NIFTY started the day at 19,450 with a small gap-down of 14 points. From opening itself, the index was under selling pressure, and it fell steadily to 19,320 levels— a fall of nearly 120 points. Then, it gave a small retracement and closed at 19,365, down by 99 points or 0.51%
BANK NIFTY (BNF) started the day at 43,897 with a gap-down of 49 points. While Nifty was weaker, Bank Nifty went sideways and moved between 43,750 and 44,050 levels. BNF closed at 43,891, down by 55 points or 0.13%.
All indices except Nifty PSU Bank (+1.4%) and Nifty Realty (+0.12%) closed in the red. Nifty FMCG (-0.89%) fell the most.
Major Asian markets closed mixed. European markets are currently trading flat-to-red.
Today’s Moves
Adani Ports (+4.32%) was NIFTY50’s top gainer on the back of strong volumes.
Apar Industries (+9.8%) surged after the company’s management gave a positive outlook on its business.
Cochin Shipyard (+9.4%) continued its strong rally after posting robust Q1 FY24 results. The stock has zoomed 40% in three trading sessions.
ITC (-2.05%) was NIFTY50’s top loser. The company’s board approved the demerger of its hotels business yesterday. Meanwhile, analysts said that the next-term outlook for ITC remained strong.
Heavyweight stock Reliance (-1.4%) also dragged down the markets.
IRFC (-7.02%) fell sharply after reports stated that the Indian government was planning to sell its stake in the company.
Markets Ahead
Both indices gave mixed signals today: Nifty was weak, while Bank Nifty was holding strong. If we look broadly, we can say that the indices are mostly consolidating within a range.
Nifty The index is stuck in a range between 19,300 and 19,500— and these levels could act as strong support and resistance levels, respectively. But the immediate resistance to watch out for is 19,420. If the support level is breached, Nifty can give us targets of 19,200 and 18,900 eventually. Meanwhile, the upside target of 19,630 can be attained if the market crosses 19,500.
Bank Nifty: The index is still in our volatile zone between 44,500 and 43,400. Bank Nifty can continue to be volatile and hit stop losses on both sides as long as it trades in this range. So wait for this range to be broken.
The day was fairly easy for both option buyers and sellers!
As per reports, there are two negative factors weighing on global stock markets now: (1) US Federal Reserve’s minutes indicate that one more rate hike may be needed in this rate-hiking cycle to curb inflation. (2) Chinese macro data indicate that the economy is slowing more-than-expected earlier, and this will impact global economic growth.
How was expiry trading? Are you in net profit or loss? Let us know in the comments section of the marketfeed app.
Don’t forget to tune into The Stock Market Show at 7 PM on our YouTube channel!
Here are some of the major updates that could move the markets today:
Stocks
Power Grid has successfully commissioned assets under the government’s North Eastern Region Strengthening Scheme-VI.
Paytm’s investor Antfin has offloaded 6.53 crore equity shares or a 10.3% stake to promoter Vijay Shekhar Sharma. This makes the founder & CEO, the biggest shareholder at 19.3%.
Aurobindo Pharma is launching an HIV triple combination product for children in low and middle-income countries, under a licence from a U.K. pharma company.
Reports suggest that the govt plans to sell shares of IRFC through an offer for sale (OFS).
What Happened Yesterday?
NIFTY started the day at 19,369 with a gap-down of 65 points. It started moving up after the initial red candles and tried to break yesterday’s high. NIFTY closed at 19,465, up by 30 points or 0.16%
BANK NIFTY started the day at 43,726 with a gap-down of 364 points. The index faced strong rejection from the 44k zone when trying to move back up. BANK NIFTY closed at 43,946, down by 144 points or 0.33%.
US markets closed in the red. The European markets closed mixed.
What to Expect Today?
The Asian markets are trading in the red.
The U.S. Futures are trading flat.
GIFT NIFTY is trading in the red at 19,394.
All the factors combined indicate a gap-down opening in the market.
NIFTY has supports at 19,400, 19,360, 19,300 and 19,240. We can expect resistances at 19,438, 19,560 and 19,620.
BANK NIFTY has supports at 43,960, 43,840, 43,750 and 43,680. Resistances are at 44,277, 44,520, and 44,800.
NIFTY has the highest call OI build-up at 19,600. The highest put OI build-up is at 19,300. PCR is at 1.05.
BANK NIFTY has the high call OI build-up at 44,000 and 44,500. The highest put OI build-up is at 43,800. PCR is at 0.82.
INDIA VIX is at 12.12, the first time since May. The VIX in the U.S. market is also up.
The U.S. market continued to move down yesterday night after Fed Minutes once again confirmed a high chance of more rate hikes. The Fed also sees no recession in the 2023 forecast.
NIFTY respected all our major levels yesterday. And with the last 2 day candles, NIFTY is at the same level as Friday’s close. So till now for the week, NIFTY has had consolidation.
With today’s gap-down expected at 19,400, we should have a watch out for 19,300 as the first support. I would wait for the initial few candles before taking a position. Watch out for BANK NIFTY’s 43,680 level as well.
For the 3rd weekly expiry in the August series, let us hope the market will trade between 43,500-44,100 in BANK NIFTY and 19,250-19,550 on NIFTY.
And do remember, since it is an expiry day you can expect some volatility. So keep your eyes on the major levels and watch out for big candles!
Follow along with Smart Money (NIFTY) and Piggy Bank (BANK NIFTY) trades. Follow along on the marketfeed app or our website for trades!
Make sure that you tune in to The Stock Market Show at 7 PM on our YouTube channel. All the best for the day!
Here are some of the major updates that could move the markets tomorrow:
Govt plans to sell IRFC shares through offer for sale
The government is planning to sell a part of its holding in state-owned Indian Railway Finance Corp (IRFC) through an offer for sale (OFS) in the current financial year (FY24). The govt currently holds an 86.36% stake in the financing arm of the Indian Railways. To make the central public sector enterprise compliant with SEBI’s minimum public shareholding (MPS) norm, the government has to dilute its 11.36% stake in IRFC.
Petrol, diesel sales fall in Aug as rains hit demand
According to preliminary data from state-owned oil firms, India’s petrol and diesel consumption fell in the first half of August compared to the previous month and a year ago as monsoon rains hit mobility and slowed industrial activity. Consumption of diesel fell 5.7% YoY to 2.67 million tonnes from August 1 to 15. Petrol sales fell 8% YoY to 1.19 million tonnes during the same period.
Coal India capex spending grows 8.5% to Rs 4,700 cr in Q1
Coal India Ltd’s capital expenditure (capex) rose 8.5% YoY during April-July (Q1) to ₹4,700 crore as it continued to invest heavily in evacuation infrastructure, land, and mining machinery. The capex spend during the first four months of FY24 was almost 100% of the target of ₹4,754 crore and 28.3% of the annual target of ₹16,600 crore.
Lupin gets USFDA approval for Bromfenac Ophthalmic Solution
Lupin has received approval from the US Food & Drug Administration (USFDA) to market its generic Bromfenac Ophthalmic Solution. The drug is used to treat post-operative inflammation in patients who have undergone cataract surgery. The product will be manufactured at Lupin’s Pithampur facility in Madhya Pradesh
Amara Raja to expand into 2-wheeler market to power growth
Amara Raja Batteries plans to expand into the two-wheeler electric vehicle (EV) market through chargers and batteries as part of an expansion to triple its lithium-ion business this financial year. The company is also banking on its upcoming lithium cell and battery pack manufacturing units to increase production by Q1 FY25.
The Union Cabinet has approved seven multi-tracking projects targeted at Indian Railways with an outlay of ₹32,500 crore. The said projects will add 2,339 kilometres to the existing network of Indian Railways. They will cover 35 districts across Andhra Pradesh, Bihar, Gujarat, Jharkhand, Maharashtra, Odisha, Telangana, Uttar Pradesh and West Bengal.
Telecom services industry revenue growth may slow to 7-9% in FY24: ICRA
Ratings agency ICRA said the telecom services industry is expected to report moderate revenue growth of around 7-9% in FY24 due to muted average revenue per user (ARPU) expansion in the absence of tariff hikes. The capital expenditure levels of telecom firms are expected to remain elevated as they expand 5G coverage. This would keep the debt levels of the industry high at around ₹6.1-6.2 lakh crore as of March 2024.
Nazara Technologies invests ₹4.15 crore in Snax Games
Nazara Technologies Ltd has invested approx ₹4.15 crore (via its wholly owned Singapore subsidiary Nazara PTE Ltd) in Israel-based game developer Snax Games Ltd. The company entered into a publishing agreement with Snax Games through which it has acquired the exclusive rights to publish the games in the Indian subcontinent and the Middle-East region on a revenue-sharing basis for five years.
US-based investment firm GQG Partners has invested $1.1 billion (~₹9,150 crore) in Adani Power for an 8.1% stake. GQG Partners bought 31 crore shares of Adani Power in the largest ever secondary market equity deal, and promoter Adani family sold the stake for over ₹9,000 crore. With this investment, GQG Partners has bought ₹34,000 crore ($4.2 billion) in Adani group companies since March this year.
NIFTY started the day at 19,463 with a gap-down of 62 points. Initially, the index tried moving up, but the earlier support of 19,500 now turned into resistance. After forming a double top near the 19,500 zone, the index crashed without a retracement till 19,300 and then gave a sharp recovery of 100 points like yesterday to 19,400 levels. Nifty closed at 19,381, down by 144 points or 0.74%.
BANK NIFTY (BNF) started the day at 44,862 with a gap-down of 132 points. Initially, the index tried moving above 45,000, but that level acted as a strong resistance. Similar to Nifty, Bank Nifty also fell nearly 750 points to the low of 44,300 levels (which is also a support zone). Then, there was a small retracement to 44,600. BNF closed at 44,513, down by 482 points or 1.07%.
All indices except Nifty Pharma (+1.04%) and Nifty Media (+0.91%) closed in red. Nifty Realty (-1.78%) fell the most.
Major Asian markets closed mixed (Japan’s Nikkei fell 1.6%). European markets are currently trading in the red.
Today’s Moves
Adani Ent (+2.39%) was NIFTY50’s top gainer. The company posted a 44% YoY increase in net profit to ₹674 crore, while revenue fell 38% YoY to ₹25,438 crore.
IRFC (+12.6%) hit a 52-week high of ₹45.3 today. IRFC and RITES signed an agreement to explore avenues of mutual collaboration in the railway ecosystem and transport infrastructure sector. Read more reasons for the stock’s recent rally here.
Pharma stocks Mankind Pharma (+9.1%), Laurus Labs (+5.4%), Lupin (+4.1%), Gland Pharma (+3.1%), and others showed strong grains in a weak market.
UPL (-3.02%) was NIFTY50’s top loser. The stock hit over a 2-year low on weak June quarter results.
Vedanta (-6.65%) fell up to 9% after a block deal took place on the exchanges wherein ~16.5 crore shares of the company worth ₹4,270 crore changed hands.
Godrej Properties (-5.2%) fell after the company said its pre-sales declined by 11% YoY to ₹2,250 crore as delayed launches adversely affected bookings.
Markets Ahead
As said in yesterday’s post-market report, the target of 19,300 in Nifty was achieved today. But 44,150 in Bank Nifty is yet to be achieved.
Markets are clearly under selling pressure without any retracement. So tomorrow, we can expect a range-bound movement if the market opens with a big gap up or gap down. If the market opens flat and breaches today’s low, more bearishness can kick in.
Nifty: The important support for Nifty is now clearly 19,300. If that level is breached, the index can fall to 19,200 levels. The important resistance to watch out for is the 19,400-420 region, and 19,500 can be achieved if this resistance is crossed.
Bank Nifty: The important support for Bank Nifty is at 44,500 and the important resistance will be 44,750. A breakdown from 44,500 can give us a target of 44,150 and a breakout from 44,750 can give us targets of 45,000-200.
The markets are still under selling pressure. So even if there’s an up-move, it can be just a pullback, and the markets can continue to fall in the coming days.
If one played safely on today’s expiry day, it could’ve been an easy day for non-directional option sellers as well. Option buyers might have found it difficult to capture the trade as there was no retracement given for an entry.
Meanwhile, India’s services activity recorded the fastest growth rate in 13 years on strong demand. S&P Global’s India Services Purchasing Managers’ Index rose from 58.5 in June to 62.3 in July.
How did your expiry go? Let us know in the comments section of the marketfeed app.
Don’t forget to tune into The Stock Market Show at 7 PM on our YouTube channel!
As Amazon founder Jeff Bezos said, “21st century is going to be the Indian century”. Our country is striving towards becoming a global hub for the manufacturing and services sectors. With the help of various government initiatives, the Indian manufacturing sector could grow into a $ 1 trillion market by 2025. To achieve this goal, raw materials and finished goods need to be transported extensively across India. This is where the world’s 4th largest railway network comes in— the Indian Railways.
In this editorial, we shall analyse the key stocks that may benefit from the advancement of the Indian railway ecosystem.
IRFC
Indian Railway Finance Corporation (IRFC) is the financing arm of the Indian Railways (IR). The company raises capital by issuing bonds to banks and financial institutions. The Indian Railways approaches IRFC whenever it requires capital for new or existing projects. In the financial year 2021, the lender has provided 67% of the total capital outlay of IR.
The key metric used to track IRFC’s performance is Net Interest Income (NII). It is the difference between the interest received from borrowings and the interest paid to depositors. The lender reported a 43% YoY growth in NII from Rs 2,747 crore in FY20 to Rs 3,943 crore in FY21. Interestingly, IRFC has no bad loans or Non-Performing Assets (NPAs) in its books. The company is essentially lending to the government, which means that default risks are minimal.
The lender reported a 17% increase in total revenue to Rs 15,770 crore in FY21, compared to Rs 13,421 crore in FY20. Net profit increased 38% year-on-year (YoY) to Rs 4,416 crore in FY21. IRFC’s revenue has grown at a Compounded Annual Growth Rate (CAGR) of 11.7% over the past five years. Profit has grown at a 5-year CAGR of 36.4%, which defines the efficiency of the lender. The company’s Assets Under Management (AUM) stands at Rs 3,66,155 crore. It has grown at a 5-year CAGR of 18%.
IRFC’s return on equity (ROE) can be considered decent compared to similar financial institutions.
IRCON & RVNL
Indian Railway Construction Company Limited (IRCON) and Rail Vikas Nigam Limited (RVNL) are the two infrastructure wings of the Indian Railways. They undertake projects such as the construction of new rail lines, gauge conversion, railway electrification, major bridges, etc.
IRCON was incorporated in 1976 by the Central government. Other than railway projects, the company also undertakes general infra projects like highway construction, flyovers, signalling, and telecom. IRCON has an order book worth Rs 34,312 crore, out of which Rs 32,605 crore (~95%) are of railway projects. The company also has exposure in 21 countries, which covers 4.5% of its total order book.
IRCON’s profit after tax (PAT) margin has been declining and was recorded at 7.1% in FY21. The company’s revenue has been increasing over the years, but profits have not grown at the same pace.
Meanwhile, RVNL is relatively a new company. To overcome the lag in infrastructure progress in the railway sector, the government incorporated RVNL in 2002 (as part of the National Rail Vikas Yojana). The company undertakes operations and maintenance services of different rail projects.
We can see that RVNL’s revenue has consistently increased over the years. It has posted a 5-year CAGR of 20.3%. PAT has underperformed the growth rate of revenue, resulting in a CAGR of 15.7% over the past 5 years. RVNL’s PAT margin declined to 5.8% in FY21, compared to 7.3% in FY17.
Both IRCON and RVNL have registered a decline in profit margins over the past few years, meaning that the railway infrastructure is a low-margin business. However, these companies can benefit from the government’s target of 100% electrification of broad gauges by the end of 2023.
RailTel Corporation
RailTel Corporation of India is a telecom infrastructure provider that has an optic fibre network along railway tracks, covering 67,415 km across 7,321 stations. The company is well-diversified in its business operations.
National Long Distance (NLD) is the license for a telecom player to communicate over a long-distance network. The competitors in this segment are BSNL, Bharti Airtel, Reliance Jio, and Vodafone Idea (Vi).
Internet Service Provider (ISP)– RailTel offers internet and broadband services to banks, educational institutions, and government departments. Railnet is a special intranet connecting every zonal, divisional, sub-divisional office with the headquarters.
Infrastructure Providers Category-1 (IP-1) is the authorization given by the Department of Telecommunication through which the company can monetise its towers, bandwidth, and optic-fibre systems.
RailTel is also planning to leverage its expertise in communication networks to foray into new spaces. The company aims to digitalise 125 railway hospitals and 650 health units of the Indian Railways to create a Hospital Management Information System. It is also working on web-based administration systems for government departments and educational institutions.
Coming to RailTel’s financial performance, the firm reported a 20% YoY growth in total revenue to Rs 1,411 crore in FY21. PAT margin of the company has declined from 14% in FY17 to 10% in FY21.
IRCTC
Indian Railway Catering And Tourism Corporation Ltd (IRCTC) is the services wing of the Indian Railways. The company has direct business operations with end customers (B2C). Let us look at its business verticals:
The Covid-19 pandemic has severely impacted the company’s operations. While analysing the revenue split-up in FY20 (pre-Covid period), the catering segment contributed the largest share of the revenue. However, the vertical contributes only 16% to the Earnings Before Interest & Tax (EBIT). The internet ticketing vertical of the player has contributed 74% to EBIT.
IRCTC’s Internet Ticketing service has the highest profit margin. From 69% in FY19, it has increased to 78% in FY21. It means that for every Rs 100 the company earns as revenue through this segment, they are able to keep Rs 78 as profit. This makes it one of the most profitable businesses in the industry.
Conclusion
Apart from the companies mentioned above, there are other firms that contribute to different wings of Indian Railways. BEML, Titagarh Wagons, and Texmaco are some of the engineering companies that help build coaches, locomotives, engines, etc. However, these are small-cap companies whose financial performances have been poor.
Stock
Govt/Promoter Holding
Market cap
1-year return
IRCTC
67%
Largecap
210%
RVNL
78%
Midcap
103.5%
IRCON
73%
Smallcap
19.95%
Railtel
72%
Smallcap
21.33%
IRFC
86%
Midcap
1.4%
Rail stocks performance
Investing in stocks related to railways has a reliable advantage. These companies conduct normal businesses, but their audience is different from others. Catering to the railway sector makes them monopolistic.
Have you included rail stocks in your portfolio? Let us know through the comment section of the marketfeed mobile app.
Cipla receives DCGI approval to import Moderna’s Covid-19 vaccine to India
Cipla Limited has received an import license from the Drugs Controller General of India (DCGI) for restricted emergency use of Moderna’s Covid-19 vaccine in India. The vaccine will be used as part of donations from Moderna to our country. Currently, there is no commercial pact between Cipla and the US-based pharma giant. Moderna’s messenger mRNA vaccine will be the fourth Covid-19 jab to be available in India after Covishield, Covaxin, and Sputnik V. The vaccine has shown more than 90% efficacy in clinical trials for protection against Covid-19.
IRCTC Q4 Results: Net profit declines 23% YoY to Rs 104 crore
Indian Railway Catering and Tourism Corp. (IRCTC) Ltd reported a 23% YoY decline in net profit to Rs 103.8 crore for the quarter ended March (Q4). Its revenue from operations fell 41.2% YoY to Rs 338.8 crore during the same period. The revenues from its catering segment declined by 70% YoY to Rs 67.38 crore in Q4. Tourism sales declined by 69% YoY to Rs 31.6 crore. IRCTC’s board has recommended a final dividend of Rs 5 per share.
Reliance to invest in petrochemicals hub in Abu Dhabi: Report
According to a report from Economic Times, Reliance Industries Ltd (RIL) is planning to invest in petrochemical facilities in Abu Dhabi, as it strengthens energy ties with the Middle East. RIL is set to join projects at Abu Dhabi National Oil Company’s Ruwais refining hub. The report further states that Reliance will invest around $1.5 billion (~Rs 11,144 crore) in the facility.
IRFC Q4 Results: Net profit jumps 126% YoY to Rs 1,482.5 crore
Indian Railway Finance Corporation (IRFC) Ltd reported a 126.4% YoY jump in standalone net profit to Rs 1,482.5 crore for the quarter ended March (Q4). Net profit has declined by 85.84% when compared to the previous quarter. Its revenue from operations rose 39% YoY to Rs 4,455 crore during the same period. Net profit for the financial year 2020-21 (FY21) rose 38.35% YoY to Rs 4,416.13 crore. IRFC is the dedicated market borrowing subsidiary of the Indian Railways.
Cyient earns partner-level status in John Deere Achieving Excellence (AE) program
Cyient Limited has earned Partner-Level status in the John Deere Achieving Excellence (AE) Program for 2020. This is US-based Deere & Company’s highest supplier rating, awarded to companies for outstanding performance in product and service quality. Cyient is a supplier of multiple services to John Deere’s operations in India, including product design, simulation and analysis, cost management, application development, etc.
Jubilant Industries’ arm enters into strategic partnership with H.B. Fuller
Jubilant Agri and Consumer Products Ltd (JACPL), a wholly-owned subsidiary of Jubilant Industries Ltd, has signed a distribution agreement with US-based H.B. Fuller. This strategic collaboration will help expand the reach of H.B. Fuller’s high-performance adhesive solutions through a wide range of technologies. JACPL will serve as a national channel partner to H.B. Fuller.
DCM Shriram Q4 Results: Net profit declines 25% YoY to Rs 19.5 crore
DCM Shriram Industries reported a 24.9% YoY decline in consolidated net profit to Rs 19.51 crore for the quarter ended March (Q4). Net profit has increased by 24.6% when compared to the previous quarter. Its revenue from operations rose 12.76% YoY to Rs 486.77 crore during the same period. Net profit for the financial year ended March 31, 2012 (FY21) declined by 32.5% YoY to Rs 64.75 crore. New Delhi-based DCM Shriram Industries manufactures and sells sugar, alcohol, power, chemicals, and industrial fibers.
Garden Reach Shipbuilders and Engineers (GRSE) Ltd has installed an artificial intelligence (AI)-enabled high-end CCTV network for surveillance at five of its units. The state-of-the-art technology will enable surveillance of the 152.81-acre area of the shipyard to ensure round-the-clock safety and security of all its premises. It will be a valuable tool for detecting unauthorized intrusion or trespassing. The cost of setting up the surveillance systems was Rs 12.95 crore
Parag Milk launches fat-free milk under the brand ‘Pride of Cows’
Parag Milk Foods Ltd announced its entry into the fat-free milk segment under the premium milk brand ‘Pride of Cows’. Fat-free milk will be available in Mumbai, Pune, and Surat at Rs 120 per litre. It will be offered at Rs 140 per litre in Delhi. The company will increase its milk production capacity to 2 lakh litres by 2026 to meet growing demand. Parag Milk Foods’ fat-free milk will also be available on the company’s existing subscription-based model.
Gujarat Mineral Development Corp. (GMDC) reported a consolidated net loss of Rs 184.63 crore for the quarter ended March 2021 (Q4 FY21). It has posted a net profit of Rs 12.29 crore in the corresponding quarter last year (Q4 FY20). Its revenue from operations rose 37.4% YoY to Rs 565.80 crore in Q4 FY21. Net loss for the financial year ended March 31, 2012 (FY21) stood at Rs 39.34 crore. This is compared to a net profit of Rs 146.49 crore in FY20. GMDC’s board has recommended a dividend of Rs 0.2 per share.
Bharat Forge acquires 100% control of Sanghvi Forging and Engineering
Bharat Forge Ltd, through its wholly-owned subsidiary BF Industrial Solutions, has acquired 100% control of Sanghvi Forging & Engineering Ltd (SFEL). The company’s resolution plan for Sanghvi Forging was approved by the National Company Law Tribunal (NCLT) on April 26 and by the Committee of Creditors (CoC) of SFEL on February 17. SFEL manufactures open and closed die forging products for the oil & gas, defence, and shipbuilding industries.
Vodafone Idea Q3 Results: Net loss at Rs 4,532 crore
Vodafone Idea Ltd (Vi) reported a consolidated net loss of Rs 4,532.4 crore for the quarter ended December (Q3). It had posted a net loss of Rs 7,218.5 crore in the corresponding quarter last year. The company’s revenue grew 1% YoY to Rs 10,894 crore during the same period. Vi saw a one-time net gain of Rs 1,696.5 crore in Q3, which includes gains made on the sale of its stake in Indus Towers. The telecom operator’s average revenue per user (ARPU) improved to Rs 121, compared to Rs 119 in the previous quarter (Q2 FY21).
ONGC Q3 Results: Net profit falls 67% YoY to Rs 1,378 crore
Oil and Natural Gas Corporation (ONGC) reported a 67.4% YoY decline in net profit to Rs 1,378 crore for the quarter ended December (Q3). Its revenue fell 28% YoY to Rs 17,024 crore during the same period. ONGC’s crude oil production during the quarter declined 3.3% YoY, while gas output declined 6% YoY. The company’s board has declared an interim dividend of Rs 1.75 per share.
Power Grid to acquire 74% stake of Jaiprakash Power in JV
Power Grid Corporation said its board has approved a proposal to acquire 74% stake of the joint venture partner in Jaypee POWERGRID Ltd (JPL). JPL is a joint venture between Power Grid and Jaiprakash Power Ventures Ltd. The company said the acquisition would be completed within the current fiscal year.
Amara Raja Batteries Q3 Results: Net profit rises 18% YoY to Rs 194 crore
Amara Raja Batteries Ltd (ARBL) reported a 17.98% YoY jump in consolidated net profit to Rs 193.69 crore for the quarter ended December (Q3). Its revenue from operations rose 12.18% YoY to Rs 1,960.43 crore during the same period. The company has announced plans to set up a greenfield lead recycling unit with a capacity of 1 lakh tonnes. This would help ARBL to comply with recycling standards while adopting advanced technology in the most eco-friendly manner. ARBL’s board has approved an interim dividend of Rs 5 per share.
Ircon International Q3 Results: Net profit rises 35% YoY to Rs 103 crore
Ircon International Ltd reported a 35% YoY increase in net profit to Rs 103 crore for the quarter ended December (Q3). Its revenue from operations rose 29% YoY to Rs 1,244 crore during the same period. Ircon announced it has secured new orders worth around Rs 3,983 crore in the current financial year (Q4 FY21).
Godrej Industries to diversify into housing finance business
Godrej Industries Ltd announced that Godrej Housing Finance Ltd (GHFL) has recently obtained a license to operate as a Housing Finance Company. GHFL is owned by the Godrej Family through Anamudi Real Estates LLP. To pursue the opportunity in the housing finance business, the Board of Godrej Industries has approved the proposal of acquiring shares of GHFL from Anamudi.
Prabhat Dairy Q3 Results: Net profit declines 14% YoY to Rs 8 crore
Prabhat Dairy reported a 14.17% YoY decline in net profit to Rs 8.78 crore for the quarter ended December (Q3). Its total revenue declined 53% YoY to Rs 102.89 crore during the same period. Prabhat Dairy is an integrated milk and dairy products company in Maharashtra, catering to institutional and retail customers.
IRFC Q3 Results: Net profit rises 15% YoY to Rs 1,046 crore
Indian Railway Finance Corporation (IRFC) reported a 15.4% YoY increase in net profit to Rs 1,046.74 crore for the quarter ended December (Q3). Its total revenue rose 8.01% YoY to Rs 3,932.46 crore during the same period. On February 12, IRFC listed its $750 million (~Rs 5,444 crore) medium-term note on India International Exchange’s (India INX) debt listing platform. The issue is part of the company’s $4-billion (~Rs 29,000 crore) global medium-term note programme.
Delta Corp Q3 Results: Net profit at Rs 1.25 crore
Delta Corp Ltd reported a net profit of Rs 1.25 crore for the quarter ended December (Q3). It had posted a net profit of 55.07 crore in the corresponding quarter last year. The gaming and hospitality company’s revenue declined 39.58% YoY to Rs 128.93 crore in Q3 FY21.
Sadbhav Engineering Q3 Results: Net profit loss at Rs 24.32 crore
Sadbhav Engineering Ltd reported a consolidated net loss of Rs 24.32 crore in the quarter ended December (Q3). It had posted a net loss of Rs 69.79 crore in the corresponding quarter last year. The company’s total revenue rose 2.12% YoY to Rs 695.76 crore in Q3 FY21. Sadbhav Engineering is a civil engineering construction company based in Gujarat.
2020 was unmemorable for a lot of reasons but Initial Public offers (IPO) is not one of them. Out of the 16 IPO launched in 2020, 12 IPO gave investors the much-desired listing gain. You can read about the top 5 IPOs of 2020 here.
The Indian Railway Finance Corporation (IRFC) has decided to take the public route. They will be the first company coming with its IPO in 2021. The IPO will hit the market on 18th January 2021. Let’s dig deeper and understand what it is all about.
About the Company
The Indian Railway Finance Corporation (IRFC) was incorporated in 1986. It is fully owned by the Government of India. The main role of IRFC is to act as a borrowing arm of Indian Railways. It is responsible for raising funds for the Ministry of Railways (MoR). The primary business of IRFC is to finance the acquisition of rolling stock assets. These stock assets consist of wagons, trucks, electric multiple units, containers, cranes and more.
India has a huge railway network with approximately 13,452 trains every day. In fact, India holds the largest rail network in Asia as it transports 22.70 million passengers per day (FY18). IRFC has financed almost 40% of the total expenditures carried out by Indian Railways in 2019-20.
The IPO of this state-run company will open on 18th January and will close on 20th January. The total issue size of the IPO is Rs 4,600-crore. A total of 178.2 crore equity shares will be offered by IRFC as their move to go public. It comprises a fresh issue of up to 118.8 crore shares and an offer for sale of up to 59.4 crore equity shares. The price band of the IPO is Rs 25-Rs 26 per equity share.
Anchor investors have been allocated 60% of the total portion reserved for qualified institutional buyers (QIBs). As the price of the shares is low, you are required to buy at least 575 equity shares as one lot. Further bids can be made in multiples of 575 shares. That means an investor who is looking to invest in this IPO has to at least pay Rs 14,950 (Rs 26 x 575). The maximum a single investor can invest is Rs 1,94,350. But since the IPO will be oversubscribed anyway, there is no point in applying for more than one lot.
Mostly, there are two reasons why IRFC has decided to take the public route. Firstly, to increase the company’s equity capital base and make it more robust. This will help them to meet business future growth requirements. Secondly, to meet general corporate purposes.
Financial Overview
30 September 2020
31 March 2020
31 March 2019
31 March 2018
Total Assets
2,91,986.58
2,75,504.12
2,06,438.29
1,61,451.04
Total Income
7,384.00
13,421.09
11,133.59
9,268.38
Profit after Tax
1868.84
3192.09
2139.93
2,001.46
(Values in Rs Crore)
As you can see from the table, the revenues and profits have increased consistently for the last three years.IRFC recorded a 20% increase in revenues in FY20 as compared to FY19. Their profits rose by a stunning 50% from Rs 2139.93 crore to Rs 3192.09 crore in just one year. This tells us that the company has done well in recent times. Till the first half of 2020-21, we can see that the company has also accumulated revenue worth Rs 7,384 crore. With this trend, they will easily surpass their numbers of the previous year.
The biggest strength of IRFC is its pivotal role in the growth of Indian Railways. Most of the Indian population, especially the lower-middle class population, travels through trains. They find travelling through the air very costly. Thus, Indian Railways, which is still very cheap, is their preferred option. Indian Railways will only expand from where they are right now. This expansion will involve a significant amount of financing, thus giving more business prospects to the company.
Risk Factors
As a borrowing arm of the Indian Railways, IRFC derives a large part of their revenues from them. This comes by leasing Rolling Stock Assets to the Indian Railways. In 2019, 99.81% of the total operating revenue came from Lease income, interest on loans and pre-commencement lease interest income. If there is any shift from the funding requirement or reduced demand for Rolling Stock Assets will adversely affect the company’s business.
Any slowdown in Indian Railways or government initiatives to move away from traditional railway format will affect IRFC’s business.
IRFC meets their funding requirements from taxable/tax-free bonds, term loans from banks, internal accruals and lease financing. Their lending projects can be severely impacted if the cost of funds, coming to them, increases.
IRFC could witness a rise in their financing cost if there is a downgrade in their credit ratings. A downgrade in India’s debt rating can also decrease the operational efficiency of the company.
IPO Details in a Nutshell
IPO Date
Jan 18, 2021 – Jan 20, 2021
Issue Type
Book Built Issue IPO
Face Value
Rs 10 per equity share
IPO Price
Rs 25 to Rs 26 per equity share
Lot Size
575 Shares
Offer for Sale(goes to promoters)
594,023,000 Equity Shares
Fresh Issue(goes to the company)
1,188,046,000 Equity Shares
Issue Size
1,782,069,000 Equity Share
Listing At
NSE, BSE
Conclusion
An NBFC is not a reliable bet in our opinion but IRFC’s business model is very safe. IRFC lends to the Indian Railways, which is a government agency. Thus, the risk of non-repayment of loans is very low, if not zero. As the lending margin increases, net interest income(NII) will increase, and it is more profitable for IRFC. Still, do consider the risk associated with this company as explained above and then come to your own conclusion. IRFC had filed draft papers for its IPO last January. You can find it here. What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section below!
