Yesterday’s Market Performance

Nifty: 15856.00 I 32.00 (0.20%)
FII Sell Net: 163.31 CR
DAX: 15,669.29 I 154.75 (1.00%)

Sensex: 52975.80 I 138.59 (0.26%)
DII Buy Net: 2187.80 CR
FTSE: 7,027.58 I 59.28 (0.85%)

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Howdy Toasters!

In today’s issue, we discuss;

• Bharti Airtel announces price hike for its postpaid subscribers; a bigger picture for the company’s revenue and EBITDA.
• Jubilant FoodWorks released their Q1FY22 numbers- company’s Q1 revenue grew by ~131%.
• Top movers and shakers of the market, other important financial news, and an educative concept to help you keep learning. Read along!

Magma Fincorp: 151.90 | 7.20 (4.98%)

• The share jumped 5% after Adar Poonawalla-led Rising Sun Holdings acquired a controlling stake in the company

Mahindra Holidays: 324.30 | 14.15  (4.56%)

• The stock gained over 4 percent after the company said at a meeting to be held on July 29 a proposal for issuance of bonus equity shares, subject to requisite approvals, would also be considered.

Note: Above are not owned by the authors of the newsletter and are neither recommendations to buy the stocks; not our style at FinLearn.

Bharti Airtel raises postpaid tariffs (finally); sign of changing times? Or does Jio continue pulling a Jio?😶

• Bharti IN has recalibrated its postpaid plan offerings for both, retail & corporate subscribers, taking small (?) but huge EBITDA accretive steps; there have been significant changes on the corporate side, with miniscule changes on the retail side of things (an increase of data limits for some plans)

• For corporate plans, the entry-level tariff has been revised upwards to INR 299, implying an INR 50 & INR 100 increase from the earlier offerings; this transpires to a tariff hike of 20% and 50% respectively (massive); plans come into force from the next billing cycle

• In financial terms, this is massive; a price hike of INR 50 & INR 100 directly contributes to a 2% and 3% increase to the India Wireless revenue and EBITDA numbers respectively in FY21 (as a consolidated level, the impact is 1% and 2% respectively)

• At the end of Q4FY21, the total postpaid subscriber count for the company stood at 16.6 Mn (5.2% of overall mobile base), evenly split between retail & corporate and currently contributing ~13% to the revenues of the India wireless business

• Considering the relatively low Average Revenue Per Customer (ARPU) for the corporate segment, the new tariffs in this category can now account for ~40% of the overall revenue

Damn!! How did this happen? And should I be worried about my bill? :PP 😅

• Historically speaking, and we highlighted this in one of our earlier issues as well, but Bharti IN has categorically stated that they would be price takers, and not makers (for all those Eco 101 folks out there), so this is a pleasant surprise

• So a couple of positives to extrapolate from this (by us that is) –

  • Stickiness is high in the Corporate customer base, so inelasticity of demand will continue, and risk of churn would be on the lower side (in % terms)

  • Jio is strong in the PrePaid space, and has often tried to find a way to break Bharti IN hold, with deep discounts and greater plans, but to little success; a price hike puts that to bed (for now?)

  • VIL is the third player in the telecom market in India (just about right? Jk jk) and a price hike is what they’ve been promising investors looking to pump money; this gives Vi a pathway to that

  • A price hike is overdue, like 4 quarters overdue :P; very likely this is going to be positively appreciated by the investor community (i.e. track the stock)

• Next in line is the proposed tariff hike in the prepaid segment, (also has a much larger impact on revenue & EBITDA) although the company didn’t indicate when / if they were planning one in the near term (why would they, with Jio lurking)

Jubilant Foodworks (Dominoes & more) dropped their numbers; what did we make of them and what can you extrapolate for other listed players like Zomato (feels weird right?) 🧐

What else caught our eye? 👀

Retail chicken prices cross INR 200 per kg (might as well try mock meat now?) 

• With a jump of about 35% in the last 2 months, retail poultry prices are expected to stay rooted due to the doubling of poultry feed prices and a reduction in production amid falling demand
• The average cost of branded poultry has increased to INR 78,000 per tonne from INR 37,000 per tonne last year, due to the increased cost of soybean (that makes up 30% of the feed) and maize (which has increased from INR 14 per kg to INR 20 per kg)
• Losses due to high production costs and uncertainty over demand have forced several poultry shops to shut operations (~30% of small farmers in the unorganized space have been rendered unemployed)
• A possible solution is to allow duty-free import of soybean to neutralize the demand vs supply mismatch and restart operations

No hike in fuel prices for the 6th day in a row (why thank you very much) 

• Holding steady for the longest time in weeks, fuel prices maintained their 100+ level on the back of global development in fuel production and rising US inventories
• Mumbai has the highest price across metros (for this too lol) with petrol at INR 107 and Diesel at INR 97

Arbitrage