Markets back with a bang

Nifty50: 18,101 ▲ 241 (+1.3%)
Sensex: 60,747 ▲ 846 (+1.4%)

Hello,

It’s ‘earnings season’ of another kind for employees of Taiwan's Evergreen Marine Corp.

This Taipei-based shipping company is handing out year-end bonuses equal to (believe it or not) 50 months' salary. That is more than 4 years of pay! Employees of this company can thank an unprecedented industry-wide shipping boom for the windfall. 

Back home, the markets couldn't have asked for a better start to the earnings season. We tell you why.

• Markets gained, supported by positive global clues.
• Of the Nifty50 pack, 43 stocks advanced.
• TCS kicked off Q3 earnings season.

All Nifty indices closed in the green with IT (2.8%) and Metal (1.4%) being the top gainers.

What’s trending

⭐ TCS' quarterly profit up 3%

TCS (NSE) : 3,309 ▲ 97.45 (+3%)

I.T. major Tata Consultancy Services Ltd (TCS) has announced its results kicking off the earnings season for the third quarter. The company has registered a revenue of ₹58,229 crore, which is a growth of 19.1% year-on-year. Profit grew 3% as compared to last quarter to touch ₹10,846 crore. The operating margin stands at 24.5%. The Board also announced a dividend of ₹75/share including a special dividend of ₹67/share. Earlier, TCS rode on the pre-results wave as it closed more than 3% higher.

⭐ Titan's Q3 growth fails to impress

TITAN (NSE): 2,489 ▼ 48.15 (1.90%)

Investors stayed unimpressed by Titan's 12% growth in the December quarter. Consequently, the company's shares traded lower (-1%) in a positive market. The company reported vibrant festive season growth from its 'emerging businesses' category. This includes the fragrance, accessories and clothing brand, Taneira which reported a 75% upswing in sales. Titan's watches and wearables segment rose by 14% while the jewellery business grew by 11%.

⭐ Asian paints gains on capex upgrade

ASIANPAINTS (NSE): 2,983 ▲ 4 (+0.1%)

Asian paints' announcement of a new manufacturing facility brought cheer to its shareholders. The company is planning to set up a new water-based paint plant with a capacity of 4 lakh kilolitres per annum. The company plans to invest approximately ₹2.000 crore in this project which will be commissioned in three years, after land acquisition. However, here is something to keep an eye on. Prices of crude oil, a major raw material used in the production of paints and emulsions, have been rising lately (+3% today). This could likely impact the profit margins of paint manufacturers like Asian paints.

In Focus

Housing sales at 10-year high

India’s realty sector has made a stunning comeback in 2022. According to an industry report, housing sales hit a 10-year high across the top seven cities of the country. 3.6 lakh housing units were sold in 2022 as compared to 2.3 lakh in 2021. That is a 54% increase in one year. 

And, despite interest rates going up, experts expect the momentum in real estate to continue through 2023. Let’s understand why. 

1. WFH

The work from home trend fuelled housing demand last year with most buyers looking to upgrade to larger homes. This demand is expected to spillover to 2023 as well. However real estate is also benefiting from offices opening up. 

2. Rise in rentals 

Employees returning to offices are driving demand for rental homes near their workplace. Thus, house rents, especially near commercial hubs, are going up. For instance, rents rose between 20% and 25% last year in the Delhi-NCR region. High rents could push many to buy homes over renting. Meanwhile, rising rents also act as an impetus for existing homeowners to buy additional flats and rent them out. 

3. Robust booking numbers 

Booking of under-construction flats is a good metric to track demand for new homes and these numbers are showing healthy growth. In the December quarter, Bengaluru-based developer Sobha reported its highest ever sales booking numbers. The company’s sales booking rose 36% to ₹1,424 crore. Similarly, Mumbai-based Macrotech Developers, which operates under the brand name Lodha, reported pre-sales booking growth of 16% to ₹3,035 crore.  

4. New launches  

The high demand is also fueling new launches. In 2022, new launches in the housing market rose 81% year-on-year. 21% of the launches are in the premium housing segment dominated by large organised realty players in prime locations.

However, rising interest rates and global slowdown could impact growth of the realty sector. The sales post mid-January will be an acid test for demand. The period till Makar Sankranti is widely considered inauspicious for home buying. However, multiple factors indicate that the robust performance may continue.

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Good to know

What is net profit margin?

Net profit margin refers to how much profit a company makes in comparison to its revenue. This financial ratio is represented in terms of percentage. For instance, if a company’s net profit is ₹20 crore and its revenue is ₹200 crore. The net profit margin of the company would be 10%. This ratio helps investors to understand whether a company is able to keep its operating costs and other expenses under control. It also helps in comparing companies within the same sector to identify the ones which have higher efficiencies.  

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