Bank of Maharashtra Q2 profit up 13% to Rs 130 cr on higher interest income
Bank of Maharashtra on Monday reported 13.44 per cent growth in standalone net profit at Rs 130 crore for September quarter, helped by lower provisioning and higher interest income. The bank logged a profit after tax of Rs 115 crore in the second quarter of 2019-20.
On a consolidated basis, its profit stood at Rs 130.44 crore, compared to Rs 115.15 crore in the year-ago period.
The profit increase was mainly due to the net interest income (NII), which grew by around 5 per cent. There was a considerable reduction in operating expenses by around Rs 75 crore. Provisions have also come down as asset quality improved, Managing Director and CEO A S Rajeev told reporters.
He said the bank had an interesting reversal of Rs 300 crore which is kept as provisions in the second quarter for COVID-19 and for some of the accounts that were not classified as NPA.
Rajeev said had the bank not kept aside the interest reversal amount as provisions, NII growth would have been 14-15 per cent in the second quarter.
Net interest margin stood at 2.62 per cent for the quarter as against 2.77 per cent in the year-ago quarter.
Rajeev said so far the bank has restructured 800 small accounts, including MSMEs, worth Rs 40 crore, under the Reserve Bank of India’s one-time restructuring scheme for accounts affected by COVID-19 related stress. It has restructured 25 MSME accounts worth Rs 4-5 crore.
For the corporate loans, the lender received two applications, of which one is not eligible.
The other application of amount (bank’s exposure) Rs 200 crore is pending. It is a consortium account and a decision will be taken at the consortium level, he said.
Gross NPA reduced to 8.81 per cent from 16.86 per cent. Net NPA declined to 3.30 per cent as against 5.48 per cent.
Total provisions stood at Rs 676 crore as against Rs 637 crore. Provision for NPAs was Rs 43 crore as against Rs 404 crore.
Provision Coverage ratio improved to 87.15 per cent as compared to 82.71 per cent.
The bank holds cumulative COVID-19 provision including interest of Rs 925 crore (out of which Rs 500 crore provision was made in the second quarter).
In pursuance of the Supreme court order, the bank has not declared those accounts as NPA which were not declared NPA till August 31, 2020. As a matter of prudence, the lender made an additional provision of Rs 120 crore.
Capital adequacy stood at 13.18 per cent with common equity tier 1 ratio of 10.31 per cent as at end-September.
The bank’s total deposits grew 12.15 per cent year-on-year to Rs 1,58,626 crore. Gross advances rose 13.13 per cent to Rs 1,03,408 crore.
Bharti Airtel hits seven-month low in a strong market; down 20% in 1 month
Shares of Bharti Airtel were under pressure on Monday, hitting a seven-month low of Rs 394 on the BSE, in an otherwise weak market. The stock of the telecom services provider slipped 2 per cent in the intra-day trade and was trading at its lowest level since March 19, 2020.
In the past month, the stock has slipped 20 per cent, as compared to 3.8 per cent rise in the S&P BSE Sensex. Notably, Bharti Airtel’s share price has declined sharply, by around 30 per cent, since the Adjusted Gross Revenue (AGR) verdict on September 1, 2020.
Analyst at Dolat Capital believe this is on account of news flow of fund-raise by VIL, Jio postpaid plus plan launch, and most importantly lack good news on tariff increase. This is in contrast to expectations of the immediate announcement of price hike post the AGR case closure.
“Our calculation implies that from an average revenue per user (ARPU) growth, the market is now implying a de-growth. However, we still maintain that 15-20 per cent ARPU CAGR is likely and essential for the survival of the industry,” the brokerage firm said in the stock update.
Contrary to stock reaction, the business trajectory of Bharti Airtel remains healthy and positive especially in 4G smartphone subscriber additions viz. at par / ahead of Jio. MNP (mobile number portability) request from postpaid subscribers for the transition to Jio postpaid is limited. “We appreciate Bharti’s in-market execution and the clarity on thoughts and strategy to drive the market share and growth. A few months’ delays in tariff increase don’t alter the strong long-term industry potentials and consecutive positive bias of ours,” it said in its report and reiterated ‘BUY’ on Bharti with a target price of Rs 605 per share.
“Bharti Airtel’s stock price has corrected due to investor concerns on mobile tariff hike delay. We continue to maintain that the current pricing is not sustainable and therefore expect a price hike in the medium to long term. We expect Bharti Airtel to benefit in the medium to long term, given its strong execution and premium position in the sector. We maintain our positive stance on Bharti Airtel with an OUTPERFORM rating and a target price of Rs700,” said a recent report by Credit Suisse.
Meanwhile, the board of directors of Bharti Airtel will meet on October 27, 2020, to consider the audited financial results for the second quarter ended September 30, 2020 (Q2FY21).
Rallis India Limited’s PAT falls 2% to Rs 83 cr in Sept quarter
Rallis India, a subsidiary of Tata Chemicals, on Monday, posted a 2 per cent decline in consolidated profit after tax (after exceptional items) to Rs 83 crore during the September 2020 quarter.
The company’s profit after tax stood at Rs 85 crore during the corresponding period of 2019-20, Rallis India said in a statement.
The firm’s consolidated revenue fell 3 per cent during July-September 2020 to Rs 725 crore, compared with Rs 749 crore in the year-ago period.
Rallis IndiaManaging Director and CEO Sanjiv Lal said, “Gradual return to normalcy and a good monsoon season has led to a favourable momentum for agricultural activities.”
He added that even though we are now in the unlock phase, the company continues to prioritise the safety and well-being of its employees. “We have registered an 8 per cent revenue growth during the second quarter for domestic crop care business and a 29 per cent revenue growth in seeds.”
Product-specific challenges in the international business resulted in a contraction of 29 per cent year-on-year, he said.
“Strong operating discipline resulted in improved cash from operating activities. Despite COVID-19 challenges, our CAPEX (capital expenditure) programme and focus on new product introduction remain on course,” he added.
In the first half of the financial year, the company witnessed a 21 per cent growth in profit after tax (after exceptional items)at Rs 175 crore, compared with Rs 145 crore.
Rallis India recorded a 1 per cent growth in its consolidated revenues during the first half of 2020-21 to Rs 1,388 crore, compared with Rs 1,372 crore.
How to Profit When the Stock Market Goes Down
Watching the stock market fall in real-time can induce fear and panic and that’s exactly what happened in late February and March of 2020, as trading responded dramatically to the coronavirus pandemic. Let me tell you one secret, the stock market is like just about anything else in life. It goes in cycles, with ups and downs. There’s an old saying that trees don’t grow straight to heaven. This also applies to stocks.
Beginners in the stock market tend to think about investing as buying stocks and making money when those stocks go up. That’s the most common way to profit from stocks, but it’s not the only way. Believe it or not, it’s also possible to make money when stocks go down.
If you’re looking to take advantage of falling stock prices, here’s what you can do to potentially earn a profit.
Short-selling, perhaps the most common way of profiting when a market declines. It is a simple concept like an investor borrows a stock, sells the stock, and then buys the stock back to return it to the lender.
Suppose the shares of company ABCD currently trading at Rs 500 and you think the price will go down. You borrow 100 shares of the company from a broker and you sell it in the open market and gets Rs 50,000. If the price of the company goes down to Rs 450 for one share, you buy 100 shares for 45,000 and you then replace the shares that you borrow from the broker. In this trade, you make a profit of Rs. 50 for every share, as you sell at a higher price and buy at a lower price. The total profit is from this is Rs. 5000. And keep one thing in mind if the price goes up, you will suffer a loss.
Britannia trades nearly 1% higher ahead of Q2 nos
Shares of Britannia Industries, the fast-moving consumer goods (FMCG) major, gained nearly a per cent on the BSE on Monday ahead of its September quarter (Q2FY21) results due later in the day. According to a recent Business Standard report, the FMCG sector is upbeat on the second-quarter numbers, pointing towards the demand revival driven by the relaxation in restrictions as well as consumers adjusting to the new normal.
Analysts at Edelweiss Securities estimate Britannia’s revenue, earnings before interest, taxes, depreciation, and amortisation (EBITDA) and net profit (PAT) to jump 15 per cent, 31.8 per and 23.8 per cent year-on-year (YoY), respectively. It expects the company to post volume growth of nearly 12 per cent YoY on a base of 3 per cent (Q1FY21 saw 21.5 per cent volume growth on a base of 3 per cent). “On the margin front, the raw material trend is benign and that combined with operating leverage and cost efficiencies will aid EBITDA margin; hence, we estimate 240bps YoY margin expansion,” the brokerage said in a result preview note.
Those at Nirmal Bang Securities say that Britannia is expected to deliver healthy growth in Q2FY1 like Q1FY21, though at a tapered rate. “We expect the company’s sales growth to come in at 18.0% YoY, led by base business volume growth of 13.0% versus a lower base of 3.0%. The EBITDA margin is likely to expand by 383bps YoY to 20.1% on account of declining prices of key raw materials and cost efficiencies. Adj. PAT is estimated to grow by 35.7% YoY, lower than EBITDA growth of 46.0% YoY on account of higher tax rate compared to the base quarter,” the brokerage added.
At 10:34 AM, Britannia was trading 0.87 per cent higher at Rs 3,780 on the BSE. In comparison, the S&P BSE Sensex was trading 1.2 per cent higher at 40,464 levels.
DHFL hits 10% upper circuit on report of Adani, Piramal submitting bids
Shares of Dewan Housing Finance Corporation (DHFL) were locked in 10 per cent upper circuit at Rs 13.87 on the BSE on Monday on reports that Adani and Piramal were among four bids for the troubled non-banking finance company (NBFC).
Till 09:59 am, a combined 780,000 shares had changed hands and there were pending buy orders for 2.3 million shares on the NSE and BSE.
“The Administrator of the Company has received four (4) resolution plans with respect to the options given to the Prospective Resolution Applicants (PRAs) as per the Invitation for Expression of Interest for Submission of Resolution Plan for DHFL dated 28th January 2020,” the company said in an exchange filing on Sunday, October 18, 2020.
According to the Business Standard report, four entities — Adani Group, Piramal Group, US-based asset management company Oaktree Capital Management, and SC Lowy — have submitted bids for DHFL. While Oaktree submitted a bid for the entire company, others bid for select portfolios.
While Adani Group has submitted bids only for the construction finance portfolio and slum rehabilitation loans, Piramal Group has bid for the retail portfolio, and SC Lowy for the construction finance business, putting it in competition with Adani Group.
In the past year, the stock has slipped 35 per cent, as compared to 3 per cent rise in the S&P BSE Sensex. In the past three years, the company’s share price has eroded 98 per cent, against 25 per cent rally in the benchmark index.
Jet Airways extends gain after CoC nod for revival plan; up 47% in 8 days
Shares of Jet Airways (India) hit the upper circuit of 5 per cent at Rs 42.15 on the BSE on Monday, after the committee of creditors (CoC) of the company approved the resolution plan of the consortium of Kalrock Capital–Murari Lal Jalan.
The stock was trading higher for the eight straight days and has rallied 47 per cent as compared to 2 per cent decline in the S&P BSE Sensex during this period. Till 11:19 am, a combined around 24,000 shares changed hands and there were pending buy orders for 2.28 million shares on the BSE and NSE.
The Kalrock Capital-Murari Lal Jalan consortium has proposed to re-launch Jet Airways as a full-service carrier, with an initial investment of Rs 1,000 crore. It has initiated discussions with lessors and international airlines for contracts and partnerships. READ ABOUT IT HERE
“The e-voting concluded today, i.e October 17,2020 and the resolution plan submitted by Murari Lal Jalan and Florian Fritsch has been duly approved by the CoC under section 30 (4) of the code as the successful resolution plan”, the resolution professional said in an exchange notification.
The resolution professional of Jet Airways will now have to get the plan approved by the National Company Law Tribunal (NCLT). Upon receiving the NCLT approval, they would need to apply to civil aviation ministry and corporate affairs ministry for their approvals, respectively.
According to a Business Standard report, claims made by financial creditors, operational creditors, and employees have ballooned to over Rs 40,000 crore, out of which claims to the tune of Rs 15,525 crore has been admitted by the resolution professional. Financial creditors such as State Bank of India, Yes Bank, and others have claimed Rs 11,344 crore but only Rs 7,459. 80 crore has been admitted. It is expected that lenders will take a fairly large haircut on their exposure.
Cosmo Films surges 9% as board to consider share buyback plan
What Is OFS (Offer For Sale)?
A private company launches an initial public offering (IPO) for additional funding. The company sells shares to outside investors so that it can gain access to funds for various purposes. This includes the growth and expansion of the company.
However, the company’s financial problems do not end with an IPO. Sometimes, a company may need additional capital to meet its goals. That’s the time such companies can opt to go for an Offer for Sale (OFS).
An Offer for Sale is a simpler method wherein promoters in public companies can sell their shares and reduce their holdings in a transparent manner through the bidding platform for the Exchange. The OFS segment was earlier allowed only for the Promoters/Promoters’ Group Entities of listed Companies, to act as ‘Sellers’ to dilute/offload their holding to achieve minimum public shareholding of 25%. Now, however, the segment has been extended to non-promoters of eligible companies holding at least 10% of the share capital of the company.
HOW OFS WORKS?
In an OFS, promoters of a company dilute their stake by selling their shares on an exchange platform. Anyone including retail investors, companies, Foreign Institutional Investors (FIIs) and Qualified Institutional Buyers (QIBs) can bid on these shares.
HOW TO BID IN AN OFS?
In an OFS, a buyer has to provide a bid in order to acquire the shares. The company sets a ‘floor price.’ Buyers cannot bid at a price below the floor price. Once the bids are placed, shares are allocated to the different buyers. There is no minimum limit to participate in an OFS. A buyer can bid for even a single share in the OFS process.
DIFFERENCE BETWEEN OFS AND FPO
OFS and follow-on public offering (FPO) are two ways a company can raise capital by selling additional shares. However, there are differences between these two methods.
An FPO is generally a lengthy process. The company is required to issue a new prospectus, which is then submitted to the Securities and Exchange Board of India (SEBI). Following that, the company has to hire managers to take care of the sale. The sale of shares can last anywhere between three and five days.
On the other hand, an OFS is much simpler. There is no requirement for the company to file any formal paperwork. In addition, the sale of shares typically takes only a single trading day.
OPEC+ fears second Covid-19 wave could lead to oil surplus in 2021
OPEC and its allies fear a prolonged second wave of the Covid-19 pandemic and a jump in Libyan output could push the oil market into surplus next year, according to a confidential document seen by Reuters, a gloomier outlook than just a month ago.
A panel of officials from OPEC+ producers, called the Joint Technical Committee, considered this worst-case scenario during a virtual monthly meeting on Thursday. In September, the panel had not seen a surplus under any scenarios it considered.
Such a surplus could threaten plans by OPEC, Russia and allies, known as OPEC+, to taper record output cuts made this year by adding 2 million bpd of oil to the market in 2021.
The Organization of the Petroleum Exporting Countries has not indicated any plan so far to scrap that supply boost.
“The earlier signs of economic recovery in some parts of the world are overshadowed by fragile conditions and growing scepticism about the pace of the recovery,” according to the document used in the panel’s monthly meeting in October.
“In particular, a resurgence of Covid-19 cases across the world and prospects for partial lockdowns in the coming winter months could compound the risks to economic and oil demand recovery,” it said.
The document presented scenarios that included a base case that still showed a deficit in 2021 of 1.9 million barrels per day (bpd) on average, albeit less than the deficit of 2.7 million bpd forecast in the previous month’s base case.
But under its worst-case scenario, the document said the market could flip into a surplus of 200,000 bpd in 2021.
This year, OPEC+ agreed to make record output cuts to support plunging prices as oil demand collapsed. It cut 9.7 million bpd from May, tapering that to 7.7 million bpd from August. From January, cuts are due to ease to 5.7 million bpd.
However, since the JTC met in September, Libyan output has climbed and a global rise in coronavirus cases has led to renewed restrictions on movement in some countries, weakening demand for crude.
OPEC-member Libya is exempt from any production cuts.
Under the document’s worst-case scenario, Libyan production would rise in 2021 to as much as 1.1 million bpd, a source familiar with the details of the meeting said. Under its base case, Libyan output would be 600,000 bpd in 2021.
Under the worst-case scenario, OECD commercial oil inventories – a benchmark OPEC+ uses to gauge the market – would remain high in 2021 compared to the five-year average rather than starting to fall below that mark.
This scenario also sees a stronger and more prolonged second wave of Covid-19 in the fourth quarter of 2020 and first quarter of 2021 in Europe, the United States and India leading to a lower economic recovery, weakening oil demand.
Under the document’s base case, OECD oil stocks are expected to stand slightly above the five-year average in the first quarter of 2021, before falling below that level for the rest of the year.
A ministerial OPEC+ panel, known as the Joint Ministerial Monitoring Committee (JMMC), will consider the outlook when it meets on Monday. The JMMC can make a policy recommendation.