Coal India rises, Ratnaveer IPO fully subscribed & more

NIFTY50: 19,528 ▲ 93 (+0.4%)
SENSEX: 65,628 ▲ 240 (+0.3%)

• Benchmark indices closed higher for the second consecutive session
• In all, 32 of the NIFTY50 stocks closed in the green
• Global natural gas prices fell over 3% amid a production halt in several gas fields in Norway due to maintenance

Among the NIFTY sectoral indices, PSU Bank (+2.4%) and Metal (+2.2%) were the top gainers, while FMCG (-0.1%) was the sole loser.

What’s trending

⭐ Coal India rises on business update

Shares of Coal India soared 4.6% today after it reported a sharp rise in coal output for August. The state-run coal miner said its production grew 13% year-on-year to 52.3 million tonnes (MT) in August. Its supplies rose 15.3% to 59 MT in August 2023 from 51.2 MT in the year-ago period. The company aims to produce and sell 780 MT of coal in FY24. Out of this, about 610 MT are planned to meet the demand from the power sector, and the rest will be allocated for non-regulated sectors.

⭐ Deepak Fertilisers gain on deals with GAIL

Shares of the fertiliser and industrial chemical maker rose 3.4% on September 4 after the company signed two gas-purchase deals with GAIL. With this agreement, the company’s total gas requirements for the next three years have been tied up with a gas basket consisting of a combination of Brent, HH and domestic-linked, in order to give a risk-mitigated basket.

⭐ Mishra Dhatu Nigam hits 52-week high 

Shares of steel and alloys maker touched a new 52-week high today after the successful launch of the Aditya-L1 mission by ISRO. State-owned company supplied specialised metals and alloys for this crucial project, including materials used in launch vehicle PSLV-C57. Company has been one of key metal suppliers to various ISRO missions. So far in 2023, the stock is up more than 95%. 

⭐ Ratnaveer IPO fully subscribed on Day 1

The ₹165 crore initial public offering (IPO) of Ratnaveer Precision Engineering opened for subscription today and was subscribed 5.7 times on Day 1. The company is a manufacturer of stainless steel products, with a focus on producing finished sheets, washers, solar roofing hooks, pipes, and tubes. The company has fixed the price band at ₹93 to ₹98 per equity share, and the IPO will remain open for bidding till 6 September 2023. To apply for the IPO click here.

In Focus

Aviation industry to face headwinds ahead?

During January to June 2023, the Indian aviation industry witnessed passenger traffic rising by over 33% YoY to 76 million passengers. Further, lower crude oil prices aided the industry’s revenue and profitability in the first half of 2023. However, experts believe the domestic aviation industry could face headwinds in the second half of 2023, amid rising crude oil prices and declining passenger traffic. 

Jet fuel prices see double-digit growth  

As per experts, the aviation industry is likely to see muted growth because of a consistent rise in prices of aviation turbine fuel (ATF). Since 1 June 2023, oil-marketing companies have increased ATF prices by 26%, including a recent hike of 14.1% on 1 September. The rise in ATF price comes on the back of rising international crude oil prices, which rose more than 18% since the start of July. 

Fuel is by far the biggest cost for the airline industry, making up nearly 40% of total expenses of airline companies. Hence, any rise in ATF prices has a direct impact on airlines’ profitability. 

Muted passenger traffic 

Another key factor that may impact the industry is the muted passenger traffic in the second quarter of the FY24. The period from July to September is seasonally weak for airline companies. In fact, July 2023 witnessed 3% sequential fall in passenger volume due to uncertain weather conditions. 

Although data for August and September is awaited, passenger traffic is expected to be muted in these months as the festival season has been pushed to October this year.

The impact of these factors reflected in the stock prices, with shares of Interglobe Aviation declining over 6% in August, while shares of SpiceJet fell nearly 19% in the same period.

What airlines are doing?

To overcome these challenges, airlines are diverting their fleets towards high-yield international routes. This helps airlines expand their presence on international routes and improve their yield.

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