July 11, 2022

Adani Wants 5G

Tale of the Tape

Happy Monday everyone, and welcome back to The Daily Rip! 🤗

Nifty and Sensex rebounded sharply after opening lower to close with minor cuts. On the other hand, Midcaps and Smallcaps outperformed, gaining ~1% each. Over 2 stocks rose for every 1 loser. ✌🏻

Except for IT (-3%), all other sectors ended in the green. Energy (+2.8%) pulled back as oil prices rose. State-owned banks and Metals saw healthy gains, up 2% each. 📈

TCS tanked 4.5% after disappointing Q1 results. More detail below. 😥

Adani’s foray into 5G leaves Bharti Airtel’s investors with a bloody nose. Know more below. 📶

Paytm bounced 3% on solid Q1 business update. Here’s ET with more. 💰

Metal stocks broke out in trade on reports that GOI may withdraw export duty on steel and steel products. Shyam Metallics rallied +7%. Tata Steel and Jindal Steel gained +3% each. 🔥

Ethos Ltd gained ~8% after renowned investor Mukul Agarwal picked up a 4% stake. 🚀

NTPC is reportedly in talks to raise Rs 5,000 cr for its green energy business. The stock closed flat. ♻️

Cryptos were quiet AF. Bitcoin and Ethereum barely moved. 😐

Here are the closing prints:

Nifty	16,216	-0.1%
Sensex	54,395	-0.2%
Bank Nifty	35,469	+1.0%

Not Looking Good

TCS tumbled 4.5% after a disappointing Q1. Revenue’s were in line with estimates led by a decent broad-based growth. But, that’s as far as the positives go. Operating margins hit a multi-year low of 23.1% as higher salaries offset gains from a weaker rupee. 😥

TCS’s orderbook was also flat over the previous year at $8.2 billion sparking fears of a demand slowdown. Also, TCS hired a paltry 14,136 new employees in Q1 vs average 23,000 employees in recent quarters. This is negative as companies tend to hire more employees during the growth phase. Most experts believe that salaries may continue to remain high which coupled with slowing demand may dent future profitability. 📊

Here’s its report card, for those who care:

Revenue: $6.8 billion; +1.3% QoQ (Est: $6.8 billion)
Net Profit: Rs 9,478 cr; -5% QoQ (Est: Rs 9,958 cr)

TCS is down 19% YTD. 📉

Adani vs Bharti vs Jio

Assume you’re a big industrialist with billions of $$$ in cash. What do you do? Probably buy some 5G spectrum. No we’re not talking about Mukesh Ambani or Sunil Bharti Mittal here. Asia’s richest man, Gautam Adani, announced that Adani Group will participate in the upcoming 5G auction!!! 🤯

But, there’s a catch. Unlike Motabhai’s Jio which absolutely disrupted India’s telecom industry, Adani has some different plans. The Adani Group does not plan to offer mass wireless telecom services. In simple words, they won’t issue sim cards and give free high speed mobile internet to college kids. 🤨

What’s the deal bro? Adani will use 5G services to set up a private network to digitize its various businesses from airports to energy and data centers. This is bad news for big boys Jio and Bharti Airtel. First of all, experts fear Adani may be aggressive in bidding which may shoot up costs for the top 2 players. The latest move may also increase competition in the highly lucrative Enterprise (B2B) segment. Also, the possibility of Adani getting into mass telecommunication sometime in the future cannot be ruled out, resulting in a head on collision with Jio and Airtel. Yikes!! 👀

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