HAL shares rise, Nestle India announces dividend & more

Nifty50: 18,035 ▲ 20 (+0.1%)
Sensex: 61,319 ▲ 44 (+0.07%)

Dear Reader, 

It's official. 

The notorious traffic jams of Namma Bengaluru are among the worst in the world.

As per the latest TomTom report, Bengaluru is the second slowest city in the world to drive in. In fact, covering a 10km stretch in the town will take you close to half an hour! Bengaluru is only behind London on this not-so-enviable list of most traffic-congested cities.

And in case you are stuck in traffic (in Bengaluru, Mumbai or wherever), do yourself a favour. Scroll down. Read. ‘Invest’ your time gainfully.

Let’s get going!

• The markets ended flat in a volatile session.
• Of the Nifty50 universe, 25 stocks advanced.
• Investors stayed cautious after US markets opened lower on Wednesday over inflation concerns.

Among the Nifty sectoral indices, IT (+1.6%) and Realty (+1.3%) were the top gainers, while Financial Services (-0.2%) and Bank (-0.2%) were the top losers.

What’s trending

⭐ HAL shares shine on order win 

Shares of Hindustan Aeronautics (7.2%) rose after the defence PSU signed a contract with Argentinian Air Force. The company will supply parts for two-tonne class helicopters. Recently, the company’s management said it has an orderbook of ₹84,000 crore and another ₹50,000 crore worth of orders are in pipeline.

⭐ Oil companies bubble up on windfall tax cut 

State-owned oil refiners and producers, including ONGC (5.6%) and Oil India (4.9%) surged after the government cut the windfall tax on domestically produced crude oil to ₹4,350 per tonne from ₹5,050 per tonne. Excise duty on aviation turbine fuel (ATF) was also cut to ₹1.5 per litre from ₹6 per litre.  

⭐ Nestle India announces dividend

Nestle India (1.7%) reported 14% YoY rise in sales to ₹4,233 crore for the quarter ended 31 December 2022. Meanwhile, its net profit rose by 65% YoY to ₹628 crore. The maker of Maggi noodles said sales growth was driven by price increase and volume growth. The company also announced a final dividend of ₹75 per share. Record date for the dividend is 21 April. (Click here for the video)

⭐ Surf Excel becomes billion dollar brand 

Hindustan Unilever-owned detergent brand, Surf Excel has crossed a billion dollars in annual sales in 2022. Sales of the detergent crossed ₹8,200 crore mainly due to a calibrated price increase. Sales of Surf Excel jumped 32%, primarily driven by its smaller ₹10 packets.

In Focus

IT stocks turning a corner?

In 2022, the Indian IT companies were hit by a double whammy of rising wages and a slowdown in US and European markets. Against this backdrop, the Nifty IT Index had declined 26%. 

But this year, IT stocks are reclaiming lost ground. The IT Index is already up 9.8% in 2023.

Let’s see what are the reasons for this recovery. 

Large deal wins

In the December quarter, major IT companies have managed to bag large deals. This is despite concerns of a slowdown in the US and Europe. ICYDK, these regions are key revenue generators for the IT companies. In Q3FY23, Infosys’ large deal TCV (total contract value) stood at $3.3 billion – its strongest in the last eight quarters. Similarly, Tata Consultancy Services (TCS) bagged its largest deal of FY23 – worth $723million. 

The key reason behind this has been vendor consolidation. This means clients are choosing to give all IT contracts to one or two big companies rather than opt for multiple vendors. This helps clients to cut costs.  

Promising outlook 

The large deal wins have allowed IT companies to increase their revenue guidance. For instance, Infosys has raised its revenue guidance to 16%-16.5% from 15%-16% earlier. The management of Infosys highlighted that both its business – digital and core services are growing. Similarly, TCS also highlighted that one of the key reasons for strong growth in Q3 was its cloud services. 

Attrition rate

What more? The attrition rate, which is the percentage of employees leaving or quitting, continues to decline. ICYMI, this has been a major drag on IT companies’ profitability. Infosys’ attrition rate declined from 27.1% in September quarter to 24.3% in the December quarter. In the same period, TCS attrition rate dropped from 21.5% to 21.3%. 

While these factors have helped the IT stocks to stage a recovery, the concerns of high interest rates and a global slowdown continue to persist.

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What is Depreciation?

Depreciation represents the decrease in an asset’s value (tangible or intangible assets). It’s a term commonly used in accounting and shows how much of an asset’s value a company has used over a period of time. Depreciation helps in accurately reporting a company's financial performance by matching the cost of an asset to the revenue it generates and allows a company to reduce its taxable income and therefore reduce its tax liability.

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