Q1 results for Infosys beat revenue estimates but lagged on the margin front due to higher talent costs.
Net profit for Q1FY23 at Rs5,360 crore was up 3.2% yoy but down 5.7% sequentially. However, Infosys has upped its revenue growth guidance for FY23 by 100 bps to 14%-16% range. For Q1FY23, the revenues were up 23.6% yoy at Rs34,470 crore, but even sequentially the revenues were up 5.5%. OPM fell from the range of 21%-23% to 20.1% in the quarter. Infosys saw robust revenue growth in the US and the UK.
For the week ended 22nd July 2022, total of 9 out of the 10 most valuable companies added Rs2.98 trillion to their market cap. The benchmark indices gained 4.29% in the week. Barring LIC, all other heavyweights were gainers in the week. In terms of market cap gainers, Reliance Industries added Rs68,565 crore, TCS added Rs64,930 crore and ICICI Bank Rs34,029 crore. Among others, Infosys added Rs31,894 crore, SBI Rs30,969 crore, Bajaj Finance Rs20,637 crore and Hindustan Unilever added Rs16,811 crore for the week.
It is official that Prashant Jain has decided to move on from his position of chief investment officer (CIO) of HDFC AMC. It is today the third largest AMC in India with AUM of over Rs4 trillion. Post the exit of Jain, Chirag Setalvad will head equities while Shobhit Mehrotra will head fixed income. Talks of Jain moving out of HDFC AMC were doing the round ever since Navneet Munoth was brought in as CEO of HDFC AMC, in place of Milind Barve. HDFC AMC AUM was down -0.2% yoy compared to 13.8% growth
for the industry.
FPI shareholding in Kotak Bank fell for 7th straight quarter in Q1FY23. Effectively, the FPI holding in Kotak Bank has fallen from 45.09% in December 2020 to 40.55% in June 2022. This has raised the room
for FPIs to invest in Kotak Bank to 20.01%. It may be recollected that Kotak Bank was deleted from the FTSE All-World Index due to the introduction of minimum headroom rule in Sep-14. With headroom crossing 20%, Kotak Bank will be again eligible for inclusion. However, FPI flows are expected in a phased manner only.
India’s sugar production is expected to fall to 35.5 million tonnes in the sugar cycle year 2022-23.
Typically, the sugar cycle year extends from October to September. This fall is likely due to a larger share of cane being diverted to ethanol manufacturing. For the current sugar cycle year 2021-22, the total sugar output is expected at 36 million tonnes. However, net sugar production before ethanol diversion, is expected to increase in 2022-23 from 39.40 million tonnes to 40 million tonnes. The estimates were put out by ISMA.
The fall in India’s forex reserves continued in the latest week to 15th July as the total forex reserves fell further from $580 billion to $572.71 billion. This is a 20-month low, last seen in November 2020. The sharp fall in the forex reserves is a reflection of the RBI intervention in the forex markets to stem the fall in the Indian rupee. The rupee had recently touched a life-time low of Rs80/$. With the RBI governor hinting that the RBI was willing to expend up to $100 billion on defending the rupee, lower levels look to be likely.
Most private sector banks reported sequential fall in net profits amidst provisions for rising bond yields.
This led to a hit on treasury income. For Q1FY23, the 11 banks reported increase in profits of 40% yoy but sequential profits fell -9%. Kotak Bank and HDFC Bank reported the biggest losses on treasury. The
yoy profit growth was more on account of lower credit costs. However, the asset quality of private banks saw an improvement, resulting in lower gross NPAs and lower provisioning. Fresh slippages were largely retail.
According to the MD of EXIM Bank, Harsha Bangari, implementation of global rupee trade may be much tougher in reality. India has been trying to push the concept of rupee trade with the BRICS nations viz.
Brazil, Russia, China and South Africa. Iran too may join the rupee trade. Harsha believes rupee invoicing may not take off unless dollar trade becomes impossible. Also, rupee invoicing is very process driven
and is not a blanket approval. It also needs to be explored if the BRICS nations can trade in their own currency.
