Axis Bank, reported 29.15% lower Q3 net profits at Rs.1,335 crore in the midst of higher provisioning. Total revenues were flat at Rs.19,911 crore. Retail banking revenues were flat, wholesale banking and treasury income for the Dec-20 quarter were sharply down. PAT margins fell from 9.43% to 6.70% on a yoy basis. The loan loss provisions of Axis Bank went up sharply during the quarter from Rs.3,487 crore to Rs.4,626 crore. Net interest margins came in at 3.59%; below the levels of most other private banks. The CASA ratio of Axis Bank for the quarter was up by 232 basis points at 42% of the total deposit mix.
It looks like the 50,000 levels has proven to be more than just a psychological resistance for the Sensex as the index has now given up nearly 2700 points from that level. Even the Nifty which was just shy of the 15,000 mark has now dropped below 14,000. For the first time, the stock market is giving negative returns in 2021 year-to-date. The Sensex started volatile but the index eventually tanked by 938 points as traders rushed to cover longs after there were signals of a delay in the US stimulus. Axis Bank dipped sharply after it announced disappointing results and higher provisions. Titan, IndusInd Bank and HDFC Bank were among the other stocks to lose value. In fact, all the sectoral indices in the stock market were in the red except for the FMCG index. Both the mid cap and the small cap indices were also in the red.
It was a strong quarter for Hindustan Unilever with Q3 PAT growing 18.9% to Rs.1,921 crore. However, what was more gratifying was that the EBITDA grew at 16.7% and the EBITDA margins expanded to 24%. Total revenues on a standalone basis was up 20.48% at Rs.11,682 crore. The management of the company attributed this solid show to focused strategies like better mobility, innovations in delivery and market investments. There was a sharp recovery led growth visible in the Nutrition business as well as the discretionary segments. After a good rural demand boost, HUL expects urban demand to follow suit.
In a bid to revive the regional retail power players, the government plans to make an allocation of Rs.300,000 crore or $41 billion. If it happens then it could be a game changer for the power sector in India. The main purpose would be to reduce the losses of the regional power distributors in various states. The spending will focus on upgrading infrastructure and technology of these utilities. The idea is to make these state bodies more efficient and reduce their losses. The centre will provide grants to the states on a periodic basis. This will include replacement of cables to reduce power theft and pilferage.
The board of directors of NALCO has approved an Rs.749 crore buyback by the company. The company will look to buyback nearly 13.02 crore shares at a price of Rs.57.50 in cash. The company is expected to release the process, the modus operandi and the timelines for the buyback in the next few days. NALCO is a key player in bauxite, alumina and aluminium and has been trying to move up the aluminium value chain. With the government falling short of its divestment target by a huge margin, it has been trying to look at innovative ways to raise funds. Mandatory buybacks by PSU companies is one such strategy.
In what could be a tale of two PSU banks, BOB and Canara announced results on 27 January. BOB turned around to net profit of Rs.1,196 crore in Q3 on lower provisioning. However, total revenues were down -4.6% on fall in treasury income and corporate banking income. C/D ratio improved to 81.5% for BOB even as CASA improved to 41%. Gross NPAs fell by 200 bps to 8.43% but still too high by bank standards. Canara Bank, in contrast, reported 82% growth in net profit at Rs.739 crore. Total revenues showed an impressive growth of 57.7% at Rs.24,490 crore. Treasury income doubled and even retail and whole sale banking income grew sharply. Top line was attributed to consolidation of Syndicate Bank merger. Gross NPAs are down but fairly high at 7.48%. For BOB and Canara low capital adequacy poses a real problem.
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