Positive Start To The Week

Saying No To Yes Bank

Yes Bank was the top loser on NSE500 after dropping over 10% intraday! What’s the deal bro? 🔍

Firstly, Yes Bank’s Q3 results were super disappointing. Their Net Profit dropped 81% over the previous year led by higher provisioning for bad loans. FYI – provisions more than doubled year-on-year to Rs 8,448 cr, which is a NEGATIVE! The bad news doesn’t stop there. The Bombay High Court scrapped the RBI and Yes Bank’s decision to write off Rs 8,000 cr additional tier 1 (AT1) bonds. 👎

Here’s a quick recap to understand this dispute: Yes Bank was on the verge of collapse in 2020 amidst reports of financial irregularities. The RBI swooped in and appointed a new administrator to overhaul the bank. The daring rescue plan included writing off (fancy word for nullify) the Rs 8,000 cr AT1 bonds. This meant the bondholders which included top mutual funds like Nippon, Franklin Templeton, and Kotak, pension funds and large institutions would not receive a single penny, which sucks! 🚨

What next? Yes Bank will have to pay interest on these bonds but frankly, it doesn’t have that kinda money. Alternatively, they can appeal the Bombay HC’s order in the Supreme Court which may take a lot of time (as these things usually do). There is another solution. Yes Bank can issue fresh equity shares in exchange for the bonds but this would result in MASSIVE equity dilution. Woah! 🧐

Yes Bank is +35% in the past year. The fundraising from Carlyle and Advent Group plus the sale of their Rs 48,000 cr bad loan portfolio boosted hopes of a turnaround. But, weak Q3 results and the Bombay HC ruling has again cast doubts. Let’s see how this goes. 🙏

Budget Special

Hey guys, this week we’ll be taking a look at the top sectors to watch out for ahead of the Union Budget 2023 announcement on Feb 1. Today we’ll discuss the Infrastructure sector in more detail, why it is important, and top brokerage picks. 💪

The Indian infrastructure sector is made up of transportation, water and sanitation and urban infrastructure. They are essential for connecting people and driving business, making them the engines of growth and development. In economics, it is referred to as the “multiplier effect”. 📈

For example, Imagine a government investing in infrastructure projects, it creates jobs and income for people, who in turn have more money to spend on other things, generating more jobs and income for other people in the process. This chain reaction where the initial investment sets off a series of events, leading to a growth in economic activity is called the multiplier effect. 💯

The GOI has been pouring massive investments to upgrade and modernize the country’s infrastructure. Last year, they announced that they will spend a whopping Rs 7.5 lakh crore to build new roads, homes, dams, and other projects. This is positive for a whole host of sectors like cement, construction, metals and logistics. KNR construction, KEC International, Ambuja Cement, Tata Steel and L&T are some of the top picks by Axis Securities and Bank of America. 👍

Stocktwits Spotlight

Midcap IT stocks are lit! Anwesha Panda is bullish on Persistent Systems. Follow her now for awesome chart setups like this and add $PERSISTENT.NSE to your watchlist to track its performance. Here’s the link: https://bit.ly/3XSkBrx.

Earnings Highlights 

• UltraTech Cement: Revenue: Rs 15,521 cr; (+20% YoY) | Net Profit: Rs 1,058 cr; (-38% YoY)
• JSW Energy: Revenue: Rs 2,248 cr; (+19% YoY) | Net Profit: Rs 180 cr; (-45% YoY)
• Kotak Mahindra Bank: Net Interest Income: Rs 5,653 cr; (+30% YoY) | Net Profit: Rs 2,792 cr; (+31% YoY)
• Route Mobile: Revenue: Rs 986 cr; (+75% YoY) | Net Profit: Rs 82 cr; (+85% YoY)
• Canara Bank: Net Interest Income: Rs 8,600 cr; (+24% YoY) | Net Profit: Rs 2,882 cr; (+92% YoY)

Calendar 

Here are all the companies that will announce their Q3 results tomorrow: