- #Zee downgraded on #Sony deal collapse
- Bulls back on #WallStreet
- Ram Temple to bring development, says PM Modi
All this and more with Alex Mathew on 'All You Need To Know'. #NDTVProfitLive
- Bulls back on #WallStreet
- Ram Temple to bring development, says PM Modi
All this and more with Alex Mathew on 'All You Need To Know'. #NDTVProfitLive
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TVTranscript
00:00 Let's start with the headlines. It's the advent of a new era. Prime Minister Narendra Modi says
00:06 that the Ram Mandir will bring prosperity and development. Jeffries says that Ayodhya will
00:12 surpass Mecca as well as the Vatican as the global spiritual tourism hotspot.
00:18 Sony walks out. Zee merger deal collapses. Brokerages downgrade significantly. The
00:28 stock is likely to open gap down. Bulls are back on Wall Street with the S&P 500 and the Dow
00:35 notching second straight record closes. Asian markets trade mixed. The Nikkei 225 hits a 33-year
00:43 high as investors expect the Bank of Japan to keep its policy rate unchanged. ICICI Bank's
00:50 third quarter profit crosses 10,000 crore rupees for the first time ever, beats estimates with the
00:56 ADR up as much as 2.5%. Now the nation cheered the consecration of the Ram Mandir in Ayodhya
01:04 and beyond the religious and cultural significance of that landmark moment, which is undeniable,
01:12 the revival of Ayodhya is set to significantly bolster tourism in the state and in fact in India.
01:19 Jeffries anticipates that the footfalls will surpass Mecca as well as the Vatican City combined
01:25 with over 50 million tourists expected per year. The Vatican and Mecca for context get about 30
01:32 million footfalls combined. In international news, the Dow and the S&P 500 notch a record
01:39 close for a second straight day. The Nikkei 225 is trading near 33-year peak as the Bank of Japan
01:48 in just a short while from now is expected to announce that it is keeping its policy rate
01:53 unchanged. The outcome of that meeting is at 8 a.m. this morning. Oil is edged higher with tensions
02:00 in West Asia offsetting concerns that global supplies remain ample. The US and UK launched
02:06 fresh air strikes against eight Houthi targets yesterday night and that was the latest action
02:13 to stop the group from harassing commercial shipping in the Red Sea region. As of this
02:18 morning, you have NYMEX in the US that is trading very close to that $75 per battle mark and you
02:25 have Brent crude which is about $80 to the battle. Let us turn to the Indian equity markets and we
02:32 had some trade on Saturday. Of course, we had a normal trading session and we had a holiday
02:37 yesterday. There was low volume though on Saturday. So, there is a lot to account for in trade today.
02:44 What are the latest cues in the F&O space? Agam is standing by to tell you just that.
02:48 Morning Agam, what can you tell us today? Fint Nifty expiry of course, to take into account.
02:52 Yes, absolutely Alex. We are watching out for the action from the institutionals,
02:58 especially given FPI and DI as well now return to markets and that could perhaps magnify a lot
03:06 of the trade that we saw last Saturday. While we did see a quarter percent cut on the underlying
03:11 as far as the Nifty is concerned, a 2% increase in open interest and as far as the Bank Nifty
03:16 is concerned, that's where we did see about a 0.8% up move for the Bank Nifty and an unwinding of
03:22 nearly 9.5%. So, a tad bit of short covering has already taken place, but it's not enough
03:28 and not enough to be named as short covering because we still haven't moved above the mark
03:34 of since we've seen consolidation of the previous few sessions. That said, if we do see a reaction
03:42 on Kotak Mandir Bank, further reaction of Kotak Mandir Bank as well as ICICI Bank perhaps positively,
03:49 then we may very well see that trigger as far as the Bank Nifty is concerned and hence,
03:54 Fint Nifty may also see a sharp up move and let's not forget as Alex has already mentioned,
03:59 Fint Nifty is also seeing an options expiry. Speaking of the options market,
04:03 as far as the Nifty goes, well, we did see a lot of more writing around 21, 700, 21, 800 calls,
04:10 but naturally because it was a day where the benchmark, the specific benchmark came off.
04:15 But as far as your open interest distribution, the kind of range that it is indicating at the moment,
04:21 at least based on max OI, which we are seeing in 21, 500 put and the 22,000 call, well, that's
04:28 a 500-point range within which we're expecting the Nifty to move within. And Nifty Fint,
04:33 of course, will also be in focus because of the weekly options expiry. At the moment,
04:39 while we are seeing a lot of writing around 20, 600, 20, 700 calls, in fact, 20, 800 is the one
04:46 with the max OI, should we see strength in the markets, you never know, we may in fact start
04:51 seeing a lot of activity around puts being written. Now, let's move on and talk about stocks.
04:57 And well, we did have Balkrishna Industries, which did see longs build up, but GNFC, JK Cement,
05:03 Gujarat Gas and Sun TV, on the other hand, looking at shorts building up there. And we didn't have
05:08 too much movement as far as the respective underlyings are concerned. But when it comes
05:13 to those stocks, we saw unwinding in open interest, we saw longs unwinding in Oracle Financial Services,
05:18 perhaps on expected lines, and BHEL. That one was also expected because both these stocks have run
05:23 up significantly off late and short covering for RBL Bank Emphasis and L&T Technologies. But Alex,
05:29 all eyes will be on Kotagvandra Bank and ICICI Bank, which could perhaps move the needle for
05:35 the bank activity today. Absolutely. Thanks so much, Agam, for bringing us those details.
05:38 On to a stock that is likely to see significant selling pressure in trade today and that's
05:43 Zee Entertainment. That is the top corporate story that we're tracking. In fact, on Saturday,
05:48 you had the stock decline about 1.5 percent as well. And there was a drop on Friday as well.
05:53 This is because the official outcome has come in from the Sony board meeting that took place on
06:02 Friday. And that is that Sony has called off its merger with Zee Entertainment and sent a
06:07 termination letter to the company. To put this in context and to talk about why this has come to this
06:13 point, I'm joined by Sajith Mangat. Sajith, what can you tell us about why we've reached this point
06:18 and what the likely path ahead is going to be? Well, you know, the Sony Zee talks were on the
06:27 brink of failure because of our last couple of months. But both the parties were trying to
06:34 salvage some kind of deal going into the deadline, which was Jan 28, which is a 30 day grace period
06:42 from the two year deadline, which was December 22. It seems that there were a lot of conditions
06:51 which were not met. One among them was who was going to be the principal. But Zee has
06:57 categorically stated that Puneet Goenka was willing to step down and take up a board seat till
07:05 the entire investigation against him is over. But more than that, what we understand is that
07:13 there were other financial conditions that needed to be completed before the merger could go through.
07:18 It was more of coming from the financial and balance sheet point of view. Some of the companies
07:23 which Zee had incorporated in Russia needed to be wound down. That didn't happen because Sony is a
07:32 US based company and it can't do any business with any company which has a link with Moscow.
07:38 There was another company where they have infused nearly 520 crores. They wanted to have that of
07:44 company and not be part of the thing. And from both the ends, there were a couple of issues
07:51 which remained unresolved by the time the timeline ended. And that's the reason why Sony
08:00 sent out a termination notice along with a notice seeking damages to the tune of
08:07 break-away fees of nearly $90 million to Zee. And that will be done through arbitration process
08:12 which will begin shortly for both the parties there. For Zee, it's going to be a negative
08:19 thing because the brokerage were expecting that the deal should go through after two years
08:24 of hectic defending of the deal in various courts, against the regulator, against various creators of
08:35 the promoters who wanted a pay-off for the money which was coming to the promoters.
08:40 And now it seems that the deal is off. Many of the brokerages have come down with the downgrade.
08:47 With CLSA coming at sell rating with 198 as a target, you have Citi coming out with another
08:56 sell which is around 180-190 rupees as a target there. LRR, Nuvama and others who have also
09:03 come with the target. And while that's a target they have mentioned, there is a potential the
09:11 stock can further slip down to 130-140, that's what one of the analysts had told us, saying that
09:18 because of the deteriorating financials or the industry dynamics where ad rates have not grown,
09:26 Zee has seen its EBITDA falling in the last two years, profitability coming down, margins under
09:31 pressure and the future strategies unknown going all alone. That could be one of the issues which
09:40 will be playing Zee's share price. Not only that, there are murmurs about institutional shareholders
09:46 now raising voices against the management. There could be some kind of shareholder activism that
09:54 may come in and that is something which will be overhang on the Zee stock going forward.
10:00 Thanks so much, Sajith, for bringing us those details. The stock is already down about 19%
10:05 in 2024 so far. Let's talk about ICICI Bank. This is likely to be one of the stocks of the day from
10:12 the large cap space because its December quarter profit has jumped as much as 24% and it's coming
10:18 above 10,000 crore rupees for the first time ever. My colleague Vishwanath Nair wraps up the key
10:23 numbers for us in this report. ICICI Bank for the third quarter of the current financial year has
10:29 reported a net profit of about 10,271 odd crore. This is about 23.5% higher than where the bank was
10:38 last year. Of course, remember that this is also slightly higher than the 20% net profit growth
10:44 that analysts had estimated earlier this week. As far as the net interest income or the core income
10:49 of the bank grows, that's grown about 13.5%. However, what has actually helped the profit
10:55 is the other income growth, which has risen about 21.5% for ICICI Bank. Provisions also have dropped
11:03 significantly, about 1,000 odd crore worth of provision. Of course, this number includes about
11:09 627 crore worth of provisions that the bank made against its AIF investments after the Reserve Bank
11:15 of India had changed its norms. The bank has also recorded some writebacks during the quarter and
11:20 that's why the number, the provisioning number has fallen and currently stands at a little over
11:25 1,000 crore. Advances for the bank have risen about 19 odd percent, while deposits have risen
11:30 about 18.7%, close to 19% as well. The advances in deposits have been growing in tandem for ICICI
11:36 Bank, unlike what the rest of the private banking ecosystem is seeing. As far as the loan deposit
11:42 ratio is concerned for ICICI Bank, that number stands at about 86%. According to the management,
11:47 they are comfortable with that number. CASA ratio for the bank has of course dipped from about 40.8%
11:53 in the second quarter to 39.4% in the third quarter. That indicates that the bank is facing
12:00 a pinch on the low-cost funding assets that are available to the bank. On the term deposit front,
12:08 however, ICICI Bank saw about a 31% rise and that number stands a little over 8 lakh crore.
12:14 All in all, the numbers are looking fairly strong. They have beaten most analyst estimates.
12:20 One small negative for ICICI Bank is the dip in the capital adequacy ratio, primarily because of
12:26 a 70 basis points hit on capital adequacy because of the Reserve Bank of India changing its norms
12:31 on unsecured lending. All right, and sticking with large private sector banks, we've got
12:37 Axis Bank that will report its third quarter numbers today and this is the last of the pack,
12:41 remember. So, you'll have a holistic view of the sector just after this. The expectations are that
12:46 there will be an improvement in net profit as well as net interest income. Mimansa Verma has more in
12:52 this report. Axis Bank is set to announce its Q3 earnings results on Tuesday where it is expected
12:59 to report a nearly 5% increase in net profit on year-on-year basis. Now, YOY figures are not
13:06 comparable for Axis Bank this quarter because the Axis Bank acquired Citigroup India's retail
13:12 operations in March 2023. On a sequential basis, however, the net profit is likely to rise by 4.5%.
13:19 Now, what Quota Constitutional Securities Equities is saying that the rise in net profit is likely due
13:25 to a favorable loan mix towards higher yielding loan segments as seen in the recent quarter,
13:30 especially after the bank acquired Citibank's consumer business. The net interest margin may
13:36 decline by 10 basis points on a quarter-on-quarter basis due to higher cost of deposits. The net
13:43 interest income is expected to remain stable sequentially and rise by 8.7% year-on-year.
13:49 Overall asset quality is likely to remain broadly stable, but there can be minor slippages on retail
13:56 loan front. So, provisions will be on the higher side on account of expenses related to
14:01 the acquisition deal worth Rs. 12,325 crore. This amount, however, will be spread across
14:09 a few quarters. So, the key focus for Quota Constitutional Equities this quarter will be
14:14 the integration with Citibank and the progress on net interest margin.
14:20 Now, what BNP Paribas is saying is that the net profit will be boosted because of the provisions
14:26 and capital buffering and the robust deposit franchise that the bank has got after Citibank's
14:33 acquisition is going to help bank to prop up its retail portfolio. The bank has also shown
14:41 willingness to grow its rural and small banking business, which is likely to boost the loan growth.
14:47 But on the bank's net interest margin, that is going to see the fastest impact compared to its
14:54 peers because in case there is a rate cut by the RBI going ahead. Similarly, on the rate of return
15:01 on earnings is going to be above 18% partly due to the low credit costs. One interesting bit is that
15:07 Axis Bank's short-term borrowings is at 16% of NDTL as of FY23, which is significantly higher
15:16 than other private lenders. So, the margins are vulnerable in case the RBI does not cut
15:24 interest rates on account of changes in inflation or India's external account dynamics.
15:30 All right. So, those are numbers to watch out for with regard to Axis Bank. We have to slip
15:34 into a very quick break. There's more stock-specific news to give you after all of that. So, do stay
15:46 tuned.
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19:12 waiting for both Adani Ports and Adani Electricity which is a subsidiary of Adani Energy Solutions.
19:19 So over a year, the company or the Credit Agency has also revised the outlook from negative
19:25 to stable and has added that it sees about minimal downside risk in the company citing
19:31 limited regulatory investigations into Adani Group. Other than that, on the outlook part
19:37 for both of the companies, for Adani Electricity it has added that it expects a ratio of about
19:42 operating cash flow to debt to improve about 10% in the next two years whereas for Adani
19:47 Ports it expects a ratio of adjusted net debt to EBITDA of about three to four times over
19:53 the next two years. And last on the pack is we should definitely keep a focus on the renewable
19:58 stocks post government s rooftop solar push. So over a year, the government has declared
20:05 to launch Pradhan Mantri Surya Yojana which is to install about one crore houses solar
20:12 energy and this would include focus on stocks like Tata Power, Worry Renewables, Adani Green,
20:18 SW Solar and others. So these are the stocks. Thanks so much Anushi for bringing us those
20:23 details. Now a lot of earnings have come in over the weekend and lot to take into account
20:27 of course and Varsha is joining in with a quick wrap of those numbers. Varsha, what
20:32 can you tell us? Good morning Alex. So let's start with Oberoi Realty where a company's
20:38 third profit fell by almost 50% and it missed analyst estimates. Now this is due to mainly
20:43 decline in revenue. Revenue fell 35% and the firm also saw expenses decline of almost 17.8%.
20:51 Then we have Cipla where third quarter profit increase which is in line with analyst estimates
20:57 that the profit rose almost 32% year on year and One India business grew almost 12% year
21:03 on year backed by strong performance across branded prescription. Also on the actor pharma
21:08 acquisition in South Africa, CCI approval has been received with integration expected
21:13 to be completed in Q4 FY24. Business in other international market including emerging market
21:18 fell 2%. Then we have Coforge where revenue was up 2% while EBIT was up 19%, margins were
21:26 up 14% versus 11%. If you see the key highlights, it signed three deal during the quarter. Also
21:32 a total book order to be executed in next 12 months is 974 million dollars. Then lastly
21:36 we have VST Industries where revenue was up 6%, but if you see the EBITDA was down almost
21:42 23% and net profit was down 32%. Thanks so much for bringing us those details.
21:48 And we have got a few more stocks to talk about. In fact, we have got Colgate India,
21:53 Garud Vysya Bank, Zensar Tech and Spandana Spurty, all of which have also reported their
21:58 third quarter numbers. Harsh is joining in to tell you more. Harsh, which of these stood
22:02 out? Well, in fact, most of these have stood out,
22:05 which is why we have picked them. Alex, you look at Colgate, look at the kind of numbers
22:09 they have posted in terms of margins. It has been a very strong performance overall. Revenue
22:13 up just about 8%, but it is a tough environment and in that revenue up 8% is definitely a
22:19 positive. Your margins though have gone up from that 28% mark to the 33.5% mark on a
22:25 year on year basis. Almost a 560 basis point increase in terms of margins. EBITDA has gone
22:31 up roughly 30% on that 8% based on revenue. So that's the positive and net profit therefore
22:37 is up roughly 36% year over year. So a big positive coming in there. In terms of, I'll
22:43 take Karur Vaishya next. Strong growth in terms of NII, margins have gotten better in
22:51 a very tough environment. 25 basis point increase in terms of the margins on a sequential basis.
22:58 So a couple of positives coming through for Karur Vaishya. Now, what most are projecting
23:03 is most analysts on the street are expecting the bank to take this and extrapolate this
23:08 further. Focus is largely on margins rather than loan growth is what the company commentary
23:13 has come through. Zensar a weak set, revenue down 3%, EBITDA down 9.5%. Margins therefore
23:20 have contracted by over a 100 basis points and you are seeing a 7% contraction in terms
23:25 of net profit as well. That one may be a bit of a concern. Spandana was a solid performance
23:30 overall. You are seeing a 70+% growth both on the revenue as well as on the path front
23:35 and therefore that one will be in focus as well.
23:37 All right. Thanks so much, Harsh, for bringing us those details. Remember, just a short while
23:42 from now, you are going to get the outcome of the Bank of Japan meeting where they are
23:47 likely to keep the policy rate unchanged. Remember, this is one of the only central
23:52 banks in the world that has continued to keep its policy rate at where it is and that negative
23:58 interest rate regime has continued 0.1% minus 0.1% is where the policy rate stands at right
24:05 now. And that brings us to the end of this particular edition of All You Need To Know.
24:09 Do stay tuned. We are lined up with India market open just next. So, do stay tuned.
24:16 This is NDTV Profit.
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24:38 (upbeat music)