Friday, 16th April 2021

Wipro reported 27.8% higher net profit of Rs.2,972 crore for the Mar-21 quarter, on the back of better operating margins during the quarter. However, the sequential profits were almost flat. Revenues were up just 3.4% at Rs.16,245 crore, largely driven by growth in the European markets. The numbers were in line with street expectations. Operating margins expanded by 340 bps on a yoy basis at over 21%. Wipro has given revenue growth guidance of 2-4%, excluding the recent Capco and Ampion acquisitions.

Indian exports for the month of March 2021 jumped 60.3% to $34.45 billion, on the back of an Agri-export push. However, outbound shipments for the full fiscal year 2020-21 contracted 7.26% to $290.63 billion. The import growth also kept pace growing 53.3% to $48.38 billion for the month of March 2021. However, for the full fiscal FY21, the total imports were lower by 18% at $389.18 billion. The actual trade deficit widened to $13.93 billion in Mar-21 but full-year trade deficit for FY21 was down 39% at $98.56 billion.

On Thursday, the stock market indices staged a smart recovery in the last hour of trade as the rally was led by private sector banks, metals and pharma stocks. The Sensex closed 260 points higher at 48,804, still short of its psychological 50,000 levels. This is commendable since the index had touched a day-low of 48,010 after India reported a record spike of over 2 lakh cases on Wednesday. While short covering was the story in private banks and metals, there was value buying in pharma stocks. FMCG stocks slipped.

Eicher Motors slipped 4% to touch a 3-month low of Rs.2,384 on Thursday. Analysts are becoming cautious about the prospects of the company; both in terms of volumes and price. There is also a fear that the sharp spike in the price of commodities may have to be partly absorbed by Eicher on account of the extremely competitive situation in the market. The two-wheeler space is not only vulnerable to supply shocks but also to fuel prices. Nomura has warned that EV disruption cannot entirely be ruled out.

Sugar stocks rallied 9-10% on Thursday 15 April on expectations of better earnings growth in Q4. This is likely to be driven by the subsidy announced in December 2020 which has resulted in a strong momentum in sugar exports. Most of the sugar companies like Balrampur Chini, Uttam Sugar, Dalmia Bharat, Dhampur, EID Parry and Dwarikesh Sugar rallied sharply during the day. In addition, the government has been aggressive about taking ethanol blending in petrol to 20% by 2025 and that favours sugar stocks.

One of the oldest foreign banks in India, Citigroup, will shutter its retail banking operations in 13 nations including India and China. Citi, apparently, does not find the consumer / retail operations profitable to run in India in the light of the growing heft of Indian banks. Apart from India and China; Citi will also pull out of Australia, Bahrain, Indonesia, Korea, and a few more. However, Citi institutional business will continue to be serviced in these geographies. Citi believes that it lacks the requisite scale to operate these markets. 

Aurobindo Pharma plans to demerge its injectables business and could seek board approval shortly. The entire demerger process is expected to be completed in FY22. The main objective of this plan is to unlock value as injectables account for 20% of its total revenues. The injectables business is expected to double its revenues to $700 billion in the next 3 years. For example, injectables trade at an average P/E of 30X while Aurobindo trades at a P/E of just 14X. Aurobindo may also look at this kind of plan for Biosimilars.

SBI has clarified on media reports pertaining to the excess charges levied by SBI and other banks on zero-balance accounts. It is estimated that SBI collected Rs.300 crore plus from such BSBDA accounts via extra charges in the last 5 years. SBI has clarified that RBI regulations permit banks to levy charges for beyond 4 free transactions on BSBD accounts. SBI also underscored that effective Sep-20, it stopped charging for any digital transaction but levied charges on more than 4 cash withdrawals. SBI has also waived SMS fees.

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