India’s virtual coal mining monopoly, Coal India Ltd, announced a 16.9% growth in net profits for Q3FY24 at Rs9,069.19 crore. This compares favourably with the net profits of Rs7,755.55 crore in the quarter ended December 2022. Total revenues, on a consolidated basis, for the Q3FY24 quarter stood 2.8% higher at Rs36,153.97 crore. Currently, Coal India Ltd accounts for 80% of the overall domestic coal production. In the last couple of years, output at CIL has sharply increased to meeting rising demands of power sector.
CPI inflation for January 2024 came in at 5.09% compared to 5.69% in December 2023. The sharp fall in the headline inflation was largely driven by a fall in food inflation. However, that is still a full 110 basis points away from the RBI median target of 4%. The inflation has been under the outer tolerance limit of 6% inflation for the fourth month in a row. Both rural and urban inflation eased in January 2024. MOSPI also put out the IIP growth for December 2023 at 3.8%, which is higher than 2.4% reported for November.
Bharat Forge Ltd reported 31% higher net profits at Rs378 crore for third quarter ended December 2023. Total revenues for Q3FY24 were also higher by 15.93% at Rs2,263 crore. However, in their outlook for the coming quarters, Baba Kalyani admitted that the growth momentum could moderate for the domestic and for the international markets too. During the year, the company plans to raise funds to the tune of Rs500 crore through term loans, non-convertible debentures (NCD) or other debt instruments as a bridge.
The troubles at SpiceJet are starting to manifest as the company plans to now lay off nearly 1,400 of its employees. That is nearly 15% of its total staff and is a part of desperate cost cutting measures. The cash-strapped budget airline affirmed that they did not have any choice at this point to keep the company in business. SpiceJet has a monthly salary bill of Rs60 crore, which makes downsizing inevitable. Already, the salary payments are overdue for several months and this is the way to get the Rs2,200 crore fund infusion.
Vedanta affirmed it is working overtime to complete its demerger plan and would be effective in next 9-12 months. Under the demerger, Vedanta will create independent verticals by demerging metals, power, aluminium, and oil & gas businesses into separate entities. However, markets are not too impressed by the idea because Vedanta group had merged these businesses into a single unit citing value creation, so obviously something is not falling into place. The UK parent has been under financial stress for some time.
Even as the US tech spending and US tech business has been under pressure, Indian IT companies are seeing some green shoots from India and rest of the world. IT companies like TCS, LTTS, and even Happiest Minds, saw India revenues surge. IT company CFOs admit that Indian companies may not be in the big IT spending league yet, but there is an increasing awareness of the need to spend on high end data, analytics, artificial intelligence, IOT, machine learning etc. That has brought in big demand from Indian businesses.
India’s blue-chip defence and aerospace company, Hindustan Aeronautics Ltd (HAL), reported 9.2% growth in net profits at Rs1261.40 crore for the third quarter ended December 2023 (Q3FY24). Revenues from operations were up 7% yoy at Rs6061.28 crore in Q3FY24. For the quarter, HAL reported 45.5% higher EBITDA at Rs1434.1 crore, resulting robust EBITDA margins of 23.66%. The company announced its first interim dividend payout of Rs22 per share with the dividend record date set at 20th February 2024.
With the sharp fall in inflation to 5.09% in January 2024, the discussions are now veering around whether the RBI would cut rates earlier than June 2024. The RBI governor continued to focus on inflation as being the core driver of RBI monetary policy, but clearly the clamour for a rate cut is rising. The current bond yields of 7.2% pre-supposes real bond yields of over 2% and that is a good case for a rate cut. Also, the current repo rate at 6.50% is a full 135 basis points above the pre-COVID rate, justifying an early rate cut.