Morning Update for 7 June 2021

Indices at previous closing

Nifty50: 15,670 ▼ 20.10 (-0.1%)
Sensex: 52,100 ▼ 132.38 (-0.2%)
Nifty Bank: 35,291 ▼ 357.35 (1.0%)

In the news

Indigo’s losses widen in Q4

• Market leader Interglobe Aviation, which operates the airline Indigo, reported a wider loss of ₹1,147 crore in Q4. Air passenger traffic dropped as the second wave gripped the country. As a result, revenues dipped 25% to ₹6,223 crore. 
• While the carrier’s variable expenses such as aviation fuel and other costs fell, fixed expenses such as depreciation and interest cost rose and hurt its bottom line. The stock fell around 1% last week, although the results were declared over the weekend. 

Jubilant Pharmova’s profit declines

• For the March quarter, Jubilant Pharmova reported a 18% year-on-year drop in its net profit from continuing operations to ₹173 crore, mainly due to higher other expenses. During the same period, operating revenue was nearly flat at ₹1,580 crore. 
• During the quarter, it witnessed growth in the contract manufacturing business, while the radiopharma business was impacted due to the pandemic and competition. The company has planned a capex of ₹700–800 crore in the current fiscal, whereas it had incurred a capex of ₹276 crore in FY21. The stock closed 1.6% lower on Friday but has risen over 22% so far in this fiscal.

PNB’s profit rises sequentially

• In Q4, Punjab National Bank’s net profit rose by 16% quarter-on-quarter to ₹586 crore due to a drop in provisioning. As per the bank, gross non-performing assets improved sequentially from 14.7% to 14.1%.
• However, the state-owned lender’s net interest income also fell 16.5% to ₹6,938 crore. It plans to unlock value by divesting its stake in Canara HSBC OBC Life Insurance, which is its associate. The stock was down by 1.3% on Friday, but the results were declared after market hours.

Bajaj Finance’s asset quality to weaken

• In its mid-quarter update, Bajaj Finance has said that its asset quality could deteriorate in the first six months of FY22 due to the disruption caused by the second wave. The NBFC stated that its business-to-business and auto finance segments were the most impacted in Q1 due to localised lockdowns.
• It is also facing a marginal increase, of around 8%, in EMI bounce rates in Q1 as compared to the previous quarter. Despite these challenges, the stock is trading at its lifetime high and gained nearly 7% last week.

Sectoral indices (4 June)

Global markets (at 8:15 am)

Key data releases next week 

• Wednesday: Crude oil inventories (US)
• Thursday: CPI, Initial jobless claims (US)
• Friday: IIP (India)

Fact of the day 

In 1993, the IT giant Infosys' IPO was undersubscribed. But Morgan Stanley came to its rescue by picking up 13% stake in the company.

Source: Economic Times

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Investments 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.