IndiGo faces engine parts shortage; Jubilant FoodWorks’ profit surges & more

Nifty50: 18,157 ▼ 45 (-0.2%)
Sensex: 61,033 ▼ 151 (-0.2%)

Howdy, people!

In markets, as in life, it’s advisable to not take unverified advice too literally, or else the results could be disastrous. There is a Twitter thread that shows people committing a comedy of errors, because they took instructions too literally.

• Benchmark indices erased early gains to close lower, amid mixed global cues.
• In all, 36 of the Nifty50 stocks closed in the red.
• Investors await data on US inflation data to be released on Thursday.

Among the Nifty sectoral indices, PSU Bank (+3.9%) and FMCG (+0.2%) saw maximum gains, while Realty (-1.3%) and Pharma (-1.1%) were the top losers.

What’s trending

⭐ IndiGo grounds 30 aircraft

INDIGO (NSE): 1,720 ▼ 58 (-3.2%)

Shares of Interglobe Aviation fell by 5.7% intraday after IndiGo grounded nearly 30 of its aircraft due to supply-chain disruptions. Shortage of engines and key spare parts has forced the company to ground its aircraft, which represents 11% of its total fleet of 279 aircraft. The airline reported a third straight quarterly loss at ₹1,583 crore during the September quarter, while its revenue from operations grew by 122% to ₹12,497 crore.

⭐ TVS Motor joins hands with Amazon India

TVSMOTOR (NSE): 1,143 ▲ 31 (+2.7%)

TVS Motor and Amazon India have announced a new strategic collaboration to strengthen electric mobility, electric infrastructure and connected services. As part of the agreement, a fleet of electric two-wheelers and three-wheelers from TVS Motor will be deployed for Amazon’s last-mile deliveries. Amazon aims to reach net-zero carbon by 2040, and TVS Motor wants to bolster the electrification ecosystem in the country.

⭐ Jubilant FoodWorks’ profit jumps

JUBLFOOD (NSE): 568 ▼ 44 (-7.3%)

Jubilant FoodWorks reported a jump of 9.8% year-on-year (YoY) in its net profit at ₹131 crore. Its revenue from operations also rose by 16% YoY to ₹1,301 crore. In Q2, the company opened 76 new Domino’s stores and entered 22 new cities to expand its reach to 371 cities in India. The management said that the rise in revenue was driven by like-for-like growth of 8.4% and healthy performance of new stores.

⭐ MRF reports a weak quarter

MRF (NSE): 86,500 ▼ 8,400 (-8.8%)

Tyre maker MRF reported a fall of 32% YoY in its net profit at ₹130 crore on the back of higher expenses. However, revenue from operations rose 18% YoY to ₹5,826 crore. The total expenses of MRF rose to ₹5,730 crore, up 21% YoY. The company has also declared an interim dividend of ₹3 per share and has fixed November 18 as the record date for the same.

In Focus

PSU banks continue to outshine

Public-sector banks (PSBs) have reported record profits in the current financial year. The combined net profit of 12 PSBs rose by 32% YoY to ₹40,991 crore in the first half of FY23. At the same time, index tracking the PSU Banks, namely Nifty PSU Bank, has jumped by over 35% since April 2022. What’s the reason for this turnaround? Let’s find out 

Out of the 12 listed PSBs, 10 lenders have reported 13-145% jump in their net profit during the September quarter. Out of these, State Bank of India reported its highest-ever profit of ₹13,265 crore.

As per the Ministry of Finance, continuous efforts taken by the government in reducing non-performing assets (NPA) of state-owned banks are now reflecting in their results. The gross NPA of PSBs has fallen to 7.4% in FY22 from 14.6% in 2018, while the net NPA has declined from 8% to 2% over this period. This is especially noteworthy, since the bad loan numbers have declined despite the Covid-19 pandemic.  

Furthermore, the merger of non-performing banks into larger banks like the merger of Vijaya Bank and Dena Bank into Bank of Baroda has also helped PSBs garner market share and regain some ground lost to private sector banks. In addition, the revival in credit growth, both in the retail and corporate segments after the pandemic, is also supportive of improved profitability.

Thus, an upbeat business environment and increased profitability seem to be drawing the attention of investors towards PSBs this year.

IPO Corner

The IPO market is once again in full swing. Two more companies are looking to raise money through the IPO route. On Day 1, the IPO of specialty chemical manufacturer Archean Chemical Industries was subscribed around 30%. In comparison, the public issue of Five Star Business Finance received a subdued response. The non-banking finance company’s IPO was subscribed 2% on Day 1.

Click here to apply for these IPOs on Upstox.

Good to know

What is fiscal policy?

Fiscal policy refers to the government’s use of tools such as public expenditure and taxes in response to macroeconomic conditions. Fiscal policy is often contrasted with monetary policy, which is regulated by the central bank. The objectives of a fiscal policy may include creation of public assets like roads, railways and other infrastructural works. It could also include spending on public health and education.

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