Curious Case of Vodafone-Idea

Tale of the Tape

Happy Wednesday everyone. We’re halfway through the week. 😇

Key indices extended their record run. ✌ Nifty and Sensex rose ~1% each. Broader markets were the exact opposite. Midcaps and Smallcaps both were down 1%.

Banks (+2%) and NBFCs (+2.6%) were the key sources of strength. 💪 Real Estate (-1.7%) and FMCG (-1%) cooled off.

SBI jumped +4% on strong earnings. Bharti Airtel (-1%) remained quiet despite stable results. Read more below. 📊

PNB Housing was locked in a 5% upper circuit. The Competition Commission of India (CCI) approved Carlyle’s acquisition of a stake in the company. ✅

Coforge fell 5% after 45 lakh shares (7.5% equity) changed hands in multiple block deals. 👎

Trident hit a 5% upper circuit after foraying into detergent manufacturing. 🧼

The IPO train continues to chug along. Four new IPOs opened today and got fully subscribed on day 1. Here’s more details. 💰

Cryptos crept lower. Bitcoin fell 1%. Ethereum was flat. XRP and Doge were down ~2%. ADA gained 3%

Here are the closing prints:

Nifty	16,259	+0.8%
Sensex	54,370	+1.0%
Bank Nifty	36,028	+2.3%

Earnings Roundup

Big boy SBI (+3%) hit an all-time high on strong results. 📊 Lower provisioning and higher other income led to a massive beat on the bottomline. Home loans (23% of advances) rose 11% over the previous year. Here’s more details:

Net Interest Income: Rs 27,638 cr (vs Est: Rs 28,804 cr)
PAT: Rs 6,504 cr (vs Est: Rs 5,398 cr)
Gross NPA: 5.32% vs 4.98% (QoQ)
Net NPA: 1.77% vs 1.5% (QoQ)

Here’s what the lender had to say:
The Bank has proactively made an additional provision towards the possible impact of COVID-19 pandemic… The said provision is in addition to the provisions held as per RBI guidelines… On the basis of above-mentioned assessment, Bank’s management is not expecting any significant impact on Bank’s liquidity or profitability.

SBI is up 63% YTD. 🤑

Bharti Airtel (-1%) hit a 6 month high before cooling off. 📈 Strong growth in domestic mobile and Africa business boosted the operating performance. But, both subscriber and ARPU (+1% QoQ) growth dried up due to lockdown. 😕 This, coupled with higher taxes, hurt the company’s bottomline. Here are key stats:

Revenue: Rs 26,854 cr (vs Est: Rs 26,247 cr)
Net Profit: Rs 284 cr (vs Est: Rs 448 cr)

Gopal Vittal, MD and CEO, India & South Asia at Bharti Airtel said:

We added ~ 5.1 Mn 4G customers during the quarter and our enterprise business in India continued to deliver strongly. Our Homes business grew by just about 13 percent over last year and added 285K customers in the quarter, the highest ever. We continue to invest in the best of emerging technologies, including networks and digital capabilities.

Bharti Airtel is up 12% YTD. 💸

S.O.S Time

Vodafone-Idea continues to sink. The stock is down ~30% in the last 2 days. 🔻 Concerns over its ability to remain in business are getting increasingly real. And that is causing heartburn to a lot of people. 😓

Aditya Birla Group chairman Kumar Mangalam Birla even offered to give up his stake in the company. He said:

It is with a sense of duty towards 27 crores (270 million) Indians connected by VIL, I am more than willing to hand over my stake in the company to any entity-public sector/government/domestic financial entity or any other that the government may consider worthy of keeping the company as a going concern.

Given its current situation, nationalizing the company seems like the only viable option. But it’s easier said than done. The Government has been trying to offload its own stake in various state-run companies. 😬 In that context, taking over another company (even for free) seems like a long shot. Let’s see how this one goes.

Coming Soon

Nuvoco Vistas IPO will open on August 9th. The price band is fixed at Rs 560-570 a share. The company plans to raise Rs 5,000 cr from the markets. 💸

Nuvoco Vistas is the largest cement manufacturer in East India. 🚚 It offers a diversified range of products such as cement, ready-mix concrete (RMX), adhesives, putty, and more. Its plants are strategically located in close proximity to key markets. Nuvoco Vistas boasts a wide distribution network of ~16,000 dealers pan India. In 2020, it inked a $770 million deal to buy the cement assets of Emami Group. 🏭

Financial Snapshot

FY21 Revenue: Rs 7523 cr; +10% YoY
FY21 Net Loss: Rs 26 cr

Cement stocks have been on a tear. The government’s focus on infrastructure plus strong real estate demand are key catalysts. Moreover, it’s the first cement IPO in over a decade. Investor interest is sure to be high. 😎