Dr Reddy's June Quarter Performance, Rolex Rings' Public Issue, and Buzzing Stocks Today

Thu, 29 Jul Pre-Open

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Indian share markets ended on a negative note yesterday.

Benchmark indices witnessed sharp selling pressure as investors turned wary ahead of the verdict of the US Federal Reserve's policy meeting.

Besides, the ripples of a regulatory crackdown by the Chinese government was also felt by the markets.

At the closing bell, the BSE Sensex stood lower by 135 points (down 0.3%).

Meanwhile, the NSE Nifty closed lower by 37 points (down 0.2%).

Bharti Airtel and Tata Steel were among the top gainers.

Dr Reddy's Lab and Kotak Mahindra Bank, on the other hand, were among the top losers.

The BSE Mid Cap index ended on a flat note, while the BSE Small Cap index ended down by 0.5%.

Sectoral indices ended on a negative note with stocks in the banking sector, auto sector and healthcare sector witnessing most of the selling pressure.

Telecom and metal stocks, on the other hand, witnessed buying interest.

Gold prices for the latest contract on MCX were trading on a flat note today at Rs 47,574 per 10 grams at the time of closing stock market hours yesterday.

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Top Stocks in Focus Today

Among the buzzing stocks today will be Dr Reddy's Lab.

Pharma major Dr Reddy's Lab reported a 36% drop in its net profit for the first quarter ended June 30.

The Hyderabad-based company also disclosed that it has received a subpoena from the US Securities and Exchange Commission (SEC) for the production of documents pertaining to certain CIS geographies.

Owing to these two developments, investors were disappointed. The stock crashed 14% in last two days.

The lackluster performance by Dr Reddy's follows a tepid performance from Alembic Pharma.

Both the companies' performance sent other pharma shares into the red as investors had priced in a better performance for the sector.

During the quarter, Dr Reddy's Lab reported a net profit of Rs 3.8 bn compared with Rs 5.9 bn in the year ago period.

The bottomline also represented a 32% decline over Rs 5.6 bn in the January-March period.

Topline came in at Rs 49.5 bn over Rs 44.3 bn in the same period of the previous year.

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The company had to take a setback of Rs 1.9 bn vis-a-vis a settlement order in favour of Australia's Hatchtech Pty.

The company was also hit by an anonymous complaint which alleged that healthcare professionals in Ukraine and potentially in other countries were provided with improper payments by or on behalf of the company in violation of the US anti-corruption laws.

Adani group stocks will also be in focus today.

The markets regulator has written to the custodians of foreign portfolio investors (FPIs) owning shares in six Adani group firms, seeking information on their ultimate beneficial owners (UBO).

These funds include Albula Investment Fund, Cresta Fund, and APMS Investment Fund.

A bulk of India investments of these firms is concentrated in Adani Ports and SEZ, Adani Enterprises, Adani Green Energy, Adani Power, Adani Transmission, and Adani Total Gas.

As per sources, the regulator is looking into the holding structure of these foreign-based funds to ensure there is compliance.

The custodians are directed to provide information in fifteen days.

Last week, the government had informed Parliament that the markets regulator and the Directorate of Revenue Intelligence are investigating a few Adani group firms.

Ever since the probe news came out, Adani group stocks are under pressure.

Note that the accounts of the three foreign funds were frozen in 2016 over the issuance of global depository receipts by certain listed firms. It was later clarified that no freeze was ordered for their holding in other firms.

The confusion arose because the National Securities Depository (NSDL) website continued to show the three FPIs on the list of 'frozen accounts', along with 9,444 other entities, as on 31 May.

Zomato Shares Fall for Second Consecutive Session

Food delivery unicorn Zomato's shares fell nearly 6% on the exchanges yesterday for the second consecutive day after registering solid gains during the earlier two consecutive sessions.

The online food delivery giant's shares had surged as much as 13% on the BSE on Monday, 26 July 2021, hitting an intraday high of Rs 143 per share after a bumper listing on 23 July.

The scrip was also up over 3% in early trade on Tuesday, 27 July but fell later due to overall market weakness.

Zomato made a stellar debut on bourses on July 23, listing at Rs 116 on the NSE, garnering a 52.6% premium over its issue price of Rs 76 per share. On BSE, the unicorn got listed at Rs 115, a premium of 51.3%.

The Rs 93.8 bn initial public offering (IPO) of Zomato witnessed strong interest from investors as the issue was subscribed 38.3 times. The offer received bids for 27.5 bn equity shares against the IPO size of 719 m equity shares.

Analysts believe the company has certain positivities such as an asset-light scalable business model, expanded target market post the pandemic, first-mover advantage in the food delivery business, etc.

But its operations in an almost duopoly market may attract regulatory actions, which would be negative for the company.

Zomato is the first Indian unicorn to go public and will be followed by other startups including PayTm, Policy Bazaar, among others.

Rolex Rings IPO Subscribed 3.84 Times on Day 1

The IPO of Rolex Rings, one of the top five forging companies in India, is subscribed 3.84 times on 28 July 2021, the first day of bidding.

This is the 30th public issue in 2021.

Investors have put in bids for 21.8 m equity shares against offer size of 5.7 m equity shares, the subscription data available on the exchanges showed.

Retail investors seem bullish as their reserved portion was subscribed 7.1 times and that of non-institutional investors was at 1.34 times.

Qualified institutional buyers have put in bids for 3,312 equity shares against their reserved portion of 1.6 m equity shares.

The automotive components manufacturer is planning to mop up Rs 7.3 bn through its public issue that will close on 30 July 2021.

The offer comprises a fresh issue of Rs 560 m and an offer for sale (OFS) of Rs 6.8 bn by Rivendell PE LLC.

The company has already garnered Rs 2.2 bn from anchor investors at higher end of the price band of Rs 880-900 per equity share.

How the IPO sails through remains to be seen. Meanwhile, stay tuned for more updates from this space.

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