TVS Motor Company met expectations in terms of revenue and posted a strong margin performance in Q1FY25. The key drivers were material cost savings and a better mix. The domestic demand outlook looks good with a rural rebound but geopolitical uncertainties in key export markets may dent overall growth.
'Challenge is basically near-term growth as the outlook has turned a bit adverse.'
Thermax reported 13 per cent Y-o-Y revenue growth with operating profit margin decline in Q1FY25. It took a hit of Rs 70 crore on specific projects. The company enjoys a strong order pipeline across sectors like power, steel, refining and petrochemicals.
The rally in Indian mid-and smallcap indices thus far in calendar year 2024 (CY24) has been the best in class across the world, eclipsing the global FTSE benchmarks, and also out running peers from other leading world stock markets. This is despite the correction in the mid-and smallcap segments back home seen in the last few days, triggered by valuation concerns, geopolitical developments amid nervousness ahead of the July - September 2024 (Q2-FY25) corporate results season.
Tata Steel is in the process of filing a curative petition in the Supreme Court in connection with the apex court ruling which said that states have the power to levy cess on mining and mineral-use activities. The petition by the steel manufacturing firm is aimed at seeking remedy to the order, passed by a 9-judge Constitution Bench of the Supreme Court on July 25. However, Tata Steel's managing director and chief executive officer T V Narendran told Business Standard that there was no demand note on the firm.
State Bank of India (SBI), India's largest lender, is looking to raise Rs 10,000 crore through 15-year infrastructure bonds as early as next week, said multiple sources aware of the development. Market participants expect a coupon in the range of 7.15-7.18 per cent for SBI's upcoming infrastructure bond issuance. This comes as demand for longer-tenor papers has remained strong in recent domestic capital market offerings.
'It has remained around 38 per cent over the past four to five quarters.'
The Reserve Bank of India's (RBI's) State of the Economy report for October acknowledged a slowdown in some high-frequency indicators but expressed confidence in a recovery, aided by consumption demand during the festival season. "In India, aggregate demand is poised to shrug off the temporary slowdown in momentum in the second quarter of 2024-25 as festival demand picks up pace and consumer confidence improves," said the report released on Monday.
'Even now, investors are not bothered about the war but are more concerned whether it will remain localised or not.' 'In case things are contained, markets can stage a bounce back in the next few days.'
The paint sector is seeing heightened competition with the entry of deep-pocketed groups like Aditya Birla and JSW. However, some brokerages see an opportunity in select stocks.
India's economic growth slowed to near two-year low of 5.4 per cent in the July-September quarter of this fiscal due to poor performance of manufacturing and mining sectors, but the country continued to remain the fastest-growing large economy, data showed on Friday. The gross domestic product (GDP) had expanded by 8.1 per cent in the July-September quarter of 2023-24 fiscal. The previous low level of GDP growth at 4.3 per cent was recorded in the third quarter (October-December 2022) of financial year 2022-23.
Maruti Suzuki, Hyundai and Tata Motors reported a decline in wholesales in September as the companies curtailed dispatches to dealers to reduce inventory build-up amid a decline in demand. Maruti Suzuki India reported a 4 per cent dip in total domestic passenger vehicle wholesales last month to 144,962 units compared to 150,812 units in the year-ago month. The auto major said sales of mini segment cars, comprising Alto and S-Presso, grew marginally to 10,363 units against 10,351 units in September 2023.
Dabur's performance in the July-September quarter of the current financial year (Q2FY25) was weak but in line with consensus. Consolidated revenue declined 5 per cent year-on-year (Y-o-Y) due to a temporary adjustment in General Trade (GT) inventory. Indian revenue declined 7.6 per cent, while international business grew 13 per cent Y-o-Y in constant currency (CC) terms.
Why is Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, not worried about the competition?
Marico may buck the industry trend with the fast-moving consumer goods (FMCG) major reporting strong growth and favourable commentary in a weak quarter for the industry. The company reported consolidated revenue growth of 8 per cent year-on-year (Y-o-Y) in Q2FY25. Domestic revenue growth was 8 per cent Y-o-Y with 5 per cent volume growth (4 per cent in Q1FY25).
The December meeting of the Reserve Bank of India's (RBI's) six-member Monetary Policy Committee (MPC) will start on Wednesday even as there is no clarity on whether Governor Shaktikanta Das, the chair of the panel, will continue in office after his term ends next week. The outcome of the meeting will be announced on Friday by Das at 10 in the morning.
Godrej Consumer Products Ltd (GCPL) reported a 2 per cent year-on-year (Y-o-Y) increase in consolidated revenue to Rs 3,670 crore. Organic revenue growth in constant currency was up 14 per cent Y-o-Y. Consolidated operating profit was up 5 per cent to Rs 760 crore, profit before tax grew 10 per cent Y-o-Y to Rs 710 crore, and adjusted net profit grew 12 per cent Y-o-Y to Rs 490 crore.
Expansion of its development portfolio, brokerage upgrades, and strong outlook have led to a 15 per cent gain for the stock of real estate major Godrej Properties (GPL) in six trading sessions. The company recently acquired a 53-acre land parcel in Joka, Kolkata with an estimated development potential of 1.3 million square feet of saleable area with an estimated revenue potential of Rs 500 crore.
Bharti Airtel on Monday reported a 168 per cent year-on-year rise in consolidated net profit to Rs 3,593 crore for the September quarter, and the company unveiled top-level changes, including Gopal Vittal moving into the role of executive vice chairman on January 1, 2026. India's second-largest telco - that competes with Reliance Jio and Vodafone Idea in the Indian telecom market - clocked quarterly revenues of Rs 41,473 crore, 12 per cent higher than the year-ago period, aided by strong momentum in India and growth in Africa.
IT services major HCL Technologies (HCLTech) on Monday reported a 10.51 per cent increase in consolidated net profit to Rs 4,235 crore in July-September quarter of FY25, as the company raised the lower band of its growth guidance on the back of better-than-expected performance. The Noida-headquartered firm had posted a net profit of Rs 3,832 crore in the year-ago period. HCLTech increased the lower band of its revenue growth guidance to 3.5-5 per cent year-on-year in constant currency, against a guidance of 3-5 per cent in the first quarter.
'GenAI programmes may not be large in terms of value, but have triggered a lot of new opportunities among clients.'
After a strong show during the September quarter (Q2FY25) and favourable demand conditions, going ahead, the country's largest player in the room air conditioner segment, Voltas is well placed to improve its market share. Expectations of record volumes in FY25 for the sector and the company's strategy of prioritising market share over margins could help the leader expand share in the room AC segment.
'Retail investors, who had not seen such a massive correction in the SMID universe since COVID-19, are witnessing something like this for the first time. Panic profit booking may continue.'
Equity benchmark indices Sensex and Nifty settled higher on Thursday, powered by a rally in banking and power stocks amid a largely firm trend in global markets. The stock markets mostly traded range-bound in the absence of any major trigger and persistent foreign capital outflows, traders said. The 30-share BSE Sensex rose 144.31 points, or 0.18 per cent, to settle at 81,611.41.
The Q2FY25 revenue for Coal India (CIL) was reported at Rs 30,700 crore (down 6 per cent year-on-year or Y-o-Y and 16 per cent sequentially). The blended average selling price was Rs 1,622/tonne (down 6 per cent Y-o-Y and 3 per cent quarter-on-quarter or Q-o-Q). Adjusted operating profit stood at Rs 7,200 crore (down 20 per cent Y-o-Y and 38 per cent Q-o-Q) due to lower-than-expected e-auction volumes and higher costs.
From the Sensex pack, Adani Ports & Special Economic Zones, Mahindra & Mahindra, Reliance Industries, HDFC Bank, Larsen & Toubro, NTPC, State Bank of India, UltraTech Cement and Kotak Mahindra Bank were the major gainers. In contrast, Tata Steel, Titan, Bajaj Finserv, JSW Steel, Bajaj Finance, Hindustan Unilever, ITC, Tata Motors and Tata Consultancy Services were among the laggards.
'There is more expansion in the industry happening in retail lines, so we will continue to focus on those lines.'
'Margins will be an outcome of that. They will likely remain somewhat range-bound.'
If the index is unable to sustain above 24,500 levels, technically it can then slip to its 200-DMA placed at 23,365 levels.
'Invest only in stocks of those companies that deliver on earnings and there is earnings visibility too for the next few quarters.'
In previews of Q2FY25 and beyond, industry analysts are expecting a turnaround for IT services. High teens earnings per share or EPS growth is expected for the next two-three financial years. The hopes are backed by deal wins of above $100 billion as at Q1FY25, up 16.6 per cent year-on-year ( Y-o-Y).
India's steel market is out of step with global trends. Global demand is weak with China at a huge supply surplus to its domestic demand, pushing down global steel prices. India's domestic demand for steel is strong, given the continuing infrastructure push and is likely to accelerate as urbanisation improves, and the auto sector continues to grow alongside the infrastructure push.
Analysts are expecting pharmaceutical companies to post sales growth of 10-11 per cent in the second quarter this financial year while the Ebitda (earnings before interest, tax, depreciation, and amortisation) margins are anticipated to improve by about 110 basis points. Ebitda improvement will be led by lower input costs because prices of active pharmaceutical ingredients (APIs) are 5-15 per cent lower year-on-year (Y-o-Y). Axis Capital said sales growth would be around 10 per cent, of which growth in the India market would be 11 per cent or so.
Food delivery platform Zomato has laid the foundation for its third vertical of growth by agreeing to acquire Paytm's entertainment and ticketing business, said analysts on Thursday (August 22). Zomato, which also runs a quick commerce business called Blinkit, will strengthen its 'going out' offering but the acquisition may take time to yield results, they said. "Paytm's entertainment and ticketing arm will be part of Zomato's District app, which is due to be launched in the coming weeks.
Road awards were muted in Q1FY25. But the pace will accelerate with a bidding pipeline of Rs 1.1 trillion (September 2024), mostly dominated by HAM (Hybrid Annuity Model) projects, which contribute 47 per cent and engineering procurement and construction or EPC projects, which have about 36 per cent share. Hence, infrastructure companies mostly reported revenue decline on a year-on-year (Y-o-Y) basis in Q1FY25.
Trends in the global energy markets are crucial if India's growth outlook is to remain healthy. Prices for the Indian crude basket were averaging around $86.2 per barrel through Q1FY25 and then moderated to $84 in July and to $78-79 in August (so far). But global crude supply may outpace weak global demand in the short term.
Hero MotoCorp (HMCL) saw strong volume performance in the first quarter of the current financial year (Q1FY25), but margins disappointed due to weak spare part sales and negative electric vehicle (EV) margins. The company hopes for a strong festive season due to better rural sentiment. Revenue grew 16 per cent year-on-year (Y-o-Y) to Rs 10,140 crore, operating profit was up 21 per cent to Rs 1,460 crore, and adjusted net profit grew 19 per cent Y-o-Y to Rs 1,120 crore.
Bajaj Auto reported steady results in Q1FY25, with revenue surging 16 per cent year-on-year (Y-o-Y), operating profit registering a growth of 24 per cent Y-o-Y, and margins swelling 20.2 per cent. The profitability was aided by 50 basis points (bps) on the accrual of PLI benefits. The domestic prospects for two-wheelers are healthy, though the response to the newly launched CNG motorcycle is a key monitorable.
Against the Reserve Bank of India's (RBI's) projection of 7.1 per cent, India's first quarter (Q1) 2024-25 (FY25) gross domestic product (GDP) growth came in at 6.7 per cent. This is in line with market expectations and significantly lower than the 7.8 per cent recorded in the fourth quarter (Q4) 2023-24 (FY24) and 8.2 per cent in Q1FY24. The quarter witnessed decreased government consumption and investment spending due to the parliamentary election.
The April-June quarter (Q1) of the current financial year (FY25) may be soft for banks with loan growth moderation, net interest margin (NIM) pressures, and higher staff and credit costs inching up, according to analysts. Credit growth could ease due to the lagged impact of the Reserve Bank of India (RBI) tightening and deposit growth has weakened, and the current account and savings account (CASA) ratio has declined 10-370 basis points (bps) quarter-on-quarter (Q-o-Q) for many banks.
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