Vedanta digs into chips, BPCL’s profits tank & more

Nifty50: 16,170 ▲ 144 (0.9%)
Sensex: 54,252 ▲ 503 (0.9%)

Hey, hey!

Look who's back? We aren’t just talking about Rafael Nadal. Like the feisty tennis superstar, who’s battling it out at the French Open after a rib injury, the markets rose strongly after being beaten down intraday. 

Meanwhile, it’s flying season for more reasons than one. Investors cheered ‘Go, Indigo’ as the company’s stock soared despite widening losses. More on that later.

• Markets snapped the three-day losing streak in a volatile trading session to end in positive territory. 
• In all, 39 of the Nifty50 stocks closed in the green.
• The US Fed minutes, which were released on Wednesday, indicated the central bank will likely make multiple interest rate hikes of 0.5% going forward.

Among the Nifty sectoral indices, PSU Bank (+3.1%) and Metal (+2.6%) saw the most gains, while FMCG (-0.2%) was the sole loser.

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What’s trending

⭐ Vedanta digs into chips 📲

Amid a global semiconductor shortage, Vedanta aims to finalise the location for its $20 billion semiconductor and display plants in India by next month. Partnering with Foxconn, it will launch its first chip product in the next two years. 

⭐ Torrent-ial rise ⏫
Shares of Torrent Pharmaceuticals zoomed 9% intraday despite reporting a net loss of ₹118 crore in the March quarter. The company had reported a net profit of ₹324 crore in the same period last year. However, investor sentiment was positive on account of a 10% YoY rise in revenues at ₹2,131 crore. The company also announced a 1:1 bonus share issue and a dividend of ₹23 per share.

⭐ BPCL’s profits tank 👎
Bharat Petroleum Corporation reported a massive 82% decline in its standalone net profit to ₹2,130 crore. Revenue from operations rose 25% to ₹1.23 lakh crore on higher oil prices, but reduced profitability on fuel sales impacted profits. During February and March, BPCL and other state-owned oil marketing companies had not raised fuel prices much despite a sharp rise in crude oil prices. 

⭐ Apollo’s under the weather 😑
Apollo Hospitals’ Q4 net profit declined by 46% year-on-year to ₹90 crore in Q4. This was attributed to a provision for capital gains tax relating to the reorganisation of its pharmacy distribution business. Meanwhile, revenue rose by nearly 24% YoY to ₹3,546 crore.    

⭐Govt plans to exit Hind Zinc ⛔

The central government plans to divest its remaining 29.5% stake in mining company Hindustan Zinc. Currently, Vedanta holds about 64.9% stake in the company. With this divestment, the government aims to raise about ₹38,000 crore and will move closer to its divestment target of ₹65,000 crore for this fiscal year.

In Focus

It's a bird! It's a plane! It's Indigo!

Budget airline Indigo's shares shot up 10% after it announced its results. On the outside, you'd notice its widening losses. But take a closer look and you'll see that the industry is ripe for a strong revival after years of pandemic-induced pain. So what's up?

Investors' mood hit Cloud 9 after the company reported a 29% jump in revenues to ₹8,020 crore. The management has said it will take advantage of the pent-up demand to raise fares and return to profitability. 

But with good prospects comes more competition. New players are landing in the aviation industry. Akasa Air is reportedly planning to take to the skies by July this year. Further, Jet Airways, backed by new owners, is planning a comeback around July-September this year (it has already received the green light from the DGCA). 

Meanwhile, the Tata Group is planning an overhaul of Air India. After its ₹2.4 billion acquisition of the state-owned airline, the company aims to upgrade the airline’s fleet and provide better onboard services.

Further, the industry still has some concerns. Aviation fuel prices have risen sharply on the back of skyrocketing crude prices. If we go back to Indigo's results, its losses widened mainly because of a 68% increase in aviation fuel expenses. And let's not forget the pandemic, which is still present in some parts of the world. Thus, likely disruptions in travel abroad could impact the industry in the near term.

Nevertheless, the post-pandemic pick-up in travel demand is set to support the industry’s revival. In fact, India could witness nearly 400 million fliers by 2030.

IPO corner

On the final day, the IPO of Aether Industries received a massive boost from qualified institutional buyers (QIB). The QIB category was subscribed more than 17 times. Meanwhile, the retail category was subscribed 1.1 times, and the public issue was oversubscribed 6.2 times overall.

Good to know

What are futures?

Futures are exchange-regulated financial contracts, wherein a party promises to buy or sell an asset at a predetermined future price and date. Futures are mainly used as hedging instruments across different types of assets such as stocks, commodities, indexes, and currencies. They are designed to safeguard the parties from losses from any unfavourable price movements. This is similar to making hotel reservations in advance so that you don’t have to shell out a huge amount closer to the trip.

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