Stock Market Investment Shot, 27 July 2022

Larsen & Toubro reported 45% higher net profits for the June 2022 quarter at Rs1,702 crore. This was on the back of strong execution in the infrastructure segment as well as positive growth in the IT portfolio.
Total sales revenues for the quarter were up 22% at Rs35,853 crore. International revenues at Rs13,235 crore accounted for 37%. During the quarter, L&T secured fresh orders worth Rs41,805 crore , including
Rs17,842 crore of international orders. Consolidated order book stood at Rs3.63 trillion as of June 2022.

The lockdown in Vedanta’s copper smelter plant at Thoothukudi, Tamil Nadu since May 2018 caused the Indian economy total loss of Rs14,749 crore. With little prospects of the plant reopening any time soon,
Vedanta has put the plant on the block for sale. Vedanta had incurred a losses of Rs4,077 crore due to the shutdown. In the process, India turned from being a net copper exporter to a net importer of copper. The Thoothukudi plant was catering to 40% of the domestic demand for copper, which has been on the rise.

Tata Power posted 90% growth in net profits at Rs883.54 crore for the June 2022 quarter. The profit got a boost from a sharp 42% growth in total sales revenues at Rs14,639 crore. For FY23, Tata Power planned Rs14,000 crore of capex, which includes Rs10,000 crore investment in renewables. Tata Power
in Q1FY23 has done well across generation, transmission, distribution and renewables. Total renewable capacity of Tata Power is at 5,524 MW, with installed capacity of 3,634 MW and 1,890 MW under implementation.

The positive vibes are coming from the auto component industry, which is expected to see 9-11% of its revenues coming from EV (Electric Vehicle) parts by 2027. This is based on CRISIL estimates. The demand
for renewable parts is expected to grow simultaneously with demand for parts of the traditional internal combustion (IC) engine vehicles. Revenues from EV components is likely to grow at 76% CAGR between 2021 and 2027. Out of the EV components basket, 60% will come from batteries and 15% from drivetrains.

Asian Paints reported 80.4% growth in net profits to Rs1,036 crore with business showing growth in value and volumes. Total revenues from operations grew 55% to Rs8,579 crore for Q1FY23. Amidst a sharp spike in input costs, Asian Paints saw its expenses for the quarter grow by 48.9% yoy. Growth came essentially from the domestic decorative business. The big takeaway was the volume growth, the highest in last six quarters, both at the domestic and international level. Asian Paints made a strong push in luxury offerings.

Zydus Lifesciences secured final approval from the US FDA to market its generic version of bisoprolol fumarate tablets, which is generally used to treat high blood pressure. The US FDA has granted Zydus the approval for tablets of strengths 5 mg and 10 mg. The drug will be manufactured in the SEZ, Ahmedabad and distributed by Viona Pharma. Generally, the Bisoprolol Fumarate Tablets are used to treat high blood pressure (hypertension) either standalone or in combination with other high blood
pressure medications.

The IMF has slashed growth forecast for India by 80 bps to 7.4% for FY23. The reasons for this downgrade include sub-par external conditions and rapid policy tightening by central banks across the world. IMF ruled out any global recession and has maintained global GDP growth estimates at 3.2%. IMF has warned that further lockdowns and deepening real estate crisis in China can be a major dampener to global growth in the coming quarters. IMF also expects the global trade growth to slow amidst supply chain constraints.

UBS Securities upgraded Reliance Industries to “BUY” with 1-year price target in the range of Rs2,900 to Rs3,150. The stock currently trades at Rs2,438 so it leaves a 29% upside to the stock. UBS expects RIL to invest up to $36 billion in new energy in this decade and believes that the true value of the new energy franchise is not yet reflected in the price. The new energy initiative alone is expected to create value of $35 billion to the RIL market cap. UBS also expects the retail and telecom businesses of RIL to grow faster.