing direct distribution and improving its rural footprint. “In this year, we saw higher growth in market share and as a result we significantly reinforced our market leadership,” he said.

Berry also said that the global economy continued to witness supply-led constraints across various input materials fuelling inflation. Market prices of palm oil jumped 54%, industrial fuel rose 35% and packaging materials climbed 30%. This led to an overall inflation in the quarter of about 14%, he said.

“While we have been able to partially mitigate the impact through strategic forward covers and accelerated cost efficiency programs, we have also initiated necessary price increases across the portfolio all of which will address the cost push and normalise profitability. We are confident that our resilient brands and strategic growth initiatives will hold us on a path of profitable share gain in the future as well,” he added.

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Penny Stock Update: These stocks gained up to 10.00% on Monday

Penny Stock Update: These stocks gained up to 10.00% on Monday
by 5paisa Research Team 08/11/2021

At the start of the week Indian equity market closed in the green mark. BSE OIL & GAS Index is the top gainer whereas, BSE Private Banks Index is the top loser in Monday’s trade.

After Diwali, the week started with the green mark. In today’s trade frontline Indian equity indices closed up positive. The majority of sectoral indices closed up in positive whereas, four sectoral indices closed down in negative.

The Nifty 50 and BSE Sensex closed in green, up by 151.75 points i.e., 0.85% and 477.99 points i.e., 0.80%. Stocks pulling the BSE Sensex and Nifty 50 index up are HDFC, Bajaj Fiserv and Infosys. Whereas, stocks that dragged the BSE Sensex and Nifty 50 down are IndusInd Bank, ICICI Bank, M&M and SBI.

On Monday’s trade, the S&P BSE OIL & GAS, S&P BSE CONSUMER DURABLE, S&P BSE CPSE and S&P BSE Enhanced Value Index were top gainers. BSE OIL & GAS index consisting of stocks such as Hindustan Petroleum Corporation Ltd, Adani Total Gas Ltd, Indian Oil Corporation Ltd and Bharat Petroleum Corp Ltd are top gainers.

Today, four sectoral indices were top losers, which are S&P BSE Private Banks Index, S&P BSE Healthcare, S&P BSE BANKEX and S&P BSE Quality Index. BSE Private Banks Index consisting of stocks such as IndusInd Bank Ltd, City Union Bank Ltd, Bandhan Bank Ltd, ICICI Bank and Axis Bank Ltd are the top losers.

Here is the list of penny stock that gained up to 10.00% on a closing basis on Monday, November 8, 2021

Sr No.          

Stock          

LTP           

Price Gain%          

1.          

A2Z Infra Engineering Ltd  

5.50  

10.00  

2.          

Gayatri Highways Ltd  

0.80  

6.67  

3.          

Sambhaav Media Ltd  

3.15  

5.00  

4.          

IND Swift Ltd  

12.70  

4.96  

5.          

Sakuma Exports Ltd  

12.70  

4.96  

6.          

Visa Steel Ltd  

16.00  

4.92  

7.          

Sel Manufacturing Company Ltd  

6.45  

4.88  

8.          

Onelife Capital Advisors Ltd  

17.25  

4.86  

9.          

Indowind Energy Ltd  

10.80  

4.85  

10.          

Hilton Metal Forging Ltd  

14.10  

4.83  

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Aurobindo Pharma revenue, profit slide in Q2; shares extend losses

by 5paisa Research Team 08/11/2021

Hyderabad-headquartered Aurobindo Pharma came up with its financials for the quarter ended September 30 with both revenues and net profit shrinking year-on-year even after factoring out the impact of a key business disposal.

The company’s consolidated net profit declined 13.7% to Rs 697 crore compared with the year-ago period. On a sequential basis, net profit slid 9.5%.

This was partly due to the disposal of its Natrol unit. However, even after factoring out the impact of the asset that had contributed to the financials last year, Aurobindo recorded lower business activity. Consolidated net profit after discounting Natrol declined 2.1% year-on-year.

Consolidated revenue declined 8.3% to Rs 5,941.9 crore compared with the same period last year but rose 4.2% sequentially compared to the first quarter. Factoring out the impact of Natrol disposal, revenue declined 2.1%.

The company’s share price has corrected sharply by a third since May. It declined 2.55% to close at Rs 672.4 apiece on the BSE in a strong Mumbai market on Monday.

Aurobindo Pharma Q2: Other Highlights

1) EBIDTA before forex and other income stood at Rs 1,186.7 crore.

2) EBITDA margin was 20%, compared with 21.2% in the first quarter and 21.3% a year earlier.

3) R&D spend was Rs 399 crore, 6.7% of revenue. This is up from 6.3% for April-June.

4) Received final approval for seven ANDAs including two injectables from the US FDA.

5) US formulations revenue grew 6.9% YoY to Rs 2,967.6 crore.

6) Europe formulation revenue stood at Rs 1,662 crore, an increase of 9.7%.

7) Revenue from growth markets declined 13.5% YoY and grew by 17.3% QoQ to Rs 386.3 crore.

8) API revenue for the quarter was at Rs 780.6 crore versus Rs 829 crore in the corresponding period last year.

9) The board declared an interim dividend of Rs 1.50 per share.

Aurobindo Pharma management commentary

N. Govindarajan, managing director of the company, said business performance across most of the segments was robust, aided by a gradual pick-up in demand and gradual market share gains.

“However, profitability was impacted by cost pressure on some of the key raw materials as well as higher logistic costs,” he said.

Govindarajan said Aurobindo is leveraging the opportunity to streamline its working capital to improve cashflows and will continue to see the benefits of these measures over the next few quarters.

“We are pleased with the steady progress in our complex generic product development and look forward to executing the same to enhance our business growth and profitability.”

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Chart Busters: Top trading set-ups to watch out for Tuesday

Chart Busters: Top trading set-ups to watch out for Tuesday
by 5paisa Research Team 09/11/2021

On Monday, the benchmark index Nifty has marked the low of 17836.10 and thereafter recovered nearly 250 points. The index settled above the 18000 mark. The price action has formed a bullish candle with a long lower shadow. The long lower shadow indicates buying interest at lower levels. The leading indicator, 14-period daily RSI has given a positive crossover, which is a bullish sign.

Here are the top trading set-ups to watch out for Tuesday.

J.K. Cement: Majorly, the stock is displaying a bullish trend as it is marking the sequence of higher tops and higher bottoms. Further, it is trading above its short and long-term moving averages. These averages are in ascending order, which suggests the trend is strong.

On Monday, the stock has given downward sloping trendline breakout on the daily chart. This breakout is confirmed by robust volume. Additionally, the stock has formed a sizeable bullish candle on breakout day, which adds strength to the breakout. The momentum indicators and oscillators are also suggesting bullish momentum. The leading indicator, 14-period daily RSI has also given a downward sloping trendline breakout, which is a bullish sign.

On the daily timeframe, ADX is quoting at 16.41 which suggests that the trend is yet to be developed. Directional indicators continue in the ‘buy’ mode as +DI continues above –DI. Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 3930 followed by Rs 4000 in the short term.

Muthoot Finance: The stock is oscillating in the range of Rs 1638.85- Rs 1402.40 for the last 63 trading sessions. On Monday, the stock has given a 63-days consolidation breakout on the daily chart. Further, on breakout day the volume was expanded by nearly 8 times of 50-days average volume, which indicates important buying interest. The 50-days average volume was 9.02 lakh while on Monday the stock has registered a total volume of 71.64 lakh.

Currently, the stock is trading above its short and long-term moving averages. These averages are in a rising trajectory. Interestingly, the daily RSI is oscillating in a sideways range, i.e. 40-60 zone since the last 52 trading sessions. On Monday, RSI has given consolidation breakout and surged above the 60 mark. The RSI is trading above its 9-day average and both are in a rising trajectory. The fast stochastic is trading above its slow stochastic.

Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 1770 followed by Rs 1850 in the short term.

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F&O Cues: Key support & resistance levels for Nifty 50

F&O Cues: Key support & resistance levels for Nifty 50
by 5paisa Research Team 09/11/2021

Nifty F&O action for November 11 expiry shows 17,900 will act as key support now.

Nifty 50 re-claimed the 18,000 mark on Monday after a gap of 12 days. On November 08 Nifty 50 saw a gap up opening, however, it soon fell into negative territory. Nevertheless, after 1130 hours it started to gain steadily and closed near the intra-day high by the end of the day. At close, Nifty was up 0.85% or 151.7 points to 18068.5. This is the second day in a row when Nifty 50 gained, despite Nifty Bank closing in the red.

Activity on the F&O market for the weekly expiry on November 11, 2021, now clearly shows that 18,500 will act as a strong resistance for this week. The highest call option open interest (91,666) for Nifty 50 stood at a strike price of 18,500. In terms of the highest addition of open interest in the call options front was at 18,500 in the last trading session. A total of 44,489 open interest was added at this strike price. The next highest call option open interest stands at 20,000 where total open interest stood at 71,651.

In terms of put activity, the highest put writing was seen at strike price of 17900 (74,231 open interest added on November 08), followed by 18,000 (45,686 open interest added on November 08), while there was put unwinding at strike price 17,000, followed by 16,700.

Highest total put open interest (104,498) stood at a strike price of 17,900. This is followed by a strike price of 17,800, which saw a total put option open interest of 71,606 contracts.

Following table shows the difference between call and put option at strike price near to max pain of 18000. Max pain has moved up from 17,900 to 18,000 mark in yesterday’s trade.

Strike Price  

Open Interest (Call option)  

Open Interest (Put option)  

Diff(Put – Call)  

17,800.00  

16567  

71606  

55039  

17,900.00  

54010  

104498  

50488  

18,000.00  

51312  

66593  

15281  

18100  

67921  

28899  

-39022  

18,200.00  

69126  

7096  

-62030  

18,300.00  

67932  

8428  

-59504  

18,400.00  

69394  

896  

-68498  

The Nifty 50 put call ratio (PCR) closed at 0.92 better than 0.72 in the previous trading session. A PCR above 1 is considered bullish while a PCR below 1 is considered bearish.

Following table shows the participant wise action of key players on the index options front.

   

Index Put Options  

Client Type  

Change of OI*  

% Change of OI*  

Nov 08 2021  

Nov 03 2021  

Nov 02 2021  

Client  

2822  

0.88%  

-317435  

-320257  

-318531  

Pro  

3500  

7.03%  

53255  

49755  

53952  

DII  

0  

0.00%  

43014  

43014  

41014  

FII  

2843  

1.30%  

221165  

218322  

225761  

*Change from Previous Day  

   

   

   

   

   

  

   

Index Call Options  

Client Type  

Change of OI*  

% Change of OI*  

Nov 08 2021  

Nov 03 2021  

Nov 02 2021  

Client  

-68154  

-183.51%  

-31015  

37139  

148897  

Pro  

43204  

46.04%  

-50631  

-93835  

-195673  

DII  

0  

0.00%  

401  

401  

401  

FII  

24950  

44.32%  

81245  

56295  

46376  

*Change from Previous Day  

   

   

   

   

   

  

   

Net Change in Open Interest  

Client Type  

Change of OI*  

% Change of OI*  

Nov 08 2021  

Nov 03 2021  

Nov 02 2021  

Client  

-70976  

-19.86%  

286420  

357396  

467428  

Pro  

48870  

31.99%  

-103886  

-152756  

-245428  

DII  

0  

0.00%  

-42613  

-42613  

-42613  

FII  

22107  

13.64%  

-139920  

-162027  

-179385  

*Change from Previous Day  

   

   

   

   

   

  

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Divis Lab’s H2FY22 earnings grew 40% YoY to Rs. 40bn, driven by Custom synthesis and Nutraceuticals segments

by 5paisa Research Team 09/11/2021

Divis Lab’s Q2FY22 growth was majorly driven by Custom synthesis segment and Nutraceuticals segment. The overall revenue growth was a robust 40% YoY to Rs. 20bn in 1HFY22, while for the same time period, Generic API segment suffered by declining to 6.3% YOY to Rs. 16.6bn. Gross margin remained flat at 67.1% YoY, EBITDA margin declined by 180bp to 41.5% YoY, EBITDA rose by 9% YoY to Rs. 8.3bn, PAT grew at 15% YoY to Rs. 6.1bn. 

Exports stood at 88% of sales, of which 72% came from export sales in the US and Europe. Inventory levels are high for both CS and Generics to ensure a seamless supply chain and it has enough capacity to meet the demands of Molnupiravir. 

The backward integration in products for which Divis Lab holds 70% market share has been completed while It is yet to achieve backward integration on new introductions which will be done once they reach a considerable market share. 

In the API segment, no impurities were found in DIVI’s Sartan APIs, Nitrosamine or Azido, hence this should help drive up sales and gain market share. Even though the Generic API segment declined by 6.3% YoY 1HFY22, it is estimated that the revival of the segment will be supported by increase in market share of existing molecules by backward integration and addition of 16 new molecules that are under various development stages. Its strength and scale is estimated to increase 15% revenue CAGR in the Generic API segment to Rs. 47bn over FY21-23E.

On the contrary, which Divis has the one of the best recovery in iodine recovery rates, the pricing is key to remain competitive in media products. The commercialization of these products is expected in the next 1-2 years as it is already working on validation batches.

Divis has successfully built long-lasting relationships with its innovators on the basis of its chemistry and process skills, manufacturing scale from clinical to commercial qualities, and project execution. The supply contract for Molnupiravir API with Merck/MSD proves that DIVI is a favourite of global innovators for critical projects. It also has the requisite chemistry skills to work on any further Antiviral drug, including, the treatment of COVID-19. 

Divis is estimated to achieve 41% CAGR in CS to Rs. 56bn over FY21-23E given its technical leadership and large scale facilities. The company expects the construction of Kakinada to begin as soon as the land is handed over since the legal hurdles are settled. The estimated capex is ~Rs. 10-20bn and will be spread over the next 2-3 years. DIVI has already incurred capex worth ~Rs. 25bn since FY18. At present, the WIP capex stands at Rs. 4.3bn, which will be completed in FY22 and in the second half, an additional INR3b expected to be spent.
 

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