- #AartiIndustries surges after securing a 4-year supply contract
- What should we expect from the Telecom pack's Q3 earnings?
Find out what's happening in trade so far with Hersh Sayta and Smriti Chaudhary on Market IQ. #NDTVProfitLive
Guest List:
Rajendra Gogri, CMD, Aarti Industries
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- What should we expect from the Telecom pack's Q3 earnings?
Find out what's happening in trade so far with Hersh Sayta and Smriti Chaudhary on Market IQ. #NDTVProfitLive
Guest List:
Rajendra Gogri, CMD, Aarti Industries
_______________________________________________________
For more videos subscribe to our channel: https://www.youtube.com/@NDTVProfitIndia
Visit NDTV Profit for more news: https://www.ndtvprofit.com/
Don't enter the stock market unaware. Read all Research Reports here: https://www.ndtvprofit.com/research-reports
Follow NDTV Profit here
Twitter: https://twitter.com/NDTVProfitIndia , https://twitter.com/NDTVProfit
LinkedIn: https://www.linkedin.com/company/ndtvprofit
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03:16 Good afternoon.
03:17 Welcome.
03:17 You're watching Market IQ on NDTV Profit.
03:19 I'm going to quickly take you through where markets are
03:22 at the moment.
03:23 You are seeing the Nifty, which is down around 0.6%
03:26 or thereabouts.
03:27 You are seeing declines, no surprises with regard
03:30 to where you are seeing the declines coming from.
03:33 It's the Nifty Bank, which continues to decline.
03:36 And HDFC Bank contributing to that decline.
03:40 Let's have a quick check on where contributories are at.
03:44 At least the Nifty contributories,
03:46 you are looking at the biggest decline coming in
03:49 or contributing 65 points contributed on the declines
03:54 by HDFC Bank out of the 125-point fall
03:58 that we are seeing on the Nifty 50 itself.
04:00 LTI Mine Tree also on the back of earnings
04:02 contributing to that.
04:03 Asian Paints also on the back of earnings
04:05 contributing to that fall.
04:07 So out of the top four, you're seeing three largely
04:11 an earnings reaction.
04:12 NTPC is the other one, which is contributing meaningfully
04:16 to the declines.
04:17 In terms of sectors, I'll quickly pull up
04:21 the likes of a Nifty Bank.
04:22 And if we can see the contributories there
04:24 within the Nifty Banking Pack, that will come up shortly
04:28 on your screen.
04:29 There you go.
04:29 You're seeing HDFC Bank, AU Small, IndusInd.
04:33 IndusInd also on the cusp of earnings.
04:35 So that one also a bit of a pre-earnings kind of a reaction
04:39 that's coming through.
04:40 You have Kotak and ICICI, which will also declare numbers soon.
04:44 But on the positive side, you're seeing a good recovery
04:47 coming through.
04:48 You're seeing Axis, which has been in the green
04:50 for a better part of the day.
04:51 You're seeing IDFC, PNB, Federal Bank.
04:54 And even within the Nifty PSU Banks,
04:56 you're seeing a positive reaction,
04:58 at least a bit of a positive reaction,
05:00 which seems evident with SBI also in the green.
05:03 Right.
05:04 Harsh, there's another stock in focus today,
05:06 which is Aarti Industries.
05:07 That's up about 5% on the back of a new contract win.
05:11 To talk to us more about this, we're
05:12 joined by the CMD of Aarti Industries, Rajendra Gogri.
05:16 Welcome, Mr. Gogri.
05:17 Thank you for taking the time out.
05:20 Thank you.
05:21 So tell us about the new contract win.
05:24 And when does it start?
05:27 Do you need CAPEX for this new contract?
05:31 It is from calendar year '24 to calendar year '27.
05:36 And this is part of our ongoing expansion.
05:39 So no additional CAPEX is going to be
05:44 required for fulfilling this contract.
05:49 Right.
05:50 Will this be a margin accretive contract for you?
05:53 This one, 6,000 crore?
05:55 Yeah, it will have a similar margin,
05:57 EBITDA margin, 15% to 17%.
06:01 The top line increase will translate
06:03 to increase in EBITDA.
06:05 Understood.
06:06 And so, Harsh, also joining in, if I may.
06:09 So I just want to try and understand,
06:11 you've won another contract as well, 3,000 odd crore,
06:15 the execution of which is over a period of nine years,
06:17 so slightly elongated execution timeline.
06:20 Now, when I combine these two, how
06:22 are they going to contribute to your top line
06:25 in FY '24 onwards?
06:27 Because I'm guessing that's the execution timeline even
06:30 for-- or the execution start date even
06:32 for the second contract of 3,000 odd crore.
06:35 So now 9,000 is the combined number.
06:38 3,000 over nine years, 6,000 over the next three to four
06:43 years, how would that meaningfully
06:45 add to your top line from FY '24,
06:47 if you can give us a broad number?
06:49 Yeah.
06:50 Today's contract will be adding 1,500 crores per year.
06:53 Perfect, yes.
06:54 And the earlier contract, which is--
06:56 they have some sort of a ramp up.
06:58 So that will be about 300 crores in FY '25.
07:02 So 1,500 plus 300, 1,800 crores.
07:05 Understood.
07:05 And that's FY-- sorry, yes, apologies, FY '25 onwards.
07:09 Understood.
07:10 So where will your top line go to?
07:12 It's roughly at 6,600 odd crore.
07:14 So your top line would go to roughly,
07:17 let's say, 9,000 odd crore FY '25.
07:19 Is that where one can see it?
07:22 Yeah, I think around 50% increase will be there.
07:25 Sure, understood.
07:26 That's significantly higher.
07:28 That's roughly 10,000 crore.
07:29 Margins have come off sharply over the last couple of years.
07:32 So where do margins go from here?
07:34 When can we start seeing margins come back above that 20% mark
07:37 for Aarti?
07:40 For us, basically, margin also relates
07:42 to the base raw material, benzene, toluene, and all that.
07:45 So absolute EBITDA is more important.
07:48 But margin at the constant raw material prices
07:51 also will increase, as we expect--
07:54 Right.
08:00 We seem to have lost audio for Mr. Gogri,
08:05 but we'll try and connect.
08:06 But let's move on.
08:08 And apart from Aarti, we have another stock
08:12 that is in focus today, which is LTI Mine Tree.
08:15 The stock is down over 10% on the back of Q3 numbers.
08:19 Let's take a look at the Q3 numbers.
08:22 It was a big miss on the back of furloughs.
08:28 But we'll come back on it, and we'll
08:30 talk about this a little bit more in detail.
08:33 But we have Mr. Gogri back.
08:35 And, sir, can you hear us now?
08:38 Yes, I can hear you.
08:40 Go on, please.
08:43 Yeah, I think we are discussing on the top line.
08:45 So we should be reaching around 9,000 crores.
08:49 And we expect a lot of operating leverage coming into play,
08:54 and a transfer of gross profit to EBITDA will happen.
09:00 So at the constant raw material, we
09:02 expect the EBITDA margin to grow in FY25 and subsequent years.
09:09 So, sir, is there a date, or rather a quarter,
09:14 that one can give in terms of a guidance
09:15 as to when it will breach that 20% mark?
09:18 Because it seems that it's been below that 20% mark
09:22 since a while.
09:24 No, that I already mentioned.
09:25 It will be always linked to the raw material prices.
09:27 So at constant raw material prices,
09:31 we expect it to increase.
09:32 But in a particular, you know, benzene
09:34 can move like anything.
09:35 You know, it has historically moved from $300 to $1,300.
09:39 So all these commodity prices impact the EBITDA margin.
09:45 But at the constant raw material prices,
09:47 it is going to increase in FY25, mainly
09:51 because of operating leverage.
09:54 Thank you so much, Mr. Gogil, for joining us
09:57 and for all the answers that you gave us.
10:00 It was a pleasure talking to you.
10:01 Now, let's come back to LTI Winetree.
10:04 The stock is down in trade over 10%
10:06 on the back of Q3 numbers.
10:08 We spoke to the CEO, Debashish Chatterjee,
10:11 and asked him if the company will
10:12 be able to achieve 17% to 18% EBIT margin for FY24
10:17 and what margin levers are still in play for that thing
10:20 to be achieved.
10:21 Listen in.
10:24 We have very clearly called out that, you know, for FY24,
10:30 and we are not going to--
10:33 we are-- that 17% to 18% range does not hold good.
10:36 So we are going to-- but at the same time,
10:38 the plan remains intact.
10:39 But we are just deferring it by a few quarters.
10:42 But when you talk about the EBIT, just to clarify,
10:45 we lost almost 200 basis points because of furloughs,
10:48 fewer working days, and quite a bit of seasonal pass-throughs
10:52 that we have in our business in Q3.
10:54 But we recovered 80 basis points from our SG&A efficiency,
10:59 as well as 60 basis points from our other operating efficiency.
11:02 So we lost 200, gone back 140.
11:05 That's why you see a decline of 60 in terms of our EBIT.
11:09 Well, switching focus from one set of earnings to another,
11:12 banking major, IndusInd Bank,
11:14 going to report its third quarter earnings today.
11:16 Mimansa joins us.
11:18 She's obviously got all the details with regard to analyst views
11:22 and what we can expect.
11:23 Mimansa, take it away.
11:24 Yeah. Hi, Harsh.
11:25 So IndusInd Bank is set to announce its Q3 earnings today,
11:28 where it is expected to report a 16% rise in the net profit
11:32 on year-on-year basis.
11:34 Now, this is because of a continued momentum
11:36 in accelerated growth in core high-yield loan segments,
11:41 which is vehicle finance portfolio for IndusInd Bank.
11:44 Apart from that, the net interest income is expected to rise
11:47 by around 15%, and the growth in NIR number is slightly slower
11:52 than what was reported in the previous quarter,
11:54 which was at 18%.
11:57 The NIM is likely to remain stable at 4.3% on quarter-on-quarter basis,
12:02 with the CASA ratio declining 90 basis points to 38.5%.
12:08 Now, this indicates that deposits growth was driven by term deposits.
12:13 The loan growth is seen at 20%,
12:15 but the key focus area is going to be the cost of funds
12:18 and whether the bank is able to sustain its current loan growth levels.
12:22 The deposit growth is seen at around 13% on year-on-year basis.
12:27 On asset quality, the analysts are expecting stable NPAs in this quarter,
12:33 and provisions will continue to decline due to lower slippages.
12:36 Both microfinance loans and vehicle finance portfolio
12:39 shows negligible risk for this quarter is what the analysts are saying.
12:44 Non-interest income would be subdued due to lower treasury income
12:47 and other fee income.
12:49 So, all of these factors combined are expected to result
12:53 in about 2% year-on-year rise in the pre-provision operating profit
12:58 along with higher operating costs due to recovery in the business momentum.
13:04 Right. Thank you so much for that, Mimansa.
13:06 Of course, the net interest margin number is something we'll keep our eye out on
13:09 as IndusInd comes out with its numbers.
13:11 But yes, thank you so much for that comprehensive picture.
13:15 But quickly switching focus, Smriti,
13:17 we also have the telecom sector earnings coming through.
13:20 We have Reliance coming through with its earnings tomorrow.
13:22 Jio will be in focus. SubscriberBay is back in focus.
13:26 We also have Bharti Airtel. Stellar Ride, that one has had.
13:30 Vodafone, as always, has been in focus.
13:33 Talk to us about what one can expect from the Q3 numbers when telecom is concerned.
13:38 Well, if we specifically look at Bharti and Jio,
13:42 the revenue is expected to rise based on increase in the subscribers
13:47 that Vodafone is losing and these two are gaining on the back of that.
13:50 So, we expect the top line to grow and I'll individually come to that for both the companies.
13:55 But before that, about margins, the margins are likely to be capped
13:59 considering they've taken a lot of 5G capex in the last couple of quarters.
14:04 So, Jio and Airtel, margins may remain capped.
14:09 Now, let's look at specific numbers.
14:10 In case of Bharti Airtel, revenue is likely to grow at 3.5%.
14:15 Margin probably will remain flat.
14:18 As I said, it will be capped by the capex spends on 5G.
14:21 Net profit is likely to go up 36% quarter on quarter.
14:24 So, profit may see a jump there. In terms of similar kind of trajectory for Jio as well.
14:32 But if you look at Vodafone idea, a weaker spot in the telecom sector.
14:37 The revenue growth will be flattish around 1 to 2%. Margin is likely to contract.
14:43 They've been losing customers and operational efficiency is not giving that sort of a benefit.
14:49 Now, net loss, while we can see net loss contracting.
14:53 Now, this is in contrast with the loss that expanded in the previous quarter.
14:57 So, that's where the sector is currently at.
15:01 We have seen subscriber growth in Jio of over 1 crore net additions in the quarter itself.
15:08 So, that is what's going to drive Jio's revenues and even net profits.
15:13 And Arpu is again likely to remain kind of flattish again
15:19 because these companies are not charging for 5G separately.
15:23 So, even though they have put in all the capex, they've put in all the money,
15:26 but they're yet to either have a tariff hike in FY24 or specifically charge for 5G,
15:32 even though that's unlikely. So, that's where we currently stand, Harsh.
15:35 Interesting. But all of those will be in focus. Let's slip into a very short break.
15:40 More on the other side. We'll continue to be focused on markets as well as on specific stocks.
15:45 Stay tuned.
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19:28 Welcome back. You're watching MarketIQ. In a sea of red in the markets,
19:33 we only have a couple of sectors that are in green, one of them being the realty sector.
19:38 And the gains there are led by Soba. That's up about 14.5% as we speak.
19:43 This is on the back of fundraising plans via rights issue. To tell us more about this,
19:50 we have Saloni joining us. Saloni, tell us a little bit about the plans that the company has for the fundraise.
19:57 Right. As you rightly mentioned, the stock is up about 14%. Actually, it hit a record high.
20:02 Now, this is on the back of the Shrap rally that we've seen in real estate stocks.
20:06 So one particular news, obviously, that's making the headlines for this particular stock is that the company yesterday
20:12 announced that it aims to start a rights issue. Now, that will be decided by the board on a January 22nd meet that they are planning.
20:20 This will be along with the earnings that they will be announcing. But apart from that, as far as January itself is concerned,
20:26 Soba is up around 47% versus 9% rise in Nifty Realty. This is also Soba being technically having a high P in the sector.
20:36 Talking about the brokerages view as well, that why in January also Soba has been kind of leading the rallies,
20:41 that Motilal Oswan and HDFC Securities, when they announced their topics for the realty sector at the start of the year,
20:48 Soba is one of those stocks which made kind of into their top picks list.
20:53 Motilal expects Soba to outperform in terms of growth on the vast land reserve or land bank that they have,
20:59 which will lead to them, you know, coming up with more launches and also trying to meet the demand that we are seeing in the real estate sector.
21:06 And also they are believing that the company is targeting sustainable growth,
21:10 especially with the kind of healthy cash flows and profitability that they have.
21:14 Now, contrary to this view, actually, Jefferies also came out with the report last week when it said that after the Sharp rally,
21:20 as I mentioned, that the stock has seen, they've actually downgraded the stock from hold to buy.
21:26 However, they have increased the target price to about 1.265 and they've advised the investors that, you know,
21:31 one should wait for a better entry price, especially after the Sharp rally that it's seen.
21:39 Right. Thank you so much for that update, Saloni. But we'll switch focus to Zest Money.
21:45 Now, Zest Money has announced to shut down or its shutdown plans in December.
21:51 It's going to be acquired by DMI Finance, the NBFC arm of DMI.
21:56 We've been joined by Rishabh, who's going to tell us more about this development.
22:01 Rishabh, talk to us. What does this mean?
22:07 That's right, Harsh. The troubled Zest Money has finally been acquired.
22:12 This is a distressed sale or a fire sale that has definitely come at a much, much lower valuation.
22:20 Zest Money, though the terms of the deal haven't been disclosed by either of the entities,
22:27 it is definitely much, much lesser than the 450 million dollar valuation that Zest Money once commanded.
22:34 But what the companies have revealed is that DMI Finance will be the preferred lender on the Zest Money platform,
22:42 as well as it will continue to have all the exclusive rights to all the Zest brands that exist.
22:49 So what this points to is that Zest Money as an entity and as a brand will probably continue to exist,
22:57 which is different from what we were expecting in terms of a total shutdown.
23:03 What is also not been clarified is what will happen to the employees that Zest Money has.
23:09 It has about 150 to 200 employees that are based in Bangalore currently.
23:15 DMI will also add Zest Money's checkout financing platform to its platform.
23:23 And DMI had been about a partner with Zest Money for about eight years.
23:29 All right. Thank you so much, Rishabh, for that. Now, let's move on to the pharma space.
23:34 Sun Pharma has entered into a definitive merger agreement with Taro Pharmaceuticals.
23:39 The pharma giant has agreed to acquire all the remaining outstanding ordinary shares of Taro.
23:44 My colleague, Monal is joining us with more on that.
23:48 Thanks, Smriti. Right. So Sun Pharma is now planning to acquire the balance around 22% of the share capital
23:56 that it holds, that it is now to be holding in Taro.
24:00 The original offer that was floated was $38 in May, and that was actually,
24:05 it faced a backlash from the minority shareholders.
24:08 Now, Sun Pharma has come back with a revised offer and is offering $43 per share to acquire these, the remaining stake.
24:16 Now, here what is interesting is that it's going, Taro's cash balance in hand on the balance sheet right now,
24:23 cash and short term bank balances, is $389 million.
24:27 And Sun Pharma will be spending around $348 million to make this transaction.
24:32 So all in all, all the analysts believe that it's accretive.
24:35 Also, it will give the company access to 1.3 billion of current assets that Taro has on its balance sheet.
24:43 So the analysts say is that it's a positive if this were to go through.
24:47 However, we need to remember that this deal is still going to require the approval of the minority shareholders.
24:55 So it's something that we need to wait and watch, but a positive.
24:59 Right. Thank you so much, Monal, for that.
25:02 You know, Sun Pharma and Focus on the back of that stock up 2%.
25:06 So let's quickly move on, though, stick with the real estate pack.
25:11 The house of Abhinandan Lodha is among the first developers to be building their real estate project in Ayodhya.
25:16 We had a chat with the CEO, Samajwal Ghosh.
25:20 Let's quickly listen into what he has to say with regard to this development.
25:25 My first question to you is, why did you choose Ayodhya as your first project as a project for real estate?
25:33 The way the hospitality industry is shaping up infrastructural development, roads, highways, etc.
25:41 is all leading to the fact that Ayodhya will emerge as a leading spiritual capital for not just for the country, but for the globe.
25:57 How has the response been so far on the bookings on the project?
26:01 The appeal is national and therefore the demand is also national. And we just began about few weeks back.
26:08 So, there's still a bit of way to go. But the response till now, both from the captive audience and from what we are hearing from our customer base
26:18 and from trade partners has been more than overwhelming. Uttar Pradesh being the most popular state in the country,
26:27 we are extremely bullish about the growth that is happening, the stability of administration that is happening in that state.
26:37 And is going to be of great significance in our expansion plans.
26:44 What are your expectations out of the budget and do you have, are you expecting a certain kind of policy?
26:50 Especially with regards to the real estate sector? I guess it is a little premature to comment.
26:56 But if I really look back on the last financial year, it's been extremely favorable to growing businesses.
27:04 And that is well reflected in the Sensex and Nifty numbers.
27:11 And that's all that we have on this edition of Market IQ. Thank you so much from Harsh and I and from all the team that put together this show.
27:22 But lots more coming up on NDTV Profits. Stay tuned.
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