Reliance tumbles after result, Tech Mahindra's profits drop

Benchmark indices snapped the six-day winning streak to close lower. In all, 31 of the Nifty50 stocks closed in the red. Investors await the outcome of the US Fed meeting scheduled on Wednesday. Among the Nifty sectoral indices, Metal (+1.4%) and IT (+0.1%) saw gains, whereas Auto (-1.6%) and Oil and Gas (-1.3%) were the top losers.

NIFTY50   16,631 ▼ 88 (-0.5%)

SENSEX   55,766 ▼ 306 (-0.5%)

What's Up ▲

STOCK

TODAY'S CHANGE

Tata Steel

964 ▲ 28 (+3.0%)

IndusInd Bank

960▲ 18 (+1.9%)

Coal India

200 ▲ 3.4 (+1.7%)

What's Down ▼

STOCK

TODAY'S CHANGE

M&M

1,134 ▼ 47 (-3.9%)

Reliance

2,417 ▼ 85 (-3.4%)

Maruti

8,610 ▼ 220 (-2.5%)

What’s trending?

Tech Mahindra's profits drop  TECHM (NSE): 1,014 ▼ 14.7 (-1.4%) IT firm Tech Mahindra reported a 24.8% quarter-on-quarter (QoQ) drop in its net profits to ₹1,132 crore. Meanwhile, its revenues were up by a tepid 4.9% to ₹12,708 crore. The company's total expenses rose due to a spike in employee benefit expenses. However, the attrition rate fell to 22% from 24% in the previous quarter.    BEL inks contract with MoD  BEL (NSE): 270 ▲ 3.6 (+1.3%) Bharat Electronics Limited (BEL) has signed a contract of ₹250 crore with the Ministry of Defence (MoD) for the supply of integrated anti-submarine warfare systems for surface ships. BEL reported a 15-fold year-on-year (YoY) rise in the net profit to ₹366 crore. This was due to a sharp reduction in the cost of goods consumed, and an almost 100% YoY rise in revenue from operations to ₹3,140 crore.    Canara Bank posts huge profit  CANBK (NSE): 224 ▼ 5.0 (-2.2%) Public sector lender Canara Bank posted a 71% year-on-year (YoY) rise in its standalone net profit at ₹2,022 crore. Meanwhile, its net interest income jumped over 10% YoY to ₹6,784 crore. The bank’s asset quality improved as gross non-performing assets stood at 6.98% as compared to 8.5% in the year-ago quarter.    Government’s electrifying push  The Indian government seems to be pulling all stops to speed up the adoption of electric vehicles (EVs). According to reports, it is creating a $5 billion (about ₹40,000 crore) fund to back EV adoption in the country. This fund will reportedly aim to reduce the high upfront costs associated with EV ownership. The US Agency for International Development (USAID) will provide technical assistance in setting up the fund.    Ahluwalia rises on order wins AHLUCONT (NSE): 450 ▲ 14.1 (+3.2%) Shares of Ahluwalia Contracts rose by nearly 4% intraday after the company secured three new orders from different entities. These new projects are worth over ₹1129 crore. Meanwhile, the total order inflow for FY23 stands at ₹2132 crore, which represents 79% of FY22 revenue of 2,692 crore.

In focus

Reliance tumbles after result

India’s largest company by market cap reported what looked like some strong numbers. Despite this, the stock was among the top losers on Monday. But what led to the fall? Let’s take a closer look. The conglomerate posted a 53% year-on-year (YoY) rise in revenues and a 40.8% YoY rise in the net profit. While the numbers look strong, they are below estimates. One of the key disappointments was the below-par performance by the company’s oil-to-chemicals (O2C) segment. This was despite a strong jump in the Singapore gross refining margin (GRM). GRM is the amount that refiners earn from turning every barrel of crude oil into refined fuel products.  During the quarter, GRM increased from $8 per barrel to $20 per barrel. However, the O2C segment reported an EBITDA of ₹19,888 crore, well below street expectations  of ₹23,200. The company said this was due to a rise in the price of crude, higher energy costs and losses from the fuel retailing business. Investors were also disappointed about the rising net debt. The net debt of the company rose to ₹57,655 crore (65% rise quarter-on-quarter). The company said the net debt has increased because of higher working capital requirements in businesses with increase in energy and input prices. Furthermore, a possible global recession could result in lower demand for fuel and other petroleum products. There are also worries that inflation will have an adverse effect on the company’s retail business. But it was not all bad news. The company's telecom arm, Reliance Jio, witnessed a 23% rise in revenues, supported by a 27% growth in average revenue per user (ARPU) to ₹175.7 per month. So, in all, the results are good, but not good enough! Investors have long awaited some announcement regarding the listing of Reliance’s retail and telecom businesses. Hope there's something in store for us at the upcoming AGM!