Given the spectacular run and major events out of the way, experts foresee some consolidation and stock-specific action due to quarterly earnings in the coming week.
The market clocked the biggest ever weekly gains in absolute terms, with the benchmark indices hitting new highs as the bulls, backed by the banking sector, dominated the week ended February 5. Given the spectacular run and major events out of the way, experts foresee some consolidation and stock-specific action due to quarterly earnings in the coming week.
State Bank of India | The PSU banking major surged over 39 percent last week. The country’s largest lender reported a 6.9 percent year-on-year decline in standalone profit at Rs 5,196.22 crore for the quarter ended December 2020, dented by higher provisions and slower NII growth. Net interest income grew by 3.7 percent year-on-year to Rs 28,819.94 crore in Q3FY21, meeting analysts’ estimates. NII in Q3FY20 inflated by the recovery of Essar Steel account. Total deposits grew at 13.64 percent YoY, out of which the current account deposits grew by 11.33 percent YoY, while the saving bank deposits rose by 15.99 percent YoY.
Bajaj Electricals | The share price jumped 27 percent after the consumer electronics firm posted a 948 percent YoY jump in the December quarter (Q3) consolidated net profit at Rs 98.2 crore. The company had posted a profit of Rs 9.37 crore in the year-ago period. For Q3, the income from operations stood at Rs 1,500 crore, a YoY rise of 16.8 percent. For the quarter, the consumer products (CP) segment saw a 34 percent YoY growth in revenue to Rs. 1,153 crore. The Earnings Before Interest and Tax (EBIT) for this segment stood at Rs 142 crore, showing a 115 percent rise over the year-ago period. The CP operating margins stood at 12.3 percent. On the other side, EPC segment achieved a revenue of Rs 347 crore, registering a loss of 18 percent over the corresponding quarter of the previous year.
Apollo Tyres | The stock price added 22 percent last week after the tyre-maker posted over two-fold increase in its consolidated net profit at Rs 444 crore for the third quarter ended December on the back of robust sales across domestic and international markets. It reported a net profit of Rs 174 crore in the October-December period of the last financial year. Sales during the period under review grew by 14 percent to Rs 4,965 crore, as against 4,347 crore in the year-ago period, Apollo Tyres said in a statement. Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities is of the view that for breakout traders, Rs 235 would be the key level and if the stock manages to trade above it, we can expect the uptrend to continue up to Rs 275-285.
Tata Motors | The share gained 20 percent in the week gone by. The auto major reported a 67 percent YoY growth in consolidated profit at Rs 2,906.45 crore for the quarter ended December 2020 driven by robust volumes, improved product mix and cost-saving measures. Profit in the year-ago period was Rs 1,738.3 crore. Consolidated revenue from operations grew by 5.5 percent YoY to Rs 75,653.8 crore in Q3 FY21. ICICIdirect has a buy call on the stock valuing the scrip at Rs 301 on SOTP basis (10x, 3.25x FY23E EV/EBITDA to standalone business & JLR respectively; earlier target Rs 210).
Mahindra & Mahindra | The scrip was up 15 percent after the automobile and tractor company reported a massive 39.6 percent YoY growth in profit at Rs 530 crore for the quarter ended December 2020. Revenue from operations grew by 16 percent year-on-year to Rs 14,056.5 crore in Q3FY21, with strong tractor volumes. Numbers were better than analysts’ expectations. Profit (before exceptional loss) estimated at Rs 1,538 crore on revenue of Rs 13,754 crore for December quarter 2020, according to the average of estimates of analysts polled by CNBC-TV18.
HDFC | The financial major gained 14 percent last week. The company reported a standalone profit of Rs 2,925.8 crore for the quarter ended December 2020, declining 65.1 percent compared to Rs 8,372.5 crore in the year-ago period. The profit in Q3FY20 includes proceeds from stake sale in GRUH Finance which was merged with Bandhan Bank in October 2019. Net interest income grew by 26 percent YoY to Rs 4,068 crore in Q3FY21. Credit Suisse has kept outperform rating and raised the target to Rs 2,950 per share. Morgan Stanley has maintained overweight call and raised the target to Rs 3,200 per share.
Larsen & Toubro | The stock was up 13 percent last week. The engineering and infrastructure major reported a 4.9 percent YoY growth in Q3FY21 consolidated profit at Rs 2,467 crore, receiving highest ever orders in a quarter on receipt of prestigious and large contracts. The profit growth was largely attributed to higher profit from IT and TS segment and sale of commercial property in realty. PAT also included a gain on divestment of Rs 209 crore from discontinued operations for the quarter ended December 2020, towards further adjustments accrued against the sale of the electrical & automation business to Schneider Electric SE and sale of the UK-based Marine control & automation systems subsidiary to Rolls-Royce Power Systems AG, L&T said.
UltraTech Cement | The share price gained 19 percent. The Aditya Birla group firm reported over two-fold jump in consolidated net profit to Rs 1,584.58 crore in the December quarter. The leading cement producer had posted a net profit of Rs 711.17 crore in the October-December quarter a year ago, UltraTech Cement said in a BSE filing. Its revenue from operations stood at Rs 12,254.12 crore, up 17.38 percent, during the quarter under review as against Rs 10,439.34 crore in the corresponding period of the last fiscal.
Ashok Leyland | The scrip added over 18 percent. The stock rallied on the back of January sales numbers and the government announcing a vehicle scrappage policy. The company in January 2021 posted 11 percent jump in its total sales at 13,126 units against 11,850 units in January 2020. The light commercial vehicle sales were up 40 percent at 5,752 units versus 4,096 units and total M&HCV sales were down 5 percent at 7,374 units versus 7,754 units. Morgan Stanley has kept overweight call on the stock and raised the target price to Rs 155 from Rs 63 per share. Finance Minister Nirmala Sitharaman in her Union Budget 2021 speech proposed the voluntary scrappage policy to replace personal vehicles older than 20 years and commercial vehicles older than 15 years.
Shree Cements | The stock price gained over 17 percent after the cement-maker reported a 102 percent YoY rise in its net profit to Rs. 626.2 crore for the quarter ended December. The cement maker’s revenue for the quarter saw a 16.2 percent rise to Rs. 3,309.4 crore. Its total expenses for the quarter grew by a mere 3 percent to Rs. 2,569.6 crore, providing a boost to the operating performance.
Sandip Das
