Stocks to Focus: Adani Enterprise, Sun Pharma, APSEZ, Sanofi, PNB, RailTel

Stocks to Watch Today, Friday, August 02, 2024: Benchmark domestic indices, the BSE Sensex and the NSE Nifty50, are expected to open the week's final trading session on a downbeat note due to poor global cues. At 07:00 AM, GIFT Nifty futures were quoted around 24,800 levels, indicating a more than 200-point drop at the opening bell on the Nifty50 index. In Asia, Japan's Nikkei traded down 5.08 percent, the Shanghai Composite was down 0.22 percent, while Hong Kong's Hang Seng was up 0.23 percent. South Korea's Kospi was down 2.79 percent, and the Asia Dow traded down 3.23 percent.

Adani Enterprises: The company announced its Q1FY25 results, revealing a two-fold surge in consolidated net profit to Rs 1,454 crore, up 116% YoY. Revenue rose 13% to Rs 25,472 crore, while EBITDA increased by 47% to Rs 3,705 crore, with margins at 14.6%. The growth was primarily driven by strong performances in the airports and mining businesses, as well as expansion in the new energy sector. ANIL witnessed a 3.6x jump in EBITDA to Rs 1,642 crore, with new energy contributing 38% of the total EBITDA. The airports business saw a 33% rise in pre-tax earnings to Rs 682 crore, while coal trading revenue fell by 34% to Rs 15,042 crore. Additionally, the company announced the demerger of its food FMCG business, which will integrate with Adani Wilmar, and approved a strategic investment in Adani Commodities LLP.

ITC: The company fell short of Street estimates, with a modest 0.30% increase in standalone net profit in the June quarter, amounting to Rs 4,917.45 crore. Revenue experienced a 7.2% growth, reaching Rs 18,219.74 crore, while expenses rose by 10.8% to Rs 12,366.27 crore. FMCG revenue (excluding cigarettes) grew by 6.3% to Rs 5,491.03 crore, cigarette revenue increased by 6% to Rs 7,918.10 crore, and agriculture business revenue saw a significant rise of 22.2% to Rs 6,973.32 crore. On the other hand, the paperboards, paper, and packaging business reported a 6.8% decline in revenue. The company expressed confidence, citing moderating inflation, improving agricultural terms of trade, expectations of normal monsoons, and the government’s emphasis on public infrastructure and the rural sector, which are expected to boost consumption demand.

Dabur India: The company reported consolidated revenue of Rs 3,349.11 crore for the June quarter, which is a 7% increase year-over-year. The net profit was Rs 500.12 crore, up 7.8% year-over-year. The margins improved to 19.6%. There was a domestic volume growth of 5.2% and the international business achieved an 18.4% growth in constant currency terms. The Egypt segment grew nearly 64%, Nigeria 181%, Sub-Saharan Africa 21.4%, and the MENA region 13%. Dabur reported market share gains across 95% of its portfolio.

Sun Pharmaceutical Industries: The company achieved a 40.2% year-over-year net profit growth in Q1FY25, amounting to Rs 2,835.62 crore. Revenue also saw a 6% increase, reaching Rs 12,652.7 crore. US formulation sales experienced a 1% decline, amounting to $466 million, while India formulation sales grew by 16.4% to Rs 4,144.5 crore. Sales in emerging markets increased by 8.8% to $284 million. External sales of API decreased by 8.3% to Rs 494.6 crore. EBITDA rose by 8.3% to Rs 3,607 crore, leading to an improved margin of 28.5%. The company reported R&D investments of Rs 794 crore, with a specialty R&D pipeline that includes 6 new active substances. Additionally, the company obtained USFDA approval for its alopecia drug Leqselvi (Deuruxolitinib), although it is facing legal challenges.

Adani Ports and Special Economic Zone: APSEZ reported a 47.2% year-over-year increase in net profit for Q1FY25, reaching Rs 3,113 crore. Revenue also saw growth, increasing by 11.34% to Rs 6,956.32 crore. EBITDA went up by 13.1% to Rs 4,245 crore, and margins rose to 61%. The company handled 109 MMT of cargo volume, with container volumes up by 18% and liquids and gas up by 11%. Domestic ports EBITDA grew to 72%. The net debt to TTM EBITDA ratio stands at 2.1x. For FY25, the company forecasts revenue of Rs 29,000-31,000 crore, EBITDA of Rs 17,000-18,000 crore, cargo volumes of 460-480 MMT, and planned capital expenditure of Rs 10,500-11,500 crore.

Johnson Controls Hitachi Air Conditioning India: The company experienced a 75.6% increase in revenue, with a profit of Rs 36.15 crore. In the same period of the previous fiscal year, the company had reported a loss of Rs 41.02 crore. Revenue grew by 29.04% compared to the previous quarter, while operating income decreased by 37.51% quarter-on-quarter.

Godrej Agrovet: The company's net profit for Q1FY25 increased by 22.9% year over year to Rs 131.6 crore. However, revenue declined by 6.4% to Rs 2,350.8 crore. On the positive side, EBITDA increased by 17.2% to Rs 226.2 crore, with a margin of 9.6%. Additionally, the board approved the acquisition of a 49% stake in Godrej Tyson Foods Ltd, making it a wholly-owned subsidiary. This acquisition includes an initial investment of up to Rs 110 crore for a new feed plant in Maharashtra.

Yes Bank: The RBI has requested investors who are seeking a controlling stake in Yes Bank to reconsider their demands, which include acquiring and retaining a majority stake. Investors are looking to hold a 51% stake indefinitely. The RBI has proposed a gradual reduction in stake, with voting rights capped at 26%. Potential bidders for the stake include First Abu Dhabi Bank and Japan’s Mizuho Group. The deal process may be prolonged. The SBI has put its 24% stake up for sale, while other banks collectively own 7.4% and private equity investors Carlyle and Advent own 14%.

Zee Entertainment Enterprises: The company raised Rs 2,000 crore to adapt to changing broadcast and streaming dynamics amid the Reliance-Disney JV. The company's board approved fundraising in June 2024 post-Sony merger cancellation. FCCBs of $239 million issued, proceeds to be used for digital assets and OTT platforms. The company's liquidity improved, and employee expenses were reduced, and management focussed on morale and optimal structure. Ad revenue growth was subdued, but its losses declined due to its emphasis on a balanced cost structure and revenue growth.

MTNL: After the company announced that it does not have sufficient funds to pay the interest on the 7.78% MTNL Bond Serie VII-C due on August 10, it is likely that the government's sovereign guarantee will need to be utilized. The Department of Telecommunications (DoT) has approved a payment of Rs 64 crore, while MTNL has requested Rs 1,151.65 crore for interest payment. The government has allocated Rs 3,668.97 crore for the principal payment.

Sanofi India: The company has obtained CDSCO approval for Beyfortus to prevent RSV and LRTD in infants. Developed with AstraZeneca, the drug has the potential to address significant unmet medical needs in India.

Punjab National Bank: The bank increased its MCLR by 0.05% across different tenors, setting the one-year MCLR at 8.90%, effective from 1st August, 2024. Additionally, the Bank of India also hiked its MCLR by 5 basis points for one-year tenor loans.

Ashok Leyland: The company reported an 8% decline in July 2024 sales to 13,928 units. Domestic sales were down by 9%, while medium and heavy commercial vehicle sales decreased by 14%, and light commercial vehicle sales remained unchanged.

RailTel: The company announced a 25% increase in net profit to Rs 49 crore in Q1FY25, up from Rs 39 crore the previous year. Revenue from operations also rose by 19.4% to Rs 558 crore, while EBITDA increased by 14.8% to Rs 103.4 crore, with a margin of 18.5%.

IDBI Bank: Fairfax Financial Holdings, Emirates NBD, and Kotak Mahindra Bank have been granted a 'fit & proper' certificate from the RBI for the acquisition of IDBI Bank. However, Kotak Mahindra Bank is unlikely to pursue the acquisition. The government will request financial bids before the end of FY25. Fairfax may consider merging with IDBI Bank, and Emirates NBD may become a strategic investor.

Hero MotoCorp: The company started its operations in the Philippines by partnering with Terrafirma Motors Corporation. Together, they established an assembly unit with an annual capacity of 150,000 units. The assembly unit produces the Xpulse 200 4V, Hunk 160R 4V, and Xoom 110 scooter, which has contributed to the expansion of the Indian company's global presence.

Kalyan Jewellers India: The company recorded a 23.6% year-over-year increase in Q1 net profit, amounting to Rs 177.8 crore. Revenue from operations surged by 26.5% to Rs 5,535.5 crore, and EBITDA increased by 16.5% to Rs 376.1 crore, with an EBITDA margin of 6.8%.