Thursday, 4th February 2021

SEBI barred Future Group CEO, Kishore Biyani, and brother Anil Biyani from accessing capital markets in any form for a period of the next one year. This order pertains to the insider trading case that goes back to 2017. According to SEBI, both the Biyani brothers traded in Future Retail through a clutch of group companies on the basis of inside information which they were privy to. This insider trading was allegedly done just ahead of the demerger of the group companies. This could also have a bearing on the Reliance Retail – Future Retail merger deal, where Amazon has made allegations of insider trading against Biyani.  

For the Dec-20 quarter, Bharti Airtel reported a sharp turnaround to report a net profit of Rs.854 crore compared to a net loss in the Dec-19 quarter. Bharti Airtel Q3 revenues surged by 24% to Rs.26,518 crore on the back of higher data volumes and improved ARPUs. While the Africa mobile business grew by 20% in the Dec-20 quarter, the India mobile business saw top line growth of 30% on better market share and also better ARPUs. EBITDA for the Dec-20 quarter was also up 34.12% to a record level of Rs.12,102 crore as EBITDA margins expanded from 42.28% to 45.64%. The net profit of Rs.854 is critical as Bharti had made net loss in the Dec-19 quarter as well as the sequential Sep-20 quarter. During the quarter, Bharti had hived off its Indus Tower subsidiary and converted it into a joint venture.

Apollo Tyres had a stellar Dec-20 quarter with PAT up 155% at Rs.444 crore on the back of a 17% growth in revenues and better deployment of working capital during the quarter. Consolidated sales for Q3 was at Rs.5,153 crore with markets in Asia Pacific, Middle East and Africa showing very strong sales traction. Apollo Tyres benefited from the global recovery in the auto industry which created a sharp spike in OEM demand for tyres. Operating margins of Apollo moved up smartly from 5.67% to 12.85% on a YOY basis. Apollo also reported higher PAT margins at 8.61% for Dec-20 quarter  against 3.94% in Dec-19 quarter.

The 3 day meeting of the Monetary Policy Committee (MPC) commenced on 03 February and will conclude on Friday culminating in the credit policy. On the rates front, there appears a consensus that status quo will be maintained. Also, if one considers the language of the Union Budget, then it looks very unlikely that the MPC would meddle with the accommodative stance any time soon. The repo rate at 4% and the reverse repo at 3.35% are already at record lows. The aggressive fiscal deficit targets entail huge borrowings and the MPC could dwell at length on measures to manage the yield volatility in markets.

City Union Bank (CUB) revenues for the Dec-20 quarter were 6.2% higher at Rs.1,278 crore. Only treasury income was higher on a yoy basis while retail lending and corporate lending saw lower income on a yoy basis. The sharp fall in the interest outgo due to low rates, helped the operating profits to grow 48.63% at Rs.458 crore. However net profit was down -11.7% at Rs.170 crore as the provisions for doubtful debts and loan losses than doubled from Rs.81cr in the Dec-19 quarter to Rs.218 crore in the Dec-20 quarter. That squeezed the net profit margins from 15.99% in Dec-19 to 13.30% in Q3 this year.

After making two abortive attempts to close above the 50,000 mark, the Sensex on 03 February finally managed to give a close above the psychological 50,000 mark. The Nifty also closed above the 14,750 mark for the first time in its history. The rally was predominantly triggered by financials and pharma stocks. While financials cheered the aggressive plans like the creation of a Bad Bank and the plans to privatize PSBs, insurers also cheered the enhanced FDI limits. Pharma companies appeared to be the obvious beneficiaries of a sharp 137% increase in the healthcare budget this fiscal year. The FPIs are no longer tentative as the flows have been convincingly positive post the budget announcement. The markets will now await the next big trigger on Friday when the RBI announces its monetary policy.

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