Losing streak continues

NIFTY50: 19,310 ▼ 55 (-0.2%)
SENSEX: 64,948▼ 202 (-0.3%)

Namaste, friends!

If you were out and about today, you’d have experienced the sunniest day in months, in a manner of speaking. In what is dubbed as the Zero Shadow Day, people across the country witnessed a celestial phenomenon, wherein they didn’t cast shadow at certain times of the day. However, the markets weren’t so sunny today and closed in the red yet again. More on that later. 

• Benchmark indices closed lower for the fourth straight week, the longest losing streak since May 2022
• In all, 39 of the NIFTY50 stocks closed in the red
• Eurozone retail inflation declines further to 5.3% in July, lowest since January 2022

Among the NIFTY sectoral indices, Media (+0.6%) and PSU Bank (+0.2%) were the top gainers, while IT (-1.4%) and Realty (-0.7%) were the top losers.

What’s trending

⭐ NIFTY Next 50 set for a rejig 

The NSE today announced that it will exclude ACC, HDFC AMC, Nykaa, Indus Towers, and Page Industries from the NIFTY Next 50 index, as part of the bi-annual rejig. The changes will take effect on 29 September 2023. Shares of most of the excluded companies have fallen in the range of 6–20% so far in 2023, which was one of the reasons for their exclusion. Stocks to be included in the NIFTY Next 50 index are PNB, Shriram Finance, Trent, TVS Motor, and Zydus Lifesciences. 

⭐ Adani Transmission surges on new acquisition  

Adani Transmission has signed an agreement with Megha Engineering and Infrastructures to acquire KPS 1, a special purpose vehicle offering transmission services. As per the management, the acquisition will further enhance value for its shareholders through organic as well as inorganic opportunities. This acquisition will be a cash deal and will be completed within 15 days. However, the total amount paid for the acquisition is undisclosed. Shares of Adani Transmission rose 5.8% today.

⭐ NDTV up on govt nod for new channels

News broadcaster NDTV has received approval for launching four new regional channels from the Ministry of Information and Broadcasting. NDTV Madhya Pradesh/Chhattisgarh will launch on 21 August. Meanwhile, NDTV Rajasthan, NDTV Gujarati and NDTV Marathi will be launched in upcoming months. The company’s shares were up by 1.5% today.

⭐ Yatharth Hospitals soars on strong Q1 results

Yatharth Hospitals shares soared by 9.2% after the company’s profit jumped 73% YoY to ₹19 crore in Q1FY24. Operating revenue also rose by 39% YoY to ₹154 crore. Meanwhile, bed occupancy was at 51% compared to 40% in the same quarter of last year. The hospital-chain operator made a lacklustre market debut this month, listing at a premium of just 2% over the issue price.

In Focus

Telcos to see moderate growth this fiscal

The Indian telecom industry is expected to witness subdued growth in FY24. According to rating agency ICRA, the industry could see its consolidated revenue rise by a mere 7-9% to ₹2.9 to ₹3 lakh crore. This is mainly due to a muted rise in ARPU, a key industry metric. What are the reasons behind slow ARPU growth? Let’s dive in. 

ARPU or average revenue per user is a key metric in the telecom sector. It denotes the average revenue generated by a telecom operator from each active subscriber over a period of time. ARPU is generally calculated on a monthly basis, simply by dividing monthly recurring revenue (MRR) by total number of active users. For instance, in Q1FY24, Reliance Jio reported an ARPU of ₹180.5 per subscriber per month, whereas Airtel’s ARPU was ₹200 per subscriber per month. 

As per an ICRA report, telecom industry’s overall ARPU could see slower growth in FY24 and could moderate to ₹182–₹185 from ₹175 a year ago. This is mainly due to absence of any major tariff hikes by telecom players. In recent months, telcos have not introduced traffic hikes, and are trying to earn more from low-paying customers. For instance, Airtel increased the price of its base recharge plan to ₹155 from ₹99. 

Furthermore, telecom operators are going slow on 5G monetisation with no 5G-specific plans as 5G adoption and roll out still remains at nascent stage. As a result, there is no substantial increase to ARPU. The report further states that telecom companies could see the next phase of growth when more subscribers join 5G services and telcos monetise this through 5G-specific plans. In addition, a rise in revenue in non-core business, including digital and cloud services, fixed broadband services could pave the way for future growth. 

Commenting on industry debt, ICRA expects telecom industry’s debt to remain elevated at ₹6.1-6.2 lakh crore as telecom players are going to increase capex outlay to expand 5G coverage across nation. This capex outlay is most likely to be funded by borrowings. 

On the whole, telcos could post moderate revenue growth in FY24. However, a rise in 5G subscriber base or diversification towards non-core businesses could fuel future growth.

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