Indices spurt in early trade; strong market breadth. 09February2022

The key equity benchmarks edged higher in early trade amid across the board buying in index pivotals. The Nifty hovered near the 17,400 mark. Positive Asian stocks boosted sentiment.

The barometer index, the S&P BSE Sensex, was up 477.64 points or 0.83% to 58,286.22. The Nifty 50 index added 132.40 points or 0.77% at 17,399.15.

In the broader market, the S&P BSE Mid-Cap index gained 0.79% while the S&P BSE Small-Cap index advanced 0.86%.

The market breadth was strong. On the BSE, 1863 shares rose and 683 shares fell. A total of 71 shares were unchanged.

Meanwhile, the Reserve Bank of India (RBI)'s rate-setting Monetary Policy Committee (MPC) meeting commenced on 8 February 2022 and the outcome would be announced on 10 February 2022. The RBI may hold its repo rate steady but an increase in the reverse repo rate is expected as part of a process to reduce the surplus liquidity poured into the markets earlier during the pandemic, as per reports.

On the political front, developments in the upcoming assembly polls in Uttar Pradesh, Uttarakhand, Goa, Punjab, and Manipur will be closely watched. Polls in all the five states will be held between February 10 and March 7 in seven phases. The counting of votes and the result will be declared on March 10.

Stocks in Spotlight:

Bharti Airtel shed 0.30% to Rs 706.70. The telecom major reported a 2.8% decline in consolidated net profit to Rs 830 crore in Q3 FY22 from Rs 853.6 crore posted in Q3 FY21. Total revenues stood at Rs 29,867 crore, up 18.3% YoY on a comparable basis.

Vedanta slipped 0.51% to Rs 367.70. The board of directors of the company concluded that the current structure is optimal and is commensurate with the current scale and its diversified lines of businesses. Therefore, the company will not undertake any corporate restructure including demerger/spin off etc. and will continue with its existing structure.

IRCTC advanced 2.06% to Rs 855.35. The company reported net profit at Rs 208.8 crore in Q3FY22 as against Rs 78.08 crore in Q3FY21. Total revenue jumped to Rs 556.51 crore from Rs 245.23 crore YoY.

Jindal Steel & Power (JSPL) fell 3.79% to Rs 406.35. The company posted consolidated net profit of Rs 1622 crore in Q3FY22 against Rs 2440 crore in Q3FY21. Gross revenue rose to Rs 14152 crore from Rs 10449 crore YoY.

Global Markets:

Asian stocks are trading higher on Wednesday, with stocks in Hong Kong leading gains regionally.

U.S. stocks rose on Tuesday as investors digested another batch of corporate earnings and awaited key inflation data later this week.

The US trade deficit surged to a record high in 2021 as imports increased sharply amid the restocking of shelves by businesses to meet robust domestic demand. The Commerce Department said on Tuesday that the trade deficit increased 27% last year to an all-time high of $859.1 billion. The deficit was at $676.7 billion in 2020.

Meanwhile, investors await the release of U.S. consumer inflation data expected Thursday for clues on how the Federal Reserve could react to the rising price pressures.

Jindal Stainless Q3 PAT grows 160% YoY to Rs 442 cr. 08February2022

Consolidated profit before tax (PBT) soared 139.1% to Rs 654.07 crore in Q3 FY22 from Rs 273.60 crore in Q3 FY21. EBITDA during the quarter stood at Rs 797 crore. Domestic share of sales volume stood at 74% in Q3 FY22 as against 85% in Q3 FY21 and 77% in Q2 FY22. Exports share of sales volumes was at 26% in Q3 FY22 as compared to 15% in Q3 FY21 and 23% in Q2 FY21.

Jindal Stainless (JSL) continued to register profitable growth by harnessing export markets, while maintaining total sales level on a Y-o-Y basis. A sharp product mix, attuned to market demands, helped the company remain agile and responsive to customer requirement.

The company maintained its stronghold in the lifts and escalators segment. Due to a bullish demand from the industrial and construction sectors, JSL worked on various government infrastructure projects where stainless steel is a preferred alternative on a lifecycle costing approach. As part of its drive to increase its proportion of value-added products, JSL upped sales of its special grades (such as Duplex, Super Austenitic) and Chequered Plates.

The company supplied customized and value-added grades for Desalination Plant at Dahej, Assam Bio refinery, HURL Fertilizer plants, and fleet mode nuclear projects, among others. However, shortage of semiconductor in the passenger vehicle segment and moderate demand from two-wheeler segment led to slight dip in the automotive sector during the quarter. The pipe and tube segment also witnessed a minor decline owing to a lower than expected market demand and higher raw material prices.

In order to counter imports of subsidized stainless steel (SS) from China and Indonesia, which have doubled on a year-to-date basis, JSL strategically increased its exports share from 15% in Q3 FY21 to 26% during Q3 FY22.

On a sequential basis, consolidated revenue and PAT in Q3 FY22 grew 13% Q-o-Q and 7% Q-o-Q respectively. Consolidated SS Sales Volume fell 4% to 2,47,607 MT in Q3 FY22 as compared to 2,56,664 MT in Q2 FY22. EBITDA grew 7% to Rs 797 crore in Q3 FY22 from Rs 748 crore in Q2 FY22.

Standalone revenue and PAT in Q3 FY22 grew 11% Q-o-Q and 3% Q-o-Q respectively, in line with global commodity price increase. With 36% of domestic market captured by imports, JSL managed to maintain its profitability with better product mix and export planning. The interest cost stood at Rs 89 crore in Q3 FY22 over Rs 79 crore in Q2 FY22 due to higher working capital utilization during the Q3 FY22.

Commenting on the Q3 performance, Abhyuday Jindal, the managing director (MD) of JSL, said, An intelligent product mix and the agility to step up exports helped JSL in maintaining profitability despite stiff and unfair competition from Chinese and Indonesian imports. We are always on the lookout for new avenues for stainless steel applications that can keep us ahead of competition and boost our share in domestic and export markets. Sharp focus on financial prudence and strong operating fundamentals have served us well, and we will continue to strategize business as per market dynamics.

The board has decided to raise funds, along with any other co-issuer, by way of issue of debt securities including secured or unsecured non-convertible redeemable debentures or bonds or commercial paper or notes (listed/unlisted) or any combination thereof, through private placement basis or otherwise, in one or more tranches or any other method in the domestic/ international market up to an aggregate principal amount of Rs 3,500 crore or its equivalent in any freely convertible foreign currency.

Shares of Jindal Stainless (JSL) declined 3.59% to Rs 209.75 on BSE. JSL is one of the largest manufacturers of SS in India with steel melting capacity of 1.1 MTPA (metric tonnes per annum).

Phoenix Mills gains after Q3 PAT jumps 45% YoY. 

Profit before tax stood sharply higher at Rs 137.8 crore in Q3 FY22 as against Rs 35.17 crore in Q3 FY21. EBITDA grew 45% to Rs 230.5 crore in Q3 FY22 from Rs 158.8 crore posted in Q3 FY21. EBITDA margin stood at 56% in Q3 FY22 as compared to 47% in Q3 FY21.

The company's net debt at group level stood at 1810.2 crore as of 31 December 2021. Average cost of debt declined to 7.61% in December 2021 from 7.84% in September 2021, down by 23 bps quarter on quarter.

The Phoenix Mills group is the largest player in the Indian retail mall segment, and has a portfolio of of eight retail mall assets across major cities in the country. It also has an office portfolio of in Mumbai and Pune, two operational hotels (one in Mumbai and another in Agra), and residential real estate in Bengaluru and Chennai.