Fry-Day

Wrong Number

The Telecom Regulatory Authority of India (TRAI) subscriber data for April is out and the numbers don’t look good. All three players, Jio, Bharti Airtel, and Vodafone Idea, reported a decline in active subscribers after a series of recent price hikes. 📱

The total industry-wide active customers stood at 101.4 cr, down 75 lakh over the previous month. This is the highest industry-wide drop in active subscribers since May 2021! 📊

Vodafone Idea was the biggest casualty, losing ~37 lakh customers in April. This is in total contrast to the previous month (March) where they added 2 lakh new customers. Vi’s first-ever active subscriber gain in +2 years along with narrowing losses and fundraising plans sparked hopes of a revival. Goes to show how brutally competitive the telecom business is. ⚔️

Speaking of competition, Reliance Jio continued to cement its lead at the top. India’s largest telecom operator reported a marginal drop (-1 lakh) in active users. On the other hand, Bharti Airtel lost a massive 31 lakh customers, snapping its five-month gaining streak. Consequently, Jio’s market share improved to 37.4% while Bharti’s remained flat at 34.8%. Going forward, 5G spectrum auction, price hikes, and continued market share gains would be key rerating triggers for both the stocks. ✅

Everyone Loves ITC!

ITC is on fire. The stock is up +20% so far this year vs a 4% loss for the Nifty FMCG Index. FYI – ITC has given higher returns than Reliance Industries, Titan, Maruti Suzuki, and ICICI Bank in 2022! 🤯 

What’s the deal bro? ITC’s core cigarettes business (85% of profits) is expected to come back big time after two years of Covid-led disruption and stable taxes. PS – the Government left taxes on tobacco products unchanged for a second consecutive year. ITC usually passes on the tax hike to consumers by increasing prices. 📊

There is no evidence to prove that stable pricing results in higher cigarette demand. But, worth noting that cigarette prices have risen the least compared to other consumer products, which is a big W, said experts. 🥇

Other ITC businesses are also firing on all cylinders. Higher wheat exports, due to the Russia-Ukraine crisis, may boost earnings for the Agri business. Rising travel demand from reopening and summer holidays is a big positive for ITC’s hotel’s business. 🧳

While business is back to pre-Covid levels, valuations are yet to catch up. At just 21x P/E, ITC trades at an insane 27% discount to its Jan 2019 valuations. Finally, add in some of that sweet dividend gains and you have the perfect package. FYI – Motilal Oswal has a target price of Rs 100 p/sh, +27% from current levels! 🤑

Movers and Shakers 

Here’s a look at this week’s top Nifty 500 movers. VIP Industries took the pole position after gaining +11%. 🥇Rajesh Exports (+8%) snapped its four-week losing streak. RBL Bank tanked 28% amidst speculation over the private lender’s future. Mastek (-24%) fell the most in a single week since the start of the Covid-19 pandemic. 📉 Check out their charts below: