Quarterly results kickoff with a bang: Indian IT Stocks Jump on Good Reports
We hope you had a good week. It’s that time of the year again. The time when companies share their report cards (aka quarterly results release), and Indian investors are keen on finding out if they’ve forecasted numbers as accurately. The IT bigwigs released their quarterly numbers and industry seems to have exceeded expectations. Yes, we are talking about TCS and Infosys. But before we get into the details, let’s take a look at some market updates and insights first.
📈 Weekly Update
India’s benchmark stock indices ended at a record closing high on Friday owing to a sharp rise in IT stocks following the Q3 results of heavyweights Infosys Ltd and Tata Consultancy Services Ltd. Nifty IT zoomed 5% with Infosys gaining 8%, and Wipro, HCL Tech and TCS surging 4% after an indication from the management that the worst is behind us.
Among the Nifty 50 stocks, HCL Technologies Ltd., ICICI Bank Ltd., Infosys Ltd., Reliance Industries Ltd., and Tata Consultancy Services Ltd. contributed positively to the index. Whereas Asian Paints Ltd., Bajaj Finserv Ltd., Cipla Ltd., and Mahindra & Mahindra Ltd. weighed on the index. Nifty ended higher by 1.14% at 21,894.5 and the Sensex closed 1.18% higher at 72,568.
On the global front, The US consumer price index rose 0.3% last month after nudging up 0.1% in November 2023. The jobless claim applications fell to 202,000 for the week ended 6 January, down by 1,000 from the previous week. European stocks ended higher while Asian markets ended mixed as data showed a decline in China’s exports.
Key results this week:
📈 Infosys PAT down 7% year-on-year to ₹6,106 crores; revenue was flat at ₹38,821 cr for Q3FY24, up 1.3% year-on-year (YoY). Operating margin for the quarter came in at 20.5%, down 100 basis points over the year-ago’s 2.5%.
📈TCS reported consolidated revenue growth by 4% YoY to ₹60,583 crore with consolidated profit increasing by 2% YoY to ₹11,097 crore. The operating margin improved by 50 basis points to 25%.
📈Wipro net profit dipped 12% YoY to ₹2,694 crore while overall revenue decreased 4.4% yoy to ₹22,205 crore.
📈 HDFC AMC reported a 32% YoY increase in profit at ₹488 crore (up 11.77% qoq) for Q3FY24 while revenue stood at ₹671.32 crores up 20% yoy and 4.39% qoq.
📈DMart, aka Avenue Supermarts, reported a 17% rise in revenue at ₹13,572.47 crore, YoY while its net profit rose 17% YoY to ₹691 crore.
📈HCL Tech’s net profit rose 6% YoY to ₹4,350 cr while revenues rose 6.5% to ₹28,446 crore.
📈 Hi-Tech Pipes saw a 10.7% YoY increase in revenue to ₹630.09 crore in Q3.
📈 GTPL Hathway’s Q3FY24 revenue grew by 9% QoQ and 22% YoY to ₹8,607 million.
📈 JTL Industries reported revenue of ₹567.39 crores in Q3, up 65.26% YoY and 13% YoY. The company’s profit jumped 47.23% YoY and and 8.12% QoQ to ₹30.18 crores.
📰 Quick Bites
📈 India’s retail inflation increased to 5.69% in December vs 5.55% in November and 5.72% in December 2022.
🚀 India’s mutual funds industry crossed a new milestone with net assets under management climbing past ₹50,77,900 crore in December 2023 for the first time, as per data from the Association of Mutual Funds in India (AMFI). The AUM of the industry rose 6 times in ten years ₹8.26 trillion as on December 31, 2013 to ₹50.78 trillion as on December 31, 2023. Net assets under equity schemes are over Rs 21 trillion while debt schemes account for nearly ₹13 trillion, hybrid schemes over ₹6 trillion and index funds almost ₹2 trillion, AMFI data show. SIP contributions hit new all-time high in December, with number of SIP account also climbing to a new high of 7.6 crores.
📈 This fiscal year, the Income Tax Department has collected ₹4.70 lakh crore in direct taxes, showing a 19.41% increase and reaching 81% of the annual target.
🚘 India’s retail vehicle sales in 2023 grew 11.1% to 2.39 crore, topping the 2019 figure of 2.34 crore, according to figures released by the Federation of Automobile Dealers Associations (FADA). Many car companies announced they made their best-ever annual sales in 2023 including market leader Maruti Suzuki, Hyundai Motors, and Tata Motors
🛢️ There was a growth in coal imports by India of about 11.7%, which reached 20.95 MTs in November 2023 compared to November 2022.
📰 Stocks In News
🌐 M&M’s India-Japan Fund is putting ₹400 crore in its subsidiary ‘Mahindra Last Mile Mobility Ltd.’
📉 The shares of Polycab India declined following reports about a tax raid.
💵 SBI floated $600 million worth unsecured fixed-rate notes with a 5-year maturity at a 5% coupon rate.
🏦 RBI waved off penalty amounting to ₹5 crore charged on Bank of Baroda.
🚀 Adani Group has unveiled an Indigenous Medium Altitude Long Endurance Drone for the Indian market.
💼 Reliance Industries group firms valued above ₹ 20 lakh crore in market cap.
💰 Shyam Metalics raised around ₹1,385 Cr through Qualified Institutional Placement (QIP).
🏙️ Paytm will put in ₹100 crore into Gujarat International Finance Tec-City (GIFT City).
🌿 Tata Power Renewable Energy is seeking investments worth ₹70,800 cr for renewable energy projects in Tamil Nadu.
🔄 Bajaj Auto approved share buyback worth ₹4,000 cr at ₹10,000 per share.
🏗️ Brigade Enterprises will set up residential and commercial buildings with more than ₹3,400 cr investment.
🛣️ IRB Infra collected toll of about ₹488 cr in December registering a YoY rise of around 26%.
🚢 Adani Ports has made an offer for subscription on a private placement basis for the issue of non-convertible debentures aggregating ₹500 crores.
🏭 JSW Steel saw its sales go up by twelve percent YoY.
🌱 Sustainability Corner
💰 Government incentives have been secured by Reliance Green Hydrogen, ACME Cleantech and Greenko Zero to manufacture 4.50 lakh tons of green hydrogen.
🚗 Tata Passenger Electric Mobility starts producing EVs from its new plant in Sanand, Gujarat; retools the former Ford India factory in just 12 months; new facility, which has access to a strong supplier network, unlocks additional capacity of 300,000 units.
🌿 Godrej Interio is targeting 42% of its revenues from the environmentally friendly ‘Good & Green’ product portfolio in FY24.
🚛 UltraTech Cement has rolled out five electric trucks for clinker transport that emphasize sustainability in its operations.
🌐 Tata Power Renewable Energy has proposed an investment of ₹70,800 crore for renewable projects in Tamil Nadu to achieve 10,000 MW over the next 5-7 years.
🛵 Ather Energy slashes the price of its entry-level 450S e-scooter by Rs 20,000 to INR 109,999; the move is designed to take on rising e-scooter competition with the new pricing undercutting the base models of the Bajaj Chetak Urbane, TVS iQube and Ola S1 Air.
☘️ Adani Group has indicated that they will invest ₹2 lakh crore into the green and renewable energy sectors in Gujarat within the next five years.
⛽ Indian Oil Corporation is planning a joint venture with LanzaJet Inc. on sustainable aviation fuel production and aims to reduce carbon emissions by 80%. This same task is being carried out by Mangalore Refinery in Karnataka.
🌱 Welspun World promised to invest ₹40,000 crore to create a system for producing green hydrogen and green ammonia in Gujarat.
Quarterly results kickoff with a bang: Indian IT Stocks Jump on Good Reports
On Friday, Indian IT companies rallied ~5% with the positive quarterly results of industry leaders Tata Consultancy Services (TCS) and Infosys. The performance beat initial expectations and included optimistic outlooks. This removed concerns about weak demand in the sector.
Market Reaction: TCS and Infosys Lead the Way
The market leader rose by more than 4%, while the second biggest company went up by almost 8%. Their Q3 earnings beat forecasts and showed that overall demand was still not deteriorating. This led to a rise in Nifty IT index by an impressive 5%, hitting its highest level in 21 months. As a result, the Nifty 50 benchmark also reached a new high. Other major IT companies like Wipro and HCLTech also gained by roughly 4% and 3%.
Optimistic Predictions Emerge: A Shift from Prior Warnings
Infosys and TCS gave positive expectations after months of warning that their clients would cut down on spending. Infosys’ share of new contracts surged to a nearly three-year high of 71%, with a slight fall in the total contract value to $3.2 billion.
CEO of Infosys, Salil Parekh, expressed his faith in the growth of income and emphasized that there were major wins in large deals. TCS said that demand is coming back from Banking financial services and insurance (BFSI)clients which is a crucial sector accounting for about one-third of revenue for top IT companies.
Financial Highlights: TCS Q3 Results
For Q3 FY21, TCS reported consolidated revenue growth by 4% YoY to ₹60,583 crore with consolidated profit increasing by 2% YoY to ₹11,097 crore. The operating margin improved by 50 basis points to 25%.
Other key highlights include a dividend announcement of ₹27 per share; industry-specific growth in energy resources and utilities vertical; positive performance in several regional markets.
HDFC AMC Q3 Results: Another Positive Note in Financial Sector
Apart from IT sector, HDFC AMC also reported good Q3 results with PAT surging by 32% YoY at ₹488 crore. The company’s consolidated revenue increased by 20% YoY to ₹671.3 crore.
The BSE Sensex closed higher by 2.47% or 87.53 points at ₹3502 per share. The strong showings in the information technology (IT) and asset management segments bode well for the start of the earnings season point to resilience and growth in critical sectors of the Indian economy.
