Morning Update for 8 June 2021

Indices at previous closing

Nifty50: 15,751 ▲+81 (+0.5%)
Sensex:  52,328 ▲ +228 (+0.4%)
Nifty Bank: 35,545 ▲ +152 (+0.4%)

In the news

MRF’s quarterly profit shrinks

• Leading automotive tyre maker MRF reported a 51% YoY drop in its March quarter profits. The drop looks big especially when seen in light of the 31% rise in revenues. However, the corresponding quarter last year had a large deferred tax credit. 
• At the profit before tax level, the growth is a strong 48%. Notwithstanding the sharp improvement in PBT numbers, the stock fell 3% yesterday. As per the management, while the second wave has affected the business, it is expected to get back to normalcy in about two months. 

Central Bank’s asset quality worsens

• State-owned Central Bank of India witnessed deterioration of its asset quality in Q4. The gross NPA went up to 16.55% of the loan book from 16.30% in the December quarter.
• The net interest income (NII) also dropped sequentially by 32% to ₹1516 crore. The fall in NII and an increase in provisioning led to a loss of ₹1,349 crore in Q4. Despite weak results, the stock was up almost 8% yesterday due to the buzz of privatisation. 

VA Tech Wabag reports strong Q4

• Shares of VA Tech Wabag jumped 6.2% yesterday, after it reported a 53% jump in consolidated net profit for the March quarter. The water treatment major also saw its revenues rise over 27% to ₹999 crore. The profit growth was aided by a reduction in interest costs and tax expenses.
• The company said that It has an order book of ₹9,500 crore, which is over 3 times the annual revenue. It has also managed to reduce its gross debt by 33% during FY21 and has turned around from net debt to net cash at the group level.

Union Bank of India’s profit soars

• Government-owned Union Bank of India’s net profit went up by 83% quarter-on-quarter  to ₹1,330 crore. The reasons for the spike in profits was the surge in other income and fall in provisioning for bad loans. The provisions dropped from ₹4,584 crore in Q3 to ₹3,850 crore in Q4.
• But the net interest income fell by 18% to ₹5403 crore. The lender’s gross NPAs rose from 13.4% of the loan book to 13.7%. Its stock closed 0.4% higher yesterday. 

Sectoral indices (7 June)

Global markets (at 8:15 am)

Fact of the day

In 1996, Larry Page and Sergey Brin decided to name their company Googol (referring to specific large numbers), which got changed to Google because of a typo!

Source: Stanford University

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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.