September 2021 Newsletter

19 Oct 2021by Research & Ranking

September 2021 Newsletter

RECENT MICRO/MACRO ECONOMIC DATA SUGGESTS BUOYANCY IN ECONOMY

Majority Sectors demonstrating strong performance and buoyancy in Q2FY22

Early business updates for Q2FY22 by some large and mid-corporates suggest continuing economic recovery. High frequency macro indicators for Jul-Sep’21 quarter such as manufacturing PMI, services PMI, personal loan growth, GST collections, electricity production, sequential uptick in air freight and passenger traffic, quantum leap in digital transactions and core sector growth all pointed towards the expanding demand in the economy. Current account surplus for Q1 FY22 confirmed robust growth in IT services growth. On contrary, weakness in demand is detected from macro indicators such as auto sales and industry credit, which will show up in corporate results. Oil price spike beyond US$80/barrel is a key macro risk in terms of its impact on trade deficit and inflation.

Fine print

  • India’s Manufacturing PMI rose from 52.3 in August to 53.7 in September. For the quarter, manufacturing PMI averaged 53.8
  • India’s Services PMI fell from 56.7 in August to 55.2 in September. Services PMI averaged 52.4 for the quarter.
  • Personal loan growth was 12% YoY vs 8% last year in August while Industrial growth stood at 6.7% vs 5.5% last year.
  • GST collections in September stood at Rs. 1.17 trn higher by 23% YoY and averaged Rs1.15trn during Q2FY22.
  • India’s retail inflation cooled off to a five-month low of 4.35% in September, on account of a sharp dip in food price inflation.
  • Monetary Policy Committee of the RBI kept the benchmark policy rates unchanged and retained the accommodative stance in its October review.
  • Unemployment rate fell sharply in Sep’21 to 6.9% as per CMIE which reflect signs of improved job prospects
  • Core sector output grew 11.6% in August compared to a 6.9% contraction recorded a year ago. Cement, coal, gas pushed the growth as  production of cement rose by 36.3% YoY while that of coal and natural gas increased by 20.6% YoY

Sector Glimpse

Power Sector

India’s Power demand increased by 17.6%, 18.6% on YoY basis in July, Aug 2021. Power demand in September remained subdued mainly due to heavy rains and grew at around 1.83% at 114.49 bn units in September. Purchase bids for power has increased to Rs 15.85 per unit up from Rs 2.35 per unit a month ago.

Realty Sector


Q2 sales bookings jump over 2-fold YoY to Rs 828.52 crore on improved housing demand driven by low mortgage rates


Q2 sales bookings jump 88% YoY to Rs 2,003 cr and witnessed strong demand both in ready as well as under-construction projects.


Banks/NBFC

 


Advances at Rs 11,985 bn up 15.4% YoY/4.4% QoQ. Deposits at Rs 14,060 bn up 14.4% YoY/4.5% QoQ. CASA Deposits at Rs 6,580 bn up 28.6% YoY/7.6% QoQ. CASA Ratio at 47% as of Sept 2021.


QoQ. CASA Deposits at Rs 468 bn up 55.01% YoY/0.74% QoQ. CASA Ratio at 51.9% as of Sept 2021.


AUM/Portfolio in Q2FY22 at Rs. 1,669 bn as against Rs. 1,371 bn in Q2FY21. Customer franchise stood at 52.8 Mn in Sept 21 as against 44.1 Mn in Sept 20

 


Loans assigned in Q2 FY22 stood at Rs. 71,320 Mn compared to Rs. 30,260 Mn YoY. . Gross income from dividend was Rs. 11,710 Mn v/s Rs. 3,230 Mn YoY

 

Consumer


Reported 46% YoY increase in standalone revenue at Rs 7,650 Cr in Q2FY22 against Rs 5,218 Cr in Q2FY21


Revenue growth was in low twenties with volume growth close to double-digits on a 2-year CAGR basis

 


Standalone revenue increased by 78% led by strong sales pick up annually in Jewellery (up 78% YoY), Watches & wearables (up 73% YoY) and Eye Wear (up 74% YoY).

 

Metal/Mining


Crude steel production at 4.73 MT grew 3% YoY/2% QoQ in Q2FY22. Deliveries increased by 12% QoQ/ down 8% YoY due to lower exports


Indian Operations production at 4.92 MT up 26% YoY/flat sequentiall


Production data
Aluminum:  5.7 lakh tonne up 21% YoY/4% QoQ.
Zinc: 1.62 lakh tonne down 12% YoY/down 14% QoQ.
Lead: 0.47 lakh tonne down 18% YoY/down 4% QoQ.
Oil & Gas: 165 K boepd stable both annually & sequentially.
Iron Ore: 1.3 million tonne down 11% YoY/down 10% QoQ.

Auto Sector


2-wheeler domestic MoM numbers have registered double-digit growth in September with TVS Motors leading with 21% MoM/+13% YoY. Only Suzuki and Royal Enfield have negative MoM growth in September 2021.


Passenger Vehicle segment suffered a de-growth of 39% MoM/ down 44% YoY. Within Passenger Vehicles, Maruti was the worst hit by declining 39% MoM . and 56.5% YoY


Commercial vehicle segment grew 12% MoM/+2% YoY on the back of improved infra demand.  Tata Motors, M&M, Ashok Leyland, etc. all witnessed MoM positive overall growth with VECV leading with 35% MoM growth


3-wheeler Segment sales increased by 9% MoM/14% YoY. Bajaj Auto, M&M, TVS Motors and Atul Auto, all saw double-digit growth in MoM terms between 15-20% growth.



Tractors: Tractor segment saw good growth of 90% MoM/ down 13% YoY.  M&M volume saw growth of 95% MoM while Escorts grew at 62% MoM. On YoY basis, M&M declined by 7.8% while Escorts declined by 30.4%.


Aviation Sector

Average Daily Passenger stood at 262K in Oct 21 vs 129k in the same month last year. Daily departures grew to 2032 in Oct 21 compared to 1640 in August 21 and 1310 last year Passenger load factor in Oct 21 stood at around 75% of pre-covid level compared to 70% last month.

 

 

IP-OH!! RUSH TO SMASH RECORDS

IPO bandwagon to get bigger

It has been a fantastic year so far for the primary market as India Inc has raised ₹78,250 crore through their IPOs, the highest amount in a nine-month period over the last 20 years. So far, 44 companies launched public issues in the mainboard and the same number of firms in the SME segment during January-September 2021. In the current year, the highest fundraising of ₹ 9,375 crore was by the food delivery company Zomato. The most active sector was diversified industrial products with eight IPOs followed by the Technology sector with five IPOs.

As many as 35 companies are planning to raise a record Rs 50,000 crore in next 3 months. Thereby, the total funds to be raised in 2021 is estimated to be around Rs. 128,250 Cr. This is notably ahead of the previous record in 2017 when 38 companies raised around Rs. 75,279 Cr. The listing of insurance giant Life Insurance Corporation of India (LIC) is touted to be the ‘Mother of all IPOs’ in India as it plans to raise around Rs. 1 lac crore by next fiscal. This will aid the current ongoing buoyancy in the IPO market for 2022