Stock Market Investment Shot, 29th July 2022

Reddy Laboratories posted 108% higher net profits for Q1FY23 at Rs1,188 crore. This surge in profits came on the back of strong growth in its India business. For the June 2022 quarter, total revenues were also 6% higher at Rs5,215 crore. The India business of Reddy Labs grew 26% driven by divestment of non-core brands. It has decided to focus largely on deepening its presence in oncology and dermatology. It had recently acquired Cidmus, the cardiovascular brand from Novartis. America grew 2% and Europe
grew 4%.

Bajaj Finserv stock was up 10% on Thursday after the board approved and announced a 1:1 bonus issue and 1:5 stock split. Effectively, the par value of Rs5 will be subdivided into five shares of par value 1 each. The overall impact of the stock split and the bonus would be to reduce the market price by approximately one-tenth and to enhance the number of shares held by 10 times. The stock has been an underperformer in the last quarter, but surged sharply in July. The reduced market price will enhance liquidity in the stock.

Adani Capital, the NBFC arm of the Adani group, plans to raise Rs1,500 crore via an IPO which is likely byThe sale of shares will target total valuation of $2 billion for the company. The company would basically look at the gains of listing via higher reach. Adani Capital is positioned as a credit company leveraging technology to acquire customers more effectively. It uses the D2C distribution model and 90% of its business is self-generated. Adani Capital has 154 branches and a total loan book of Rs3,000

One97 Communications, the parent of Paytm, will prioritize payments and distribution of lending products and target operating profitability by the second quarter of FY23. The core Paytm business model is based on acquiring customers and merchants for payments services and upselling them financial services. It also gives credit via its Buy Now Pay Later (BNPL) scheme, which allows credit to consumers at point of sale. Paytm lending partners disbursed 15.2 million loans via the Paytm platform in FY2022, 478% higher yoy.

RBI has confirmed that acquiring banks can continue to store Card-on-File (CoF) data until 31st January 2023, giving some leeway on tokenization deadline. However, the RBI has also stipulated that merchant or Payment Aggregator can save the CoF data only for 4 days. Such data must be used only for settlement of transactions and purged thereafter. The last time in June, the deadline had been extended till Sep-30. This extension allows more time to guest checkouts as merchants can implement cashbacks
and rewards.

Vedanta reported a 4.6% rise in net profits at Rs4,421 crore in the June 2022 quarter on the back of higher sales volume and improved commodity prices. However, profit growth was subdued due to 16% higher depreciation and amortisation charge on depletion of oil and gas assets. Total consolidated revenues for the June 2022 quarter was up 35% at Rs39,355 crore. Its gross debt in Q1FY23 rose Rs8,031 crore to a level of Rs61,140 crore. Vedanta is into oil, zinc, lead, silver, copper, iron ore, steel, aluminium and power.

In one of the biggest deals in renewable energy space, there has been an agreement by an Indian company with the government of Egypt. The MOU was signed by Egypt and an Indian company to build a green hydrogen factory, to be located in the Suez Canal Economic Zone. Green hydrogen is made by the normal electrolysis process but the power used to separate oxygen and hydrogen is renewable. ReNew Power India Ltd will build the factory to produce 20,000 tonnes of green hydrogen with investment of $8 billion.

Nestle India confirmed that it was seeing early signs of softening of commodity prices, especially in edible oil and packaging materials. For the June 2022 quarter, Nestle India saw net profits slip by 4.3% to Rs.515 crore as expenses surged 21%. Most of the FMCG companies have been contending with a sharp surge in input costs in the last few quarters. Nestle India reported revenues of Rs4,037 crore, up 16.1% yoy on pricing power. It is not just Nestle India, but even Hindustan Unilever reported reduced inflation pressure.