It was always expected to happen and finally Sony has officially called off its deal with Zee Entertainment. It has also slapped a termination fee of $90 million on Zee alleging breach of terms of the merged deal. The merger was to create a $10 billion entertainment giant with 25% market share among entertainment channels. Zee has denied any breach of terms of the deal, even as the 1-month extension also expired. A slew of downgrades of Zee Entertainment have already started hitting the market with more to come by.
Colgate-Palmolive India reported 35.7% higher net profits in Q3FY24 on the back of higher urban demand and lower costs. Even as rural demand has remained tepid, urban demand has compensated for the rural losses. Colgate Palmolive also reported 8.2% increase in revenues to Rs1,386 crore, with the core oral care vertical outperforming. This is stark contrast to the results of Hindustan Unilever, which saw pressure on the top line and the bottom line. Colgate edged up by 26 bps on a day when FMCG index was 1.8% lower.
The market cap of 5 out of the top 10 Indian companies by market cap eroded by Rs167,936 crore last week. Needless to say, HDFC Bank was the top loser, giving up Rs122,163 crore in market cap. Other losers included Hindustan Unilever at Rs17,845 crore, TCS Rs7,721 crore, and SBI Rs2,008 crore. Among the big gainers, LIC gained Rs67,456 crore for the week, edging past SBI in market cap. Among others, Bharti Airtel added Rs26,381 crore, Infosys Ltd Rs15,171 crore, ICICI Bank Rs3,164 crore and ITC Ltd adding 2,058 crore.
One of India’s leading drug manufacturer, Cipla Ltd, posted a much better than expected increase in net profits in Q3FY24 to the tune of 32%. This growth is on a yoy basis and the profit surge in the quarter was largely driven by the strong performance delivered by the North American business of Cipla Ltd. The profits were also slightly higher than the street expectations. While analysts had pegged the Q3FY24 net profits at Rs1,043 crore, the actual net profits came in at Rs1,056 crore. That is positive for the stock price.
There are concerns that Q3FY24 for India Inc may turn the lowest profit growth in the last 14 quarters. If you remove financials, net sales have risen 4.5% yoy while net profits have risen by just 7.3%. This tepid rise in profits is despite a 109 bps fall in input costs and 22% higher other income. Demand pressure is clearly visible in consumer driven businesses, especially in rural markets. This is true of retail too. While IT has fared reasonably well, cement saw higher interest costs. For Reliance, O2C was under lot of strain.
One year after the Hindenburg report triggered chaos in Adani stocks, the group has recouped most of its value. In a sense, Adani group did the right thing by not taking the short seller head-on. Instead, it focused on putting its house in order and making a statement on its cash flow position by prepaying several loans. This brought back confidence for the banks. Of course, a new breed of audacious investors like GQG Partners took a high risk call and helped out, even as the investor was laughing all the way to the bank.
It looks like the National Monetization Pipeline is proving to be a blessing in disguise for the government. Even as mining and highways, have taken the lead in asset monetization, it is likely to yield receipts of not less than Rs150,000 crore in FY24. Coal block monetization was the big story of the year, while roads and highways were the other big contributor to the monetization plan. The aggregate asset pipeline under the NMP in FY22-FY25 period is valued at Rs6 trillion. Even asset recycling in power could be a lucrative story.
Foreign investors have gone in the defensive selling close to $2.03 billion in the previous week. For the month of January 2024 so far, FPIs were net sellers in equity to the tune of $1.57 billion. However, if you take the offsetting impact of debt flows, the net impact is neutral. Apart from the tepid quarterly results of some of the heavyweights like HDFC Bank, RIL and HUL; FPIs were also cautious due to the sharp spike in the US bond yields, since it raises the opportunity cost of holding equities. DFIs are buying aggressively.
