▲ Nifty: 11,813 (+1.24%) ▲ Sensex: 40,261 (+1.27%)
Like yesterday, banks were the heroes of the market today while auto, pharma and metals acted as the supporting cast. The Nifty Bank index rose 3.1%. Leading financial institutions ICICI Bank (+6.7%), SBI (+4.3%) and HDFC (+3.9%) witnessed strong buying interest. In fact, the strong results declared by several major banks in Q2 almost gives the impression that ‘all is well’ in the banking sector. Meanwhile, UPL (-6.6%), NTPC (-3.7%) and Reliance Industries (-1.2%) were the top losers of the day.
Here are the top stories of the day.
Cadila Healthcare results beat street estimates
Shares of Cadila Healthcare jumped 5.9% today after the company’s Q2 results beat market estimates on all counts. Revenues grew 13.4% on a year-on-year basis to ₹3,820 crore versus estimates of ₹3,661 crore. The revenue growth was led by the company's US business (contributing ~45% of revenues), which grew at 18%. The company launched six new products in the US during the June-September quarter. In the Indian market (accounting for ~40% of revenues), it improved market share in various therapies including gynaecology, pain management, anti-infectives, anti-diabetic and hormones. Overall, its net profit grew by 73% year-on-year. Further, as compared to March 2020, the company’s net debt has declined by 40% to ₹4,031 crore. Investor confidence is evident in the stock, which has risen 63% in this fiscal.
Ramco Cements posts strong margin expansion
Ramco Cements’ Q2 revenues fell by 5% on a year-on-year basis as sales volumes dropped 19% during the same period. The volumes were impacted due to lockdown restrictions and unusually heavy rains in the southern states. However, the company’s operating margin expanded significantly from 22.4% in Q2 of last year to 35.2% this year. The increase in margin was due to improving per-tonne realisation, supported by a better product mix. Net profit rose 40% as compared to the same period last year to ₹235 crore, beating the street’s expectations of ₹163 crore. Further, the company expects cement demand to pick up in the coming quarters. The stock ended the day with gains of 2.8%.
Godrej Properties tumbles on lacklustre Q2 performance
Godrej Properties’ Q2 numbers showed a sequential recovery as total income jumped 44% and adjusted EBITDA jumped 87% on a quarter-on-quarter basis. This is broadly in line with the sales recovery seen across Tier-1 cities. However, sluggishness due to the pandemic was evident in the results on a year-on-year basis. The total income declined 36% to ₹238 crore. Meanwhile, net profit stood at ₹7 crore, down ~78%. Furthermore, projects slated for launch in Q2 were postponed due to delays in regulatory approvals. The stock took a beating today and was down 9.1%. However, the silver lining amidst this is that the company’s labour force at its various construction sites has significantly increased, and has exceeded pre-Covid levels by ~30%. The company believes that it has tremendous opportunity to gain market share in the residential real-estate market.
Closing bell
The recent performance of banking stocks has boosted investor confidence, which was evident in the market gains today. However, as we mentioned yesterday, cracks are visible in the smallcap stocks. The Nifty Smallcap 100 index ended almost flat (0.07%), in an otherwise bullish market. Meanwhile, major equity markets across Europe and Asia are in the green, ahead of the US presidential election today.
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Investment in securities markets are subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by RKSV group. Investors should consult their investment advisor before making any investment decision.