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JSW Steel smashes Q2 earnings, revenue growth estimates

by 5paisa Research Team 21/10/2021

JSW Steel Ltd on Thursday came out with strong quarterly results that beat estimates for both profit and revenue growth on the back of robust demand and sales of value-added and special products.

The largest domestic steel producer in India reported a consolidated net profit of Rs 7,179 crore for the July-September period, up four-and-a-half times from Rs 1,595 crore in the quarter ended September 2020.

On a sequential basis, consolidated net profit rose 21.6% from Rs 5,900 crore in the three months ended June 30.

The billionaire Sajjan Jindal-led steelmaker’s consolidated revenue rocketed 68.7% year-on-year to Rs 32,503 crore and increased 12.5% sequentially.

However, the company’s stock price declined 1.74% to close at Rs 673.45 apiece in a weak Mumbai market on Thursday. The results were declared after trading stopped for the day.

Analysts were expecting profit to be around Rs 6,500 crore or less and revenue to be under Rs 32,000 crore.

JSW Steel Q2: Other highlights

1) Crude steel production at standalone level stood at 4.1 million tonnes.

2) Average capacity utilization was 91% for the quarter, similar to Q1 FY22, mainly due to planned shutdowns.

3) On a year-on-year basis, steel production rose 6%.

4) Sales of saleable steel were 3.79 million tonnes, up 5% sequentially, as Q1 was impacted by Covid-19.

5) Exports increased by 26% sequentially as domestic demand was subdued due to monsoon.

6) Operating EBITDA was Rs 8,673 crore, lower by 8.6% QoQ but up 108% year-on-year.

JSW Steel commentary, outlook

The company said quarterly sales were affected by inventory build-up due to start of its new downstream facilities and increase in inventories at ports.

JSW Steel’s EBITDA margin for Q2 was 31%. This is lower than the first quarter primarily due to elevated prices of iron ore, coking coal and other key inputs like power, natural gas and ferroalloys. 

Demand from automobile companies remained subdued due to a shortage of chips. However, JSW said construction and infrastructure activities are likely to gain momentum in the second half of the current fiscal (October-March).

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Lodha firm Macrotech Developers swings to Q2 profit even as stock corrects

by 5paisa Research Team 21/10/2021

Macrotech Developers Ltd, part of Mumbai-based Lodha Group, swung to a consolidated net profit for the second quarter as a more than two-fold jump in revenue outpaced the increase in expenses.

The company said it posted a net profit of Rs 223.36 crore for the July-September quarter, compared with a loss of Rs 362.58 crore a year earlier.

Consolidated revenue from operations jumped to almost Rs 2,124 crore from Rs 901 crore in the corresponding quarter last year.

However, the company’s shares ended 1.7% down at Rs 1,030.35 apiece on the BSE in a weak Mumbai market. The stock has fallen 16% over the past five sessions from a peak of Rs 1,225 apiece last week.

Still, Macrotech shares are more than double the price of Rs 486 apiece at which the company floated its initial public offering in April this year.

The company has a market capitalisation of Rs 46,089.44 crore, making it the third-largest listed developer in India after DLF Ltd and Godrej Properties Ltd.

Macrotech Developers Q2: Other highlights

1) The company’s total expenses jumped to Rs 1.906.64 crore from Rs 1,075.30 crore a year earlier.

2) Projects costs soared to Rs 1,432 crore from Rs 650 crore a year earlier.

3) Macrotech’s finance costs halved to Rs 156 crore from Rs 310 crore as it used most of the money raised in the IPO to cut debt.

4) Macrotech had raised net proceeds of Rs 2,407.7 crore in the IPO and used Rs 1,500 crore to pay off loans.

Macrotech Developers commentary

The company said that the outbreak of the COVID-19 pandemic caused a slowdown in economic activity and that its operations slowed due to lockdowns announced by authorities to control the pandemic.

However, its operations as well as economic activities have gradually resumed with requisite precautions.

The company said it continues to monitor the situation but added that the actual impact of Covid-19 on its future operations remains uncertain and will depend on the spread of the pandemic.

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L&TI Q2- Price target of Rs.6620 with strong growth prediction of 24% expected

by 5paisa Research Team 21/10/2021

Growth of the different verticals

Larsen & Toubro Infotech’s key players are its three verticals- BFSI (47% of revenue), Manufacturing (16% of revenue) and Hitech (13% of revenue). Lets talk about the highest revenue earning vertical first. The BFSI vertical grew in all the regions and had a 28% YoY growth. It performed better than all the other companies in the same sector proving to be a vertical that the company can instill full confidence in. According to LTI, its digital offerings are the key reason that the vertical has grown more compared to its peers.

Manufacturing, the second highest revenue earner also had quiet a good quarter with 21% YoY growth in all the sub- sectors. According to the management, there are strong deals being entered into by the vertical which will further ensure sustainable growth in this vertical.

The Hi tech vertical has been one of the top three sectors to come out of the pandemic with flying colours due to the post pandemic flurry of tech spending. It grew by 44.9% YoY. Same as the other sectors, the growth is expected to sustain.

The demand in the retail sector in LTI has been mostly driven by the United States and grew by only 6% YoY.

 

Capital and productivity in the Q2

The company’s hiring for this quarter is at a 4 year high as the revenue growth had increased. 4,084 people have been hired in the second quarter of FY22. Due to the higher amount of people hired, the utilization fell from 83.7% in Q1 FY22 to 81.6% in Q2 FY22. The company has decided to increase the amount of freshers by 1000. Two wage hikes have been given to the employees. According to the employees, the production is assumed to remain stable as the ratios have stabilized now and a price increase is estimated over a medium term.

 

From the client’s perspective

The new client addition has increased has been increasing over the last two quarters and has been steady throughout the year. In the $10mn+ tranche of clients the number has increased from 15 to 43 and in the $20mn+ tranche, the number has increased by 3 and lastly, in the $50mn+ tranche, the number increased by 1. The Revenue per client has increased by 11% in Q2FY22.

 

Financial

The revenue of Q2 FY22 saw an increase of 7.9% QoQ and 25.8% YoY as it increased from Rs.405 million in Q2 FY21 to Rs.509 million in Q2 FY22. The Net profit fell by 10% YoY in this quarter from Rs.248 crore in Q2 FY21 to Rs.223 crore in Q2 FY22. This can be attributed to the fall in Interest income to Rs.2903 crore (12% YoY).

Q2 FY22 saw the highest disbursement in rural finance at Rs.4987 crore which is 51% higher than from the Q1 FY22. EBITDA value grew by 7% QoQ during this quarter but in YoY, the EBITDA value fell by 340bps. As soon as the supply side betters and becomes more manageable, the growth of EBITDA is assumed to be as high as the growth of the revenue.

 

Projections by analysts

A revenue growth of 24% in FY22 and 20% in FY23 has been estimated by the analysts. This growth in revenue will help the company offset the high amount of hiring taken up in this quarter. A medley of changes has been estimated to occur in the EBIT margin which touched 19.3% in FY21 and its projected to come down to 17.5% in FY22 and rise to 18.3% in FY23.

The price target has been set at Rs.6620 and a HOLD recommendation has been issued by the analysts.

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

Chart Busters: Top trading set-ups to watch out for Friday
by 5paisa Research Team 22/10/2021

The benchmark index, Nifty has continued its downward journey for the third consecutive day. However, the index has taken support at the 13-day EMA level and recovered almost 130 points from the days low. The index has closed at the 18178.10 level with a loss of 88.50 points or 0.48%. The banking benchmark index, Bank Nifty has gained 512 points or 1.30%. From the daily low, the Bank Nifty has recovered almost 602 points and ended above the 40000 mark for the first time. Among the constituents of Bank Nifty, the Kotak Mahindra Bank and RBL Bank were top gainers.

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

Kotak Mahindra Bank: After registering the high of Rs 2077.80, the stock has witnessed minor throwback along with low volume. The throwback was halted near the 38.2% Fibonacci retracement level of its prior upward move (Rs 1688.90-Rs 2077.80). On Thursday, the stock has given a cup like pattern breakout. The depth of the cup pattern is 7% and its length is 15 trading sessions. Further, this breakout was supported by a robust volume of more than double of 50-days average volume, indicating strong buying interest by market participants. All the moving averages based on trade set-ups are showing a bullish strength in the stock. Daryl Guppy’s multiple moving averages is suggesting a bullish strength in the stock. The stock is trading above all the 12 short and long term moving averages. The averages are all trending up, and they are in a sequence. Interestingly, the leading indicator, 14-period daily RSI has taken support near the 60 zone, and bounced back sharply. This indicates a super bullish range shift as per the RSI range shift rules. The ADX is reasonably good at 22.15 levels. The +DI is above the -DI and ADX shows strength in the trend. Technically, all the factors are currently aligned in support of the bulls. Hence, we would advise the traders to be with a bullish bias. As per the measure rule of the cup pattern, the upside target is placed at Rs 2230 level. While on the downside, the 20-day EMA is likely to provide the cushion in case of any immediate decline. The 20-day EMA is currently placed at the Rs 1997 level.

Jindal Worldwide: Majorly, the stock is displaying a bullish trend as it is marking the sequence of higher tops and higher bottoms on the daily chart. Further, it is trading above its short and long-term moving averages. These averages are edging higher, which is a bullish sign. After registering the high of Rs 121.90, the stock has witnessed minor correction, which is halted near the 20-day EMA level. On Thursday, the stock has given a 9-days consolidation breakout on the daily chart. This breakout was supported by above 50-days average volume. The momentum indicators and oscillators are also suggesting further bullish momentum in the stock. The leading indicator, 14-period daily RSI is in the super bullish zone and it has given bullish crossover on Thursday. The daily MACD stays bullish as it is trading above its zero line and signal line. The MACD histogram is suggesting further bullish momentum. The stock is clearly on uptrend and trend strength is extremely high. The Average Directional Index (ADX), which shows trend strength, is as high as 56.16 on a daily chart and 45.36 on a weekly chart. Generally above 25 levels is considered as a strong trend. In both time frames, the stock is meeting the criteria. Based on the above observations, we expect the stock to continue its upward movement and test levels of Rs 133.60 followed by Rs 140 in the medium term. On the downside, the 13-day EMA is likely to act as strong support for the stock.

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Biocon Q2 profit drops 18% but revenue inches up on biosimilars boost

by 5paisa Research Team 22/10/2021

Biopharmaceuticals company Biocon Ltd reported an 18% drop in its consolidated net profit for the second quarter, as a slowdown in sales of generic drugs offset the growth in its biosimilars business.

Net profit after exceptional items for the July-September period fell to Rs 138 crore from Rs 169 crore a year earlier. However, net profit before exceptional items rose 11% to Rs 188 crore.

Earnings before interest, tax, depreciation and amortization (EBITDA) jumped 35% to Rs 551 crore while the core EBITDA margin expanded to 33% from 32% from a year earlier.

Kiran Mazumdar-Shaw, executive chairperson at Biocon, said the exceptional item related to modification of the optionally convertible debentures of a private equity investment in unit Biocon Biologics Ltd and reversal of claims related to the government’s Service Exports from India Scheme.

Biocon’s consolidated revenue from operations inched up 5% to Rs 1,840 crore from Rs 1,750 crore, primarily driven by good performance of the research services unit Syngene International and biosimilars business Biocon Biologics. The biosimilars portfolio includes insulins, monoclonal antibodies and recombinant proteins across developed and emerging markets.

Biocon Q2: Other highlights

1) Pre-tax profit before exceptional items rises 27% to Rs 276 crore.

2) Revenue from generic APIs and generic formulations falls 12% to Rs 530 crore.

3) Pre-tax profit from generics business drops 28.5% to Rs 498 crore from Rs 697 crore.

4) Syngene Q2 revenue at Rs 610 crore, up 17% year-on-year.

5) Biocon Biologics Q2 revenue rises 10% to Rs 743 crore

6) Biocon Biologics Q2 EBITDA at Rs 303 crore, up 72% YoY

7) Biocon Biologics Q2 EBITDA margin at 38% and core EBITDA margin at 42%.

Biocon management commentary

Mazumdar-Shaw said Biocon Biologics made strategic moves in the last quarter that will drive future growth of its biosimilars business and deliver long-term value for its shareholders. The quarter also marked Biocon Biologics’ strategic entry into vaccines and the infectious diseases segment through partnerships with Serum Institute Life Sciences and Adagio Therapeutics.

“With the waning pandemic and improvements in supply chain conditions, I believe all three business segments, generics, biosimilars and research services, are well positioned for sustained growth in H2FY22,” she added.

Biocon CEO and MD Siddharth Mittal, said the generics business witnessed a muted performance for the quarter as it encountered continuing pricing pressure in the US for its formulations portfolio, and a slower than expected ramp up of demand for some key APIs.

“Operational and supply challenges in the earlier part of the quarter also impacted the performance of the API business. There was advance buying by customers in the corresponding period of the previous fiscal, apprehending COVID-19 related disruptions and is reflected in the year-on-year decrease in revenue,” he added.

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Trending Stock: Is Federal Bank all set to zoom?

Trending Stock: Is Federal Bank all set to zoom?
by 5paisa Research Team 22/10/2021

The Federal Bank gave a bullish pennant breakout, indicating trend continuation. Is it all set to zoom? Let’s find out.

The recovery in Bank Nifty can be well attributed to a few of the well-deserved banking stocks. The Federal Bank is one of them. From the lows in March 2020, the Bank Nifty surged almost 150%, whereas the Federal Bank has jumped almost 175%, outperforming Bank Nifty by 25%. It has given breakout from bullish pennant pattern indicating trend continuation.

A bullish pennant pattern is a continuation chart pattern, which is usually witnessed when a stock experiences a large upward movement, followed by a brief consolidation, before continuing its northward journey. Remember, in order to complete this pattern, the price needs to break out from the upper slope of the triangle with higher volumes.

Having said that, the stock was under pressure since October 2017. Last week the stock broke out this downtrend suggesting a trend reversal. Presently, the stock is trading at an important Fibonacci level of 61.8%. Breaching the same would further invite bullishness. However, there few important levels that you need to look for that is 108, 128 and 185. There might be a potential pullback from these levels.

Technical indicators such as the Relative Strength Index (RSI) is also supporting the stock’s northward journey. It is presently hovering around 68, whereas its 20-week Exponential Moving Average (EMA) is at 57. Moreover, if we look at Moving Average Convergence Divergence (MACD) then it is also supporting bullishness in this stock. MACD is in the positive territory, in fact it has also given positive crossover.

The price opened at 94.8, made a high of 98 and a low of 93.3 before closing at 96.55 on October 21, 2021.

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