India’s oldest cement company, ACC, reported 73% growth in PAT at Rs.472 crore as deferred tax credits ended up much bigger than the exceptional write-offs. Revenues were up just 2.08% at Rs.4,145 crore on a consolidated basis. Among verticals, cement business showed 4.6% growth while the smaller RMC business sales fell 20%. OPM of ACC improved from 9.36% in Dec-19 quarter to 10.00% in Dec-20 quarter. In the Dec-20 quarter, ACC took a one-time write-down of Rs.176 crore on impairment of assets at the Madukkarai plant, which was more than offset by the deferred tax credit benefit of Rs.264 crore.
The Directorate General of Hydrocarbons or DGH confirmed that India’s natural gas production crossed pre-COVID level after output from the KG-D6 field operated by Reliance and BP went on stream. In Feb-20, natural gas production in India stood at 80 mmscmd and that has now scaled 85 mmscmd in Feb-21. This recovery is attributed to RIL and BP starting off generating gas from the KG-D6 block. According to the DGH, gas production could rise further in 2021. However, ONGC and Oil India continued to produce gas at almost the same levels as of Nov-20. Output from the KG-D6 block of RIL-BP touched 6 mmscmd and is slated to cross 13 mmscmd by Jun-20. Natural gas is, currently, just 6.23% of the energy mix with major consumers being; Fertilizer plants – 33%, power plants – 18%, CGD – 18% and oil refineries – 13%.
ITC Q3 PAT was down -11.3% on yoy basis at Rs.3,527 crore due to higher excise burden and relatively lower tax credits. Revenues for ITC were up 6.14% at Rs.14,124 crore on a consolidated basis. The sales boost can also be attributed partially to the integration of Sunrise Foods. In Q3, cigarette revenues grew by 2.45% but other FMCG revenues were up 13%. Among other verticals, agri business showed growth. Hotels business and the paperboards business came under pressure. OPM for the Dec-20 quarter tapered from 34.11% to 30.95% in the Dec-20 quarter. PAT margins too tapered from 29.87% to 27.97%.
Passenger vehicle sales for Jan-21 were up 11% at 276,000 units as per data put out by SIAM. The sales were higher for the sixth consecutive month due to pent-up COVID demand. In the 2-wheeler category, sales of scooters rose 9% to 4.54 lakh units while motorcycles grew 5% to 9.16 lakh units. Demand for three-wheelers remained muted, falling 57% to just 25,335 units. The overall auto sales were 4.97% higher. The overall production volumes rose to 17.32 lakh units. However, Fitch has warned that high commodity prices and lower sales volume could dent the margins of Indian auto manufacturers.
MRF doubled its net profits to Rs.521 crore as cost cuts and efficiency dividends were visible in the counter. MRF reported 13.88% growth in gross revenues for the Dec-20 quarter at Rs.4,642 crore. MRF has been a preferred OEM supplier to auto companies and it benefited in the Dec-20 quarter from the sharp turnaround in auto demand. Operating margins for the Dec-20 quarter expanded, leading to OPM expanding steeply from 9.15% to 14.93%. Even the net profits margins of MRF almost doubled from 5.92% in the Dec-19 quarter to 11.21% in the Dec-20 quarter as cost controls played a big part.
Global index provider, MSCI, confirmed raising the weightage on select stocks like Bharti Airtel, Indus Towers, ICICI Lombard and HDFC Life. MSCI confirmed that the weightage of Bharti Airtel would increase by 1.27%, Indus Towers by 0.15%, HDFC Life by 0.11% and ICICI Lombard by 0.04%. Even PEL could see its weight improve to 0.28% post the revamp. It is expected that on the date of the balancing i.e. 26-Feb, India would likely receive flows of $700 million into this set of stocks. IIFL Alternative Research expects flows of $525 million into Airtel, $70 million into Indus Towers and $55 million into HDFC Life. In addition, ICICI Lombard is expected to get flows of $20 million and PEL of $13 million. These flows are critical as they set the direction for passive funds and index ETFs to allocate to India in a big way.