Bulls hit a six

Nifty50: 17,388 ▲ 42 (+0.2%)
Sensex: 58,350 ▲ 214 (+0.3%)

Hello, folks!

How will you respond to a job rejection email? Most of us would probably read and delete it or acknowledge it with a few polite words. But a Tik-Tok user replied to a rejection letter using a hilarious meme with the text: ‘y tho’. Guess what, her bold reply earned her an interview call!

Anyway, onto the markets, which extended their gains, while telcos float in high debt. What kind of meme telcos must use now to express their feelings.

• After being in the red for most of the day, the benchmark indices staged a comeback in the last hour to close higher.
• In all, 25 of the Nifty50 stocks closed in the green.
• RBI’s Monetary Policy Committee meeting commenced today, and the decision on interest rates is expected on 5 August.

Among the Nifty sectoral indices, IT (+1.3%) gained the most, whereas Auto (-0.8%) and Pharma (-0.7%) were the top losers.

What’s trending

⭐ Adani Power posts electrifying results

ADANIPOWER (NSE): 340 ▲ 11 (+3.4%)

Shares of Adani Power touched a new 52-week high of ₹344.95 per share intraday following the announcement of upbeat June quarter results. The company’s consolidated revenue rose by 108% YoY to ₹13,723 crore. Meanwhile, its net profit jumped by 1,619% to ₹4,779 crore. The company said that nationwide heatwaves and continued recovery in economic activity helped drive growth in electricity demand during the period.

⭐ Siemens falls despite strong results

SIEMENS (NSE): 2,612 ▼ 124 (-4.5%)

In the June quarter, the engineering company posted a net profit of ₹296 crore, up 85% year-on-year. The strong profit growth was aided by a 51% rise in revenue to ₹3,865 crore. Further, the company’s order backlog stood at an all-time high of ₹17,856 crore. However, the management has said that it is concerned about global challenges impacting demand, which could result in a slowdown in capex spending. 

⭐ Bitter pill for Aurobindo Pharma

AUROPHARMA (NSE): 558 ▼ 17 (-2.9%)

Shares of Aurobindo Pharma fell after the drug regulator USFDA issued three observations on its manufacturing unit in Andhra Pradesh. An observation is a likely regulatory violation observed during a regular inspection. The company said that none of the three observations is related to data integrity.

⭐ Jio Platforms join hands with Subex

SUBEXLTD (NSE): 33 ▲ 5.5 (+20%)

Jio Platforms has entered into a partnership with telecom analytics solutions firm Subex for its HyperSense AI. Jio said that the deal will benefit its 5G product line. Meanwhile, Subex said the deal will allow operators to address multiple use cases around customer experience and revenue growth.

⭐ India’s trade deficit widens 

In July, the country’s trade deficit (imports exceeding exports) soared to a record $31 billion compared to $10.6 billion in the same month last year. The trade deficit was fuelled by a sharp increase in coal and crude oil imports. The widening of the trade deficit has been one of key reasons for the depreciation of the Indian rupee.

In Focus

5G splurge to lay debt trap for telcos?

The highly anticipated 5G spectrum auction was finally concluded this week. India’s leading telecom companies bid for 51 GHz of 5G airwaves and spent ₹1.5 lakh crore, which was above the government’s estimate of ₹1.1 lakh crore.

There is excitement within the telecom industry and among consumers around the launch of 5G services. However, market experts believe that the higher-than-expected spectrum spends could push the telecom industry’s overall debt to more than ₹6 lakh crore, from ₹4.7 lakh crore at present. Moreover, setting up 5G network infrastructure like laying of fibre-optic cable could put additional burden on telecom operators.

In the past, telcos with unsustainable debt levels like Aircel and Anil Ambani owned-Reliance Communications were forced to go out of business. Further, competition within the telecom industry has substantially increased after the entry of Reliance Jio. 

The net debt of Bharti Airtel and Vodafone Idea stood at ₹1.96 lakh crore and ₹1.6 lakh crore, respectively, in the quarter ended March 2022. Meanwhile, Reliance Jio’s net debt was at ₹57,700 in the June quarter FY23. Market experts believe that the strong balance sheets of Reliance Jio and Airtel could act as a shield against high debt. 

However, Vodafone Idea’s elevated auction spending could raise its leverage beyond the comfort zone. This could hinder its ability to compete against rivals on the 5G turf.   

Nevertheless, telcos are all set to roll out 5G services, with some expected to launch them in the last quarter of 2022. Consumers having 5G-enabled devices will be the first to experience the 5G speeds. However, wide-scale adoption will depend on 5G handset penetration, which stands at just 15% at present.

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Good to know

What is earnings per share?

Earnings per share or EPS is a metric to ascertain the profitability of a company. It reflects how much money a company makes per share. It is calculated by dividing a company’s net profit by the number of outstanding shares.. EPS is typically used in conjunction with the stock price and the price-to-earnings or P/E ratio.

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