Stock Market Investment Shot, 28th April 2023

Hindustan Unilever reported a 9.66% higher net profit for the March 2023 quarter at Rs2,552 crore, led by higher demand for its home, beauty, and personal care products. The final dividend of Rs22 per share takes the full year dividend to Rs39 per share. Quarterly revenues were up 10.9% at Rs14,638 crore. The top line revenues grew by 19%, 10% and 3% across its home care segment, beauty and personal care, and food segment respectively. The numbers were achieved amid demand concerns and high input inflation.

The US GDP growth for the first quarter ended March 2022 slowed sharply to 1.1% as per the first advance estimates put out by the Bureau of Economic Analysis (BEA). Clearly, higher interest rates hammered the housing market even as businesses reduced their inventories. In the fourth quarter ended December 2022 the GDP had grown by 2.6%, so the hawkishness was starting to show. However, consumer spending, that accounts for 70% of US economic activity, remained resilient and grew at 3.7% on strong goods spending.

Axis Bank reported a wider-than-expected one-time loss in the March 2023 quarter due to its $1.41 billion Citi deal. For the March 2023 quarter, Axis Bank reported a loss of Rs5,728 crore, largely on account of the one-time charge. These losses pertain to the purchase of the consumer banking business of Citi in India. On the positive side, Axis Bank reported 33% higher net interest income (NII) at Rs11,742 crore, as net interest margins (NIM) expanded 73 basis points to 4.22%. Advances were up 19% and deposits 15%.

Godrej Consumer Products plans to acquire the consumer products business of Raymond Consumer Care, in an all-cash deal for Rs2,825 crore. This includes premium brands like Park Avenue and Kama Sutra via a slump sale. Raymond is a leading player in deodorants and sexual wellness categories, both of which are fast-growing verticals. The deal will also unlock benefits from significant integration synergies with the core business of GCPL. Now, GCPL hopes to provide the necessary impetus to drive growth in the brands.

Wipro net profit for the March 2023 quarter fell by 0.4% to Rs3,075 crore, even as the operating margins of the IT company fell marginally to 16.3% in the quarter. With the top line still a question due to slowing of technology spending and pressure on pricing, Wipro plans to focus for the time being on operational improvements and productivity enhancements. This is likely to cushion the company performance from the plethora of macro headwinds it is exposed to. Operating cash flows stood at 121% of the net income.

Oyo, the leisure, and travel-tech start-up, turned cash-flow positive in the March 2023 quarter. OYO ended Q4FY23 with Rs90 crore in cash flow surplus. That should give a boost to its IPO plans. OYO ended FY23 with EBITDA of Rs245 crore, making it the first profitable year since its inception in 2013. Oyo also saw revenues increase by 19% to Rs5,708 crore in FY23. OYO has just refiled its DRHP with SEBI under the newly introduced pre-filing route. OYO plans to raise nearly Rs8,400 crore through the IPO, including OFS.

Wipro announced a massive Rs12,000 crore buyback of shares; its first buyback in the last 2 years. Wipro has fixed a floor price of Rs445 per share, which is at a substantial premium to the market price of Rs375 as of the close of 27th April 2023. The previous buyback in 2021 had been worth Rs9,500 crore. The buy-back is now subject to approval of shareholders. Currently the promoter group holds 72.92% stake in Wipro, while domestic financial institutions hold 2.74% and foreign portfolio investors hold up to 9.78%.

It looks like happy times for the indices with the Sensex rallying for 6 straight sessions despite weak global market sentiments. Even the expectations of weak US GDP data did not deter the bulls on Thursday. In the last 6 sessions, the Sensex has gained close to 1.45%. Apparently, the dollar weakness has once again made the Indian markets more attractive for global investors. Also, India has been largely immune to the global banking crisis as well as the risks of an economic slowdown. FPIs are now shifting more into equity.

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