Yesterday’s Market Performance

Nifty: 16258.80 I 128.00 (0.79%)
FII Buy Net: 2828.57 CR
DAX: 15,692.13 I 137.05 (0.88%)

Sensex: 54369.77 I 546.41 (1.02%)
DII Sell Net: 411.36 CR
FTSE: 7,123.86 I 18.14 (0.26%)

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Howdy Toasters!

In today’s issue, we discuss;

• RBI Monetary Policy Highlight: retains the previously projected GDP growth of 9.5%, keeping the repo rate stable.
• Bharti Airtel dropped its Q1 results- reported consolidated revenue growth of 4.3% QoQ. (What’s in the store for us?  – Keep Reading!)
• Top movers and shakers of the market, other important financial news, and an educative concept to help you keep learning. Read along!

IIFL Wealth: 1,589.60 | 205.80 (14.87%)

• The script surged over 14% after the company’s net profit rose 42% to Rs 116.85 crore in the June 2021 quarter from Rs 82.27 crore during the year-ago period

Vodafone Idea: 6.00 | 1.40 (18.92%)

• The share tumbled over 18% after Vodafone Chief Executive Officer Nick Read said the telecom major will not be infusing fresh equity into debt-ridden Vodafone Idea

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

Monetary Policy Committee (MPC) met this week and (as expected) maintained the status quo (nice) 

• The MPC unanimously kept rates unchanged and reiterated its accommodative stance, both on rates & maintaining liquidity; the committee indicated that growth is still subpar and needs consistent firm traction and continued policy support is vital for return of double-digit growth (something the IMF alluded to as well in their update recently)

• The MPC amped up their communication on liquidity management (with current situations in play for ~12 months?) amid evolving market risks; although the market has been spooked by comments made by the Fed, and the RBI (in tandem?), the MPC reinforced that a focus towards liquidity should not be mistaken for tightening but rather normalization of liquidity operations (okay?)

• It’s fair to say that surplus liquidity has not particularly been distributed (as the RBI would’ve envisaged), with banks & other financial institutions refraining from taking on riskier bets (and sectors), and thus raises the chances of rerouting the surplus liquidity available into other asset classes

Okay. Growth numbers? Inflation risks? What’s the final takeaway?

• The governor, Shaktikanta Das maintained the previously projected GDP growth of 9.5% and indicated an expectation that inflation (at levels which were previously identified as thresholds) to be transitory in nature (think: fuel prices, sure!!), mostly driven by supply-side bottlenecks (revised upwards to 5.7% for FY22)
• Interestingly, there was one dissent on the continuation of the current stance, in the MPC, showing a potential (?) split within the committee that may play out in the near term
• Its wait & watch mode- as per our reading at least, with the RBI waiting for some more data points and current initiatives to play out before taking on concrete (rate hike?) steps to tackle inflation & liquidity mis-match present in the system
• Also of note, not particularly directly linked to the MPC, where the governor’s statements lauding the government’s discontinuation of retrospective tax (think: Vodafone & Cairn India cases)

Bharti Airtel delivered a steady quarter; what did we make of the results and what’s in store for the future (especially with Vi looking like it’s done?)

This one’s long, but it’s worth it! (we promise)

• The company reported consolidated revenue growth of 4.3% QoQ, to INR 269 bn, led by growth in the India Mobile (up 1.6% sequentially) and Enterprise Business (up 2.4% sequentially)
  • Data customer additions were healthy at 4.3 Mn (impacted by lockdowns, with data customers as a % of mobile customers rising to 60% from 58% in the previous quarter);
  • Data Volume increased by 17% QoQ (in total, per user increase to the tune of 12% QoQ), and 4g customer additions stood at 5.1 Mn (nice!!)
  • The company expanded its optical fiber network by 7,717 km in the quarter vs an average addition of 6,012 km in each of the last three quarters
  • Home Broadband business posted solid growth of 9% sequentially, with the company recording the highest-ever subscriber addition in a quarter (285,000)
• Consolidated EBITDA grew 5.3% sequentially (nice), beating street consensus estimates by 4% (India & Africa delivering steady performance growth of 5% & 8% growth qoq)
  • Margins for India Business saw an expansion by ~2%, aided by dip a in-network opex, despite site expansion and fuel inflation costs; Wireless and DTH business both registered a rise of 5% and 6% QoQ
  • Home Broadband and enterprise business witnessed a sequential decline in EBITDA (although growth across both segments was the highest recorded ever)

• Bharti Airtel continues to show it’s metal, in what would’ve otherwise been a muted quarter- the company has recorded healthy 4G additions, improved revenue mix to deliver strong EBITDA beat, has delivered on the highest ever broadband subscriptions (in a quarter marred by lockdowns), and generated solid free cash flow (phews!!)

• The company has recently revised tariffs (twice in the last two weeks), for prepaid segments, which now opens the doors for a possible hike in the postpaid segment (in the near future)

• India’s largest telecom operator (by subscribers) has a clear advantage (take it with a pinch of salt) to further gain high-quality subscribers in both the prepaid & postpaid segments, with Vodafone Idea struggling financially and on-ground reports suggesting a surge in demand for porting and new number queries (from present Vi subscribers)

What else caught our eye? 👀

Hiring activity at an all-time high in July 

• In a report released by NaukriJob Speak, hiring trends indicated a strong revival in economic activity, registering back to back growth for the first time since the second wave (July grew 11% sequentially)
• Apart from IT and IT-related jobs (that have been an outlier during the pandemic), Accounting & Taxation (up 27%), FMCG (up 17%), Banking & Financial Services (up 13%), and education & teaching (up 8%) all grew positively

Startup founders & VCs write to PM, on easier norms for direct listing overseas 

• 22 startup founders/management personnel and a bunch of VCs have written to the PMOs requesting for easier listing norms when targeting overseas listing (presently requires you to go through Singapore for a NASDAQ / NYSE listing)
• Flipping or migration of startups outside India, because local norms don’t allow for raising international capital has got the Indian startup community to jointly petition for a change in rules governing global capital fund-raises, and create a level playing field more capital, more likelihood of success, whatever happened to grow organically?)

Stop-loss