Bulls back in action

Nifty50: 18,053 ▲ 158 (+0.8%)
Sensex: 60,665 ▲ 562 (+0.9%)

Hi, there!

You know India is shivering when you spot people in trench coats in Mumbai ! The bone-chilling cold is gripping half of the country and Twitterati are having a field day. 

We encountered an amusing Twitter thread which was about giving  'chilly' names to Indian cities reeling under the cold wave. And what follows was this: ‘Chillong’, ‘Coldkata’, ‘Kaanp-pur’... Chandigarh became  ‘Thandigarh’ and Begusarai was called ‘Begurajai’... and so on... 

Well, it's nice to see people having their sense of humour intact even when the weather gods are showing no mercy. Markets, meanwhile, warmed our hearts today in the way only they can. Here's why.

• After a gap-up opening, benchmark indices made strong gains.
• 37 stocks from the Nifty50 universe ended in the green.
• Large foreign and domestic investors were net buyers, indicating confidence.

Among the Nifty sectoral indices, FMCG (+1.2%) and Realty (+1.1%) were the top gainers, while PSU Bank (-1.8%) and Media (-0.8%) were the top losers.

What’s trending

⭐ Bank of India tanks on NPA divergence 

BOI’s shares (-4.5%) dropped after the RBI had observed that the lender had under-reported bad loans. Hence, in the December quarter, the bank had to set aside an additional ₹1,419 crore as a provision for these bad loans.  Despite such a large provision, its Q3 profits showed a rise of 12% year-on-year. 

⭐ Metro Brand posts robust Q3 numbers 

The footwear retailer reported its highest-ever quarterly net profit of ₹113 crore, up 11% YoY. This was supported by revenue growth of 23% to ₹599 crore. Also, it opened a record 48 stores in Q3. 

⭐ Mastek’s profit declines 

The IT company’s (-1.4%) net profit dropped by 19% on a year-on-year basis to ₹67 crore. Meanwhile, the management said that it added 31 new customers driven by continuous demand for digital engineering and cloud transformation services. 

⭐ Spencer launches value format 

Shares of the multi-format retailer (+17%) soared, with high volumes, as it announced that it will be setting up new hypermarkets with a focus on value format. The new stores will be designed as a one-stop shopping destination and will offer a wide range of national and regional brands.

In Focus

FMCG companies take the spice route

Fast moving consumer goods (FMCG) companies are turning up the heat. Recently, Dabur acquired 51% stake in Badshah Masala for ₹588 crore. Before that, in 2020, ITC acquired spices maker Sunrise Foods for ₹2,150 crore. And, Tata Consumer roped in celebrity chef Sanjeev Kapoor as a brand ambassador and expanded its Sampann spices portfolio. 

So, let’s take a look at why FMCG companies are taking the spice route. 

High margins

In India, the demand for masala has always been robust. In fact, an Indian kitchen cannot function without a masala dabba. But blended spices add a ‘tadka’ of higher profitability to a company portfolio. How? Experts point out that the blended spices (like pav bhaji and chicken tandoori masalas) command higher margins than standalone spices because of the convenience factor and brand stickiness. 

Home cooking gets ‘lit’     

Blame it on Instagram and Tiktok. The pandemic triggered an increase in home cooking and social media made cooking ‘lit’. As food trends took over the ‘gram, sales of spices makers zoomed by 17% in FY22, according to a report. The Against this backdrop, 

The ‘brand’ shift 

Sales also received a boost owing to a shift towards branded products. ICYDK, the spices market is heavily dominated by unbranded players. The unorganised segment accounts for 50% of the market, according to industry estimates. However, an increased preference for branded spices and rise in disposable income helped large organised spices makers to clock strong growth.

Exports

There is a huge demand for Indian spices abroad, especially from the Indian diaspora. India reportedly exports spices and spices-related products to 180 countries including the US, the UK, Germany, Bangladesh, Thailand, the UAE and Sri Lanka. 

All these factors, coupled with the strong distribution network of FMCG companies, means that spices could well be the flavour of the season- in food and in the markets. Meanwhile, the FMCG index rose 1.2% today.

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Good to know

What is return on equity?

The return on equity (RoE) indicates how much money a company makes on the investments made by its shareholders. It is calculated by dividing the net income or net profit by shareholders equity. This ratio helps to understand how efficiently a company uses its shareholders’ money. It is important for investors to note that what is considered as a good RoE depends on the sector in which a company is operating.

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