Drifting lower

Nifty50: 17,721 ▼ 43 (-0.2%)
Sensex: 60,286 ▼ 220 (-0.3%)

Hello, dear reader!

Talk about throwing shade! Google has unveiled its answer to ChatGPT. And guess what it's called - BARD. 

(ICYDK, Big Daddy Will Shakespeare is called 'The Bard'). Ironically, the same man once wrote, 'What's in a name?', but clearly Google missed that memo. 

Well, apart from a full-on 'War of the Names', here's what distinguishes the two - While a finer blueprint is still awaited, we know that BARD will flex its search engine muscle to gain an edge over ChatGPT. Meaning unlike ChatGPT, whose responses are based on pre-2021 data, BARD will get its information from the web to provide ‘fresh, high-quality responses’.

Who will trump who in the AI war? To quote (who else) the Bard himself, we will know..‘When the hurly-burly’s done,/When the battle’s lost and won.'

As for the markets, the Bulls lost the battle today, again!

• After a strong opening, the markets lost steam.
• Of the Nifty50 pack, 31 stocks declined.
• All eyes are now on RBI’s rate decision tomorrow. More on that later.

Among the Nifty sectoral indices, Realty (+0.8%) and Bank (+0.2%) were the top gainers, while FMCG (-1.1%) and Auto (-1.0%) were the top losers.

What’s trending

⭐ Bharti Airtel Q3 rings in the cash

The telecom operator's (-0.3%) net profit rose by 91.5% YoY to ₹1,588 crore. This was aided by an 18% rise in the average revenue per user (ARPU) to ₹193. Its India business revenue grew by 20.8% YoY, led by continued 4G customer addition and an increase in ARPU.

⭐ Paytm shares soar

Shares of the fintech player (+5.5%) rose after the management said that the company has achieved operating profitability (₹31 crore) in Q3. The company achieved this milestone three quarters ahead of the guidance it had given investors. 

⭐ Kalyan  Jewellers’ sparkling Q3 

The jewellery maker’s net profit (-1.5%) rose 9.6% YoY to ₹148 crore in the December quarter. In the same period, the revenue also rose 13% to ₹3,884 crore. The management said that it is witnessing robust momentum in revenue and footfalls, driven by the ongoing wedding season demand. 

⭐ Blue Star aims to gain market share  

The management of the air conditioner maker (+0.2%) has said that it wants to achieve a market share of 15% by FY25. It added that the company aims to manage margins and grow faster than the market.

⭐ RBI to signal Yellow tomorrow?  

The street expects the Indian central bank to hike the key rate by 0.25%. This comes at a time when the inflation has been decreasing and came in at 5.7% in December 2022.

In Focus

Why are investors raising a toast to Varun Beverages?

Shares of PepsiCo’s bottler have risen 12% in the last two trading sessions post its Q3 results. Even in 2022, Varun Beverages was one of the top performing stocks with a return of 123%. 

So, what are the reasons for the rally? Let’s take a look. 

Strong Q3 performance  

Let’s set the context first. The December quarter is usually weak for the beverages companies. This is because the consumption of beverages goes down in the winter. Despite this, Varun Beverages reported robust growth in its profit (150% YoY) and revenue (28% YoY). The management attributed this to strong recovery post pandemic and expansion of its distribution network. 

Margin expansion 

The profitability has also improved. The EBITDA margin or profitability improved by 1.92% to 13.9%, supported by higher revenue earned per bottle/can. Also called net realisation, this metric increased by 6% to ₹164, primarily due to select price hikes and high margin products.  

 Energising profits 

In fact, the company’s energy drink, Sting, is playing a pivotal role in boosting profits. Sting has a higher net realisation and accounts for 9.6% of the total sales. More importantly, it is priced lower (₹35 per can) as compared to its rivals Red Bull (₹125 per can) and Monster (₹79 per can). 

Diversifying 

ICDYK, Varun Beverages has licensed a vast portfolio of brands from PepsiCo. This includes Pepsi, Tropicana, Slice, Mountain Dew and Miranda. 

Now, the company is further diversifying by bringing more PepsiCo brands into its portfolio. The company has started production of Kurkure. Along with this, it has an agreement in place to distribute and sell Lays, Doritos and Cheetos in Morocco. 

Getting battle ready

The company also seems to be preparing for the rise in competition in the beverage industry with the entry of Reliance Industries. It has installed 925,000 visi-coolers (refrigeration). 

Now, it remains to be seen whether these factors play out in favour of Varun Beverages.

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