Axis Bank SUUTI Stake Sale, Tata Motors Q4 Performance, and Buzzing Stocks Today

Thu, 20 May Pre-Open | Monish Vora, TM Team

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Indian share markets witnessed volatile trading activity throughout the day yesterday and ended lower.

Benchmark indices swung between gains and losses amid muted investor sentiment across global markets.

At the closing bell yesterday, the BSE Sensex stood lower by 291 points (down 0.6%).

Meanwhile, the NSE Nifty closed lower by 78 points (down 0.5%).

Coal India and Cipla were among the top gainers.

Tata Motors and HDFC, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended down by 0.5% and 0.4%, respectively.

Sectoral indices ended on a mixed note with stocks in the telecom sector, metal sector and auto sector witnessing most of the selling pressure.

Realty stocks, on the other hand, witnessed buying interest.

Gold prices for the latest contract on MCX were trading at Rs 48,141 per 10 grams at the time of closing stock market hours yesterday.

Speaking of gold, in his latest video for Vijay Bhambwani talks about why gold and silver prices are rising and why you should be bullish on them.

After a short correction, gold and silver prices have been trending upwards recently. As per Vijay, this is just the start of a long rally.

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Top Stocks in Focus Today

Ujjivan Small Finance Bank will be among the top buzzing stocks today.

Ujjivan Small Finance Bank's asset quality worsened in the March quarter.

Ujjivan Small Finance Bank (SFB) reported an 86% jump in its net profit to Rs 1.4 billion for the last quarter of the fiscal year ended in March 2021.

For the full year 2020-21, net profit fell by 98% to Rs 80 million from Rs 3.5 billion in FY20.

Income during the year, however, increased by 3% to Rs 31.2 billion from Rs 30.3 billion. Net interest income also grew by 6% to Rs 17.3 billion in FY21 from Rs 16.3 billion in FY20.

Total income during Q4FY21 was down by 9% at Rs 7.4 billion as against Rs 8.1 billion in the year-ago quarter.

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Net interest income (NII) also fell by 21% to Rs 3.7 billion as against Rs 4.7 billion in the year-ago period.

Note that disbursement in the fourth quarter grew by 31% to Rs 42.7 billion as against Rs 32.5 billion during the same quarter of last year.

Ujjivan SFB added 3.2 lakh customers during the quarter, reflecting strong new retail customer acquisition.

Adani Green Energy share price will also be in focus as the company said that it is acquiring SB Energy India from Softbank of Japan and India's Bharti Group to add 4,954 megawatts (MW) to its renewable power portfolio. The deal is the biggest acquisition in India's renewable power sector.

The transaction values SB Energy India at an enterprise valuation of approximately US$ 3.5 bn.

The target portfolio consists of large-scale utility assets with 84% solar capacity (4,180 MW), 9% wind-solar hybrid capacity (450 MW) and 7% wind capacity (324 MW).

The portfolio comprises 1,400 MW of operational solar power capacity and a further 3,554 MW that is under construction. All projects have a 25-year power purchase agreement with sovereign rated counterparties such as Solar Energy Corporation of India (SECI), NTPC and NHPC.

The operating assets forming part of the portfolio are primarily solar park-based projects. With this deal, AGEL will achieve a total renewable capacity of 24.3 gigawatts (GW) and an operating renewable capacity of 4.9 GW.

Government Selling its Stake in Axis Bank via SUUTI

The government is selling up to 58 m equity shares held in Axis Bank through the Specified Undertaking of the Unit Trust of India (SUUTI) at a floor price of Rs 680, potentially fetching it close to Rs 40 bn.

The offer for sale (OFS) opened yesterday for non-retail investors and will be opened today May for retail investors with an option to additionally sell 22 m equity shares, Axis Bank said in a regulatory filing on Tuesday.

While the SUUTI is committed to selling up to 36 m equity shares representing 1.21% of the paid up equity share capital, it has the option of selling another 22 m shares representing 0.74% of paid up equity share capital in case of oversubscription.

Note that last year, the government had sold nearly 10 m shares of Axis Bank worth around Rs 6 bn last year held through SUUTI.

SUUTI held a 3.45% stake in the bank as of 31 March, according to exchange filings. After the latest sale, its shareholding in the lender is likely to come down to 1.5%.

Apart from Axis Bank, SUUTI also has minority stakes in several listed and unlisted companies, with most of its funds locked in ITC (7.93%) and construction engineering company L&T (1.8%).

SUUTI had earlier sold off most of its stake in L&T.

The government has set up a disinvestment target of Rs 1.75 trillion for FY22.

The government's ambitious disinvestment schedule for FY22 may get delayed because of the second wave of the Covid-19 pandemic, disinvestment secretary Tuhin Kanta Pandey said at Mint India Investment Summit 2021 last month.

Tata Motors Posts US$ 1 bn Loss as Jaguar Costs Hit Bottom Line

Tata Motors reported a consolidated net loss of Rs 76.1 bn (US$ 1 bn) for the quarter ended March due to a large write off related to subsidiary Jaguar Land Rover (JLR). In the year-ago quarter, the company had reported a consolidated net loss of Rs 98.9 bn due to a similar write off of assets in JLR.

The company wrote down assets worth Rs 96.1 bn related to cancelled models at Jaguar Land Rover. Further, it bore restructuring costs worth Rs 53.9 bn related to the subsidiary. In summation, the total exceptional loss related to JLR stood at nearly US$ 2 bn in the March quarter.

However, the company's consolidated net loss was limited by the reversal of Rs 11.8 bn in impairments made by the company at the end of the previous financial year related to its Indian passenger car business.

On the top line front, the company's performance was rather upbeat as consolidated revenues in the quarter ended March jumped 42% year-on-year (YoY) to Rs 886 bn, reflecting the favourable base effect. In the year-ago quarter, the company's sales in India and at JLR suffered due to national lockdown at home, in Europe, the US and China.

The India business reported a 106% YoY jump in revenues to Rs 200.5 bn in the March quarter, whereas sales at JLR surged 20.5% to 6.5 bn pound sterling.

On the operating front, the company showed strength as Jaguar Land Rover reported a 9.1% YoY expansion in operating margin to 15.3%. The luxury carmaker was able to generate free cash in excess of 700 m pound sterling, in line with its revamped strategy.

The India business also reported a strong operating performance as the operating margin expanded 13.7% YoY to 7.8% despite the rise in input costs.

"The auto industry was deeply impacted by Covid-19 in FY21 but witnessed a steady growth in vehicle demand as the nationwide lockdown eased and pent-up demand came to fore supported by a steady recovery of the economy," said Guenter Butschek, Chief Executive Officer and Managing Director at Tata Motors.

How the company performs in the next quarter remains to be seen. Meanwhile, stay tuned for more updates from this space.

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