- #Sensex, #Nifty trade lower
- #BajajFinance, #Zee and #KPITTech in focus
Find out what's happening in trade so far with Hersh Sayta on 'Market IQ'. #NDTVProfitLive
- #BajajFinance, #Zee and #KPITTech in focus
Find out what's happening in trade so far with Hersh Sayta on 'Market IQ'. #NDTVProfitLive
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TVTranscript
00:00 Good afternoon, welcome. You're watching NETV Profit. This is MarketIQ and I'm Harsh
00:12 Saita. You know, we're going to take a quick check of where markets are at. You're seeing
00:17 the nifty just below the 21 700 mark as we speak. It's it's a day of trade which is largely
00:25 soft. It's largely range bound in trade today. And what we are seeing from a sectoral standpoint
00:32 is banks again, largely flat in line with where the nifty 50 is, the nifty bank, therefore
00:39 largely flat as well. But you're seeing a bit of a downtick when nifty finance is concerned.
00:44 So the larger financials are what is dragging the pack. Within nifty finance, you will see
00:49 Bajaj Finance playing its role in dragging the nifty finance lower. But outside of that,
00:55 it's a day of gains for the nifty PSU Bank. Second consecutive solid day of gains. Nifty
01:01 media metals both gaining. Realty also up 1 percent thereabouts. Nifty IT up around
01:07 two thirds of a percent. So that's where we are at for those sectors where the nifty pharma
01:12 and nifty energy are concerned. Nifty energy saw a 5 percent uptick yesterday, but down.
01:17 So a bit of a cool off scene there. But nifty pharma, nifty FMCG largely flat around a tenth
01:23 to a fifth of a percent of declines shown by both those indices. Where broader markets
01:29 are concerned, especially where the midcap is concerned, you're seeing two fifths of
01:33 a percent of gains there. So you're seeing a little bit of consolidation happening as
01:38 well as a bit of gains coming in over there on the nifty midcap. Also, the nifty small
01:44 cap is up a solid 1 percent or four fifths of a percent of their bouts. So you're seeing
01:49 good, good traction on the broader markets. If we can quickly have a look at the advance
01:55 decline ratio to kind of determine where the larger market is seeing gains and losses.
02:01 And there you go. You are seeing a decent balance. The advances at 1200, the declines
02:06 at around 750. So that's where we're at. But I want to pull out one stock in particular,
02:12 Bajaj Finance. That one is languishing in trade today. And within the nifty pack, that's
02:17 the one which is really dragging, you know, top loser on the nifty as we speak. And that's
02:24 largely because of the mixed set of numbers that it declared for the December quarter.
02:29 Now, where the good is concerned, you saw a solid growth both in NII as well as profit
02:36 after tax. Profit after tax slightly lower than what analysts were pencilling in. But
02:41 the real growth came in on the AUM front, 35 percent growth on the AUM, which is quite
02:47 solid. You also saw good client additions, but some of those numbers were already disclosed
02:51 at the start of the month. And therefore, the impact of that would have been factored.
02:56 Now, what's really new this time around where the results have come? One is you've seen
03:00 loan losses come in or rise by almost 20 percent plus in this quarter on a sequential basis.
03:07 Now, when I compare Q1 with Q2 as well, we saw a good 20 to 25 percent rise at that point.
03:14 And we've seen a further rise on Q2 of another 20 to 25 percent. Now, while loan losses are
03:19 well within what the management has guided for, but this particular knock is what has
03:25 impacted profit. So, Bajaj Finance's numbers came in slightly muted and what the management
03:33 guided for, therefore, is that going forward as well, they do look to calibrate growth
03:40 in the B2C segment, both in rural as well as urban.
03:43 Now, we had Bajaj FinServ, which is the holding company of Bajaj Finance. They also disclosed
03:48 their numbers, if you can pull up that stock. And there you see, it's largely languishing
03:53 in line with where Bajaj Finance is because Bajaj FinServ holds 50 percent plus of Bajaj
03:57 Finance. But let's have a quick look at the numbers. The total income was up a healthy
04:02 33.5 odd percent. And you saw net profit also up roughly 20, 22 percent thereabouts at 4000
04:10 odd crores. So, a decent set overall where Bajaj FinServ was concerned as well.
04:16 So that's on the Bajaj Twins, which are languishing in trade today. Largely, the knock on FinServ,
04:21 as I did mention, is because of Bajaj Finance. But let's quickly move on. We've spoken
04:28 about the Bajaj Twins. Those are the key ones on the Nifty 50 that we had to address. Let's
04:33 quickly go on to another one, KPIG Tech. That's trading at over 3 percent on the back of a
04:40 positive set of Q3 numbers that have come through. We have Tushar who's standing by.
04:45 Tushar, what are the key highlights of the quarter for the company? KPIG trades also
04:50 at decently high valuations. So, give us some insight on both of those factors.
04:56 So good afternoon, Harsh. So, KPIT, again, sort of an outlier in the IT pack. Revenue
05:02 was up 4.82 percent quarter on quarter. Margins were up about 60 basis points to about 16.59.
05:09 Net profit is up nearly 11 percent at 156 crores. So, what we have to remember that
05:14 the company has in a way maintained its guidance at 37 percent for the full year ending March
05:20 31st, up from 30 to 32 percent. The EBITDA margin, as what the company declared, was
05:26 at 20.6 percent in Q3. That is up again 60 basis points sequentially and in line with
05:33 its expectations for the full year. So, essentially, the company is very bullish on its growth
05:37 prospects for a year in which most of the IT pack has declined. Other key highlights,
05:42 revenues are 4.3 percent in constant currency terms. EBITDA margin is 20.6 percent up. Deal
05:49 wins stood at $189 million, which is within a healthy pipeline. So, there is no pain there
05:55 as what KPIT is seeing. About 600 freshers were hired. Again, very contrary to what the
06:02 IT pack has done. There has been actually a net headcount decline at IT services companies.
06:08 Overall, the headcount has risen to about 12,700 employees. Net cash balance is at about
06:13 829 crore, which is up 310 crore. We mentioned this because the company has declared an interim
06:20 dividend of Rs. 2.1. In terms of valuation, the company is still trading it at about 75
06:26 to 80 times its price to earnings multiple. Still a pricey stock, though rest of the ER&D
06:34 companies where the space where KPIT functions are catching up specifically, Tata Technologies,
06:39 even its bumper listing that happened. Right. Thanks so much for that, Tushar. All
06:45 of that on KPIT, that one is buzzing on the back of numbers. But let's come back to Z
06:51 Sony. That's been a saga that's played out through January and the saga continues. The
06:57 NCLT has agreed to hear Madman Films' plea on the Z Matter in relation to the Sony merger.
07:02 To tell us more about this, what's happening here, we have Charu joining in. Charu.
07:07 Hi. So as we all know that the termination of Z Sony merger has been the talk of the
07:12 town and now Madman Films Ventures, which is a shareholder of Z, has approached the
07:17 NCLT to get the merger implemented and NCLT has agreed to hear the plea. And the next
07:23 date of hearing is set to be March 12. Now, what has happened in the court is that Sony
07:28 submitted before the bench that the approval from the NCLT that was received on August 23,
07:35 2023 is subject to certain conditions and can be waived off in writing or can be fulfilled
07:40 also. So basically it was not a hard and fast approval. It does not necessarily have to
07:46 be fulfilled. To this, NCLT said that it's the correct or adjudicating authority and
07:50 it has the right to hear the matter and it will be hearing the matter. Apart from this,
07:55 the contentions made by Madman Films Ventures, which is a shareholder of Z, were that since
08:00 the merger has already been approved, it is only right that it is implemented now. Apart
08:08 from this, Sony also said that Madman is nothing but a proxy on behalf of Z and all this. However,
08:14 NCLT refused to address all these contentions and has agreed to hear the plea on March 12,
08:20 2024.
08:21 Right. Thanks so much for that, Charu. We have the likes of Z buzzing on the back of
08:25 that as well. But I'm going to quickly move on. There's Orchid Pharma, which has hit 20%
08:31 upper circuit after its new antibiotic drug got authorization from the European Medicines
08:36 Agency. Now, Varsha is joining in with more on this. Varsha, talk to us about this approval
08:41 as well as the impact of it.
08:43 Hi, Harsh. So as you rightly said, the European Medicine Agency has recommended granting marketing
08:48 authorization for a product called XB-FEB. Now, this is used to treat adult urinary tract
08:54 infection and hospital acquired pneumonia. Now, overall effectiveness of this product
08:59 if you see 79% versus 58% of the other product in the market. Now, why this is important
09:04 for Orchid Pharma is now this novel antibiotic product is being made by Orchid Pharma and
09:10 they expect global commercialization in FY25. Also, company holds marketing rights in India
09:16 and worldwide royalty sales right. Now, if you see this, they expect royalty revenue
09:22 to directly flow into their bottom line and Alkera Therapeutics, which companies into
09:26 partnership with has completed phase three trials in US and EU and they are actually
09:31 awaiting approval, which is expected in current year 2024.
09:36 Right. Thanks so much for that, Varsha. I'm going to move on. We have BSC Limited, which
09:43 has been in focus all through last year. It's been a multi-bagger and we had with us Sundararaman
09:49 Ramamurthy, who is the MD and CEO at BSC and he talks about how the change in people's
09:55 outlook towards BSC and BSC's positioning in the Indian market is aiding BSC. He spoke
10:01 with Sajith Mangal of our team and listen in to a slice of that conversation.
10:07 Cash market has been there for a long period and there at some point of time BSC had a
10:13 significant market share. Somewhere around Jan 2023 when we joined, we found that the
10:19 market share has deteriorated a lot and come to a single digit. It was hovering between
10:24 5 to 6 percent at that point of time. And in respect of derivatives, which is a two
10:29 decades plus market in India, BSC had never had a steady volume or steady growth in the
10:35 derivatives. It was primarily led by LES, right, Liquidity
10:38 Enhancement Schemes. That is right. Correct. So, it was only Liquidity
10:41 Enhancement Scheme, which was sustaining it to some levels and once it was very clear
10:46 if the LES is withdrawn, the structure may not stand the test of time. So, that was the
10:52 situation in respect of these two. In respect of currency, the futures were doing well and
10:57 the options were not. Mutual funds we were doing good. So, this is what we inherited
11:02 in Jan 2023. If you look at it, we tried to make some product changes in the cash market.
11:10 There you cannot create any unique position for yourself, which we can talk about later
11:15 if you want. The most important area where we felt that we can position ourselves and
11:20 we can make a change, we thought was derivatives, equity derivatives. So, in equity derivatives
11:27 based on market feedback, we introduced or rather reintroduced two contracts with slightly
11:32 modified product specification and that looks to be working well. That is one reason why
11:37 the market has shown greater interest into BSE and it is working. The most important
11:44 point there is the way we are positioning ourselves is we are a complementary exchange
11:50 and we are not competing with anybody. Right. BSE Limited has done an outstanding run and
11:57 if we can have graphs, just the six-month graph shows me a 170% return from that sub-1000
12:04 level. Stock is currently sitting at 2200 and that's the six-month chart. Just have
12:09 a look at that. And when I'm looking at the one-year chart, it's even more staggering.
12:14 From a sub-500 level, the stock has gone all the way to 2180. So, it's been a stellar rally
12:21 for BSE. Keep your eye out on that one. A slew of brokerage notes also at the start
12:26 of this month came out and we've discussed this extensively. We had the management with
12:30 us. You can of course watch the full interview on ndtvprofit.com. But let me quickly switch
12:36 over. Bajaj Finance, again, I want to come back to that because we have a slice of what
12:42 the management suggested on the call yesterday. Listen in to a slice of that, especially with
12:48 regard to rural consumer lending as well as urban consumer lending, which is where the
12:53 problem seems to be, where slippages and where asset quality is concerned. Listen in.
12:57 Clearly, you see in rural B2C, numbers slowly go down, which is not how you see in urban
13:09 B2C. So, we'd rather be data-dependent than anything else. I think that's the only point
13:16 I would make at this point in time. It does not mean we are not to remain watchful. It
13:22 is an important point. But remain data-dependent. At this point in time, it looks transient,
13:30 is what I would say. Given what we saw in B2C, on the margin, we have cut even urban
13:38 B2C. We've actually cut quarterly close to 450 to 500 crores of business because at some
13:45 point India starts to be rural and urban as a mix. So, we have in urban B2C on a preventive
13:54 basis in the last two quarters more so, actually three quarters, have taken action already
14:04 and reflected in 3% lower growth on a year-on-year basis. If you look at it, March quarter was
14:10 32-33%, is down to 29%. Right. That was Rajiv Jain of Bajaj Finance
14:18 who's powered the company. In fact, there was also another clarification with regard
14:22 to the leadership on the call where Rajiv suggested that he will still be an integral
14:28 part of the leadership and they will be reporting to him, even though there's a bit of a rejig
14:32 with regard to all his number twos. But that stock is languishing 5% lower in trade today.
14:37 Just wanted to cap that off and therefore, we brought you that slice of that call. But
14:41 we'll slip into a very short break. More on the other side, we'll continue to focus on
14:45 certain stocks and keep giving you IQ. Stay tuned to MarketIQ.
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