January 12, 2022

Heading For New Highs?

Tale of the Tape

Good evening, everyone. Happy Hump Day! 😊

Markets extended their unbeaten streak to day four. Hopes of a kick-ass budget and positive global cues cheered investors. Midcaps (+1.1%) and Smallcaps (+0.8%) also saw healthy gains. 💪

Except for IT and Pharma, down 0.2% each, all the other sectors ended higher. Real Estate (+2.1%) stocks continued their outperformance. Here’s what’s fuelling the rally. Energy (+1.9%) and Auto (+1.4%) stocks also climbed higher. 📈

Vodafone Idea (+8%) was amongst the gainers after yesterday’s ugly cut. Meanwhile, Tata Teleservices was locked in a 5% lower circuit as it too chose to convert its interest liabilities into equity. More details below. 😎

It was a big day for IT earnings. Infosys (+1%) absolutely killed it in Q3 and upped its FY22 revenue guidance. Wipro’s results were steady. Read more below. 📊 PS, TCS will report Q3 results later today. Here’s the Street’s expectation.

L&T (+0.5%) hit a new all-time high. The stock is up 16% in the past 3 months vs a mere 1% gain for the Nifty50 index. 🏆

DLF’s (+3%) newly launched project in West Delhi clocked over Rs 1,500 cr in sales. 💰

Gati rallied +7% after renowned investor Mukul Agarwal bought 70 lakh shares of the company. 👍

NMDC rallied ~4%. JP Morgan sees a 54% upside in the stock from the current price. Here’s ET with more. 💸

Sequent Scientific (+12%) will acquire the remaining 30% stake in Evance Group for Rs 44.5 cr. ✅

Cryptos were back amongst the gains. Bitcoin rose 2%. Ethereum led the bounceback with a 4% jump. Solana, Cardano, and Doge rose between 4%-8%. 🤑

Here are the closing prints:

Nifty	18,212	+0.9%
Sensex	61,150	+0.9%
Bank Nifty	38,727	+0.7%

Earnings Roundup

Infosys (+1%) reported blockbuster earnings after-markets. Strong growth across the board and record deal wins drove the outperformance. Operating margins remained steady despite higher employee costs. Here are the key stats: 📊

Revenue: $4.3 billion; +6% QoQ (Est: $4.1 billion)
Net Profit: Rs 5,809 cr; +7% QoQ (Est: Rs 5,701 cr)
Order book: $2.5 billion; +19% QoQ

Salil Parekh, CEO and MD at Infosys said:

Our strong performance and market share gains are a testament to the enormous confidence our clients have in us to help them in their digital transformation. We expect the healthy technology spend to continue with large enterprises progressing on their digital transformations.

Enthused by the strong performance, Infosys raised FY22 revenue growth guidance to 19.5%-20% from 16.5-17.5%. Margins are expected to remain in the range of 22%-24%. 💪

Infosys is +37% in the past year.

Wipro’s (-0.4%) Q3 results were slightly below expectations. Weakness in Manufacturing and higher costs impacted overall performance. Going forward (as usual), new client wins and strong demand are expected to drive growth. It expects 2%-4% QoQ revenue growth in Q4. Here’s its report card: 📈

Revenue: Rs 20,314 cr; +30% YoY (vs Est: Rs 20,460 cr)
EBITDA: Rs 3435 cr; +3% YoY (vs Est: Rs 3,560 cr)
EBITDA Margin: 17.6% (vs Est: 17.4%)
Net Profit: Rs 2,969 cr; +0.1% YoY (vs Est: Rs 3,010 cr)

Thierry Delaporte, CEO & MD at Wipro, said:

Wipro has delivered a fifth consecutive quarter of strong performance, both on revenues, and margins. Order bookings have been strong too, and we have added seven new customers in the more than $100 Mn revenue league, in the last 12 months.

Wipro is +51% in the past year. 💸

Vi 2.0?

Vodafone Idea (+8%) rebounded sharply after yesterday’s hammering. Is it just a one-off or is there more to it? 🤔

Analysts believe Vi’s decision to convert its outstanding interest dues into equity significantly improves the odds of its long-term survival. With a leaner balance sheet and the Government on its side, Vodafone Idea may be able to protect (and improve) its market share. Also, Vodafone Idea clarified that the current promoters will continue to remain in charge of the business aka Govt won’t mess with its $h!t. ✌️

The latest move will provide a huge relief to the company, but it may not be enough, say experts. Going forward, Vodafone Idea will need to significantly ramp up its Average Revenue Per User (ARPUs) in order to turn profitable once again. Failure to do so and its inability to rope in a strategic investor may cause serious heartburn to investors. Let’s see how this goes. 💯

Burj Khalifa of IPOs

Life Insurance Corporation of India (LIC) may file its papers for India’s largest-ever IPO by the end of the month. Reports indicate the state-owned insurer will be valued at a massive Rs 15 lakh crore. This will instantly make it the second-largest listed company in India behind only Reliance Industries. 🥈

Details about the IPO are scarce at the moment but reports indicate that the Government may sell up to a 10% stake in the company. That translates to a whopping Rs 1.5 lakh crore at current valuations. FYI – That’s 85% of the Government’s disinvestment target of Rs 1.75 lakh crore. No wonder it’s in a rush to list LIC before the end of the year. 💰

2022, like last year, is expected to be big for IPOs. 30 companies and startups have already received the SEBI approval and a further 30 are in the process. Together, they’re expected to raise a record +1 lakh crore from markets. Save your cash guys! 🤑