Bajaj Auto shares plunged as much as 5 per cent in the morning trade on Monday after the company reported 9 per cent fall in sales for the month of October 2015 at 3,52,822 units as compared to 3,86,017 units sold in October 2014. (Reuters)

Bajaj Auto shares plunged as much as 5 per cent in the morning trade on Monday after the company reported 9 per cent fall in sales for the month of October 2015 at 3,52,822 units as compared to 3,86,017 units sold in October 2014.

At 10.35 am, Bajaj Auto share price was trading 4.18 per cent down at Rs 2,443.10. The scrip opened at Rs 2,530 and had touched a high and low of Rs 2,555 and 2,422.65, respectively, in trade so far. Sensex was down 89.77 points at 26,567.06.

The company’s motorcycles total sales for the month of October 2015 declined by 8 per cent and stood at 3,08,733 units as compared to 3,36,923 units in the same month last year. Commercial vehicles sales plunged by 10 per cent year-on-year at 44,089 units.

On a year-to-date basis, the share price of Bajaj Auto jumped 3.83 per cent to Rs 2549.60 on October 30. Sensex fell 3.09 per cent during the same period.

At 9.36 am, Titan share price was down 3.53 per cent at Rs 336.40. The scrip opened at Rs 333.55 and had touched a high and low of Rs 339 and Rs 330, respectively, in trade so far. Sensex was down 125 points at 26,531.64. (Photo: PTI)

Titan Company share price declined as much as 5.36 per cent in the early trade on Monday after the Tata Group firm on Friday reported 39.41 per cent decline in net profit at Rs 145.39 crore for the second quarter ended September 30, hurt by sharp drop in income from jewellery business. The company had posted a net profit of Rs 239.98 crore in the same quarter last fiscal.

At 9.36 am, Titan share price was down 3.53 per cent at Rs 336.40. The scrip opened at Rs 333.55 and had touched a high and low of Rs 339 and Rs 330, respectively, in trade so far. Sensex was down 125 points at 26,531.64.

For the quarter ended September 30, 2015, net sales of the company stood at Rs 2,654.68 crore as against Rs 3,564.67 crore in the same quarter last year. “The retail sentiment has been extremely poor in this quarter,” the company said.

The BSE group ‘A’ stock of face value Rs 1 has touched a 52 week high of Rs 448.00 on 03-Feb-2015 and a 52 week low of Rs 303 on 01-Oct-2015.

Last one week high and low of the scrip stood at Rs 356.00 and Rs 330 respectively. The current market cap of the company is Rs 29,856.00 crore.

The promoters holding in the company stood at 53.05 per cent while institutions and non-institutions held 25.27 per cent and 21.67 per cent, respectively.

Coffee Day Enterprises which operates Cafe Coffee Day (CCD) outlets will list its shares on stock exchanges today.

The BSE Sensex and NSE Nifty opened on a flat note on Monday. Sensex opened 15.14 points down at 26641.69. Nifty opened 11.25 points down at 8,054.55.

Below are the stocks that are likely to be in focus today

Titan Company: Share price of the Tata Group firm declined as much as 5.36 per cent in the early trade on Monday after it reported 39.41 per cent decline in net profit at Rs 145.39 crore for the second quarter ended September 30, hurt by sharp drop in income from jewellery business. The company had posted a net profit of Rs 239.98 crore in the same quarter last fiscal.

Coffee Day Enterprises: The operator of India’s biggest coffee chain made a weak debut on bourses and opened at Rs 317 on NSE, below its initial public offering price of Rs 328. On BSE, shares of Coffee Day Enterprises opened at Rs 313. At 10.08 am, Coffee Day Enterprises shares were trading at Rs 292.75 apiece. The scrip touched a high and low of Rs 318 and Rs 280.70, respectively, on BSE in trade so far.

Jet Airways: Ace investor Rakesh Jhunjhunwala on Friday picked up 1.05 per cent stake in Jet Airways for Rs 50.52 crore through an open market transaction. According to the bulk deals data available with NSE, Jhunjhunwala’s RARE Enterprises acquired 11,95,000 shares or 1.05 per cent stake in the private airline.

Tata Motors: Stocks of the auto major will be in focus as the company on Sunday reported 1 per cent growth in total sales at 43,486 vehicles for October 2015 compared to 42,862 units in the same month of last year. Domestic sales of its commercial and passenger vehicles, however, were flat at 38,917 units in the month.

Adani Power: Adani Power Ltd is considering raising funds through issuance of shares on preferential basis to promoters.

Indian Overseas Bank: The public sector lender on Saturday reported a net loss of Rs 550.83 crore for the second quarter ending September 30, 2015.

Nalco: In its first overseas foray, the state-run aluminium producer Nalco has lined up a plan to invest $2.8 billion to build a smelter and a captive power unit in either Iran or Oman, depending on where it will get the fuel cheaper.

IOC: The public sector company has expressed interest in taking 5-10 per cent stake in the Rosneft-operated field.

Mahindra & Mahindra: The carmaker on Sunday reported 20 per cent surge in total sales at 51,383 vehicles in October, mainly of account of good demand for its recently launched TUV300. It had sold 42,780 vehicles in the same month last year.

Reliance Communications: The company informed BSE on Saturday that a meeting of the Board of Directors of the Company will be held on November 2, 2015, inter alia, to consider a Scheme of Arrangement for demerger of Telecom Business Undertaking of Sistema Shyam Teleservices Limited into the Company.

Birla Corporation: The company has commissioned its cement blending unit at Raebareli with an annual capacity of 5 lac tons. The company had earlier in August, agreed to a transaction with Lafarge India, whereby Birla Corp, either directly or through its wholly owned subsidiary, shall acquire both the Jojobera and Sonadih cement businesses from Lafarge India for an Enterprise Value of Rs 5,000 crore.

Jyothy Laboratories: The FMCG company is aiming to double its turnover to around Rs 2,900 crore in the next four years on the back of market expansion and extension of sub-brands. The company is looking to expand the market reach of some of its products which have strong regional presence across India in order to drive growth.

Sadbhav Infrastructure Project Ltd(SIPL): The company on Saturday said that it has completed the stake acquisition in Dhule Palesner Tollway Ltd (DPTL) from its JV partners, HCC Concessions (HCON) and JLL.

NTPC: The thermal power company is looking to source low-cost re-gasified liquid natural gas (RLNG) from spot markets overseas to improve its margins that have taken a hit in recent quarters.

Indiabulls Real Estate Ltd (IBREL): The company has cut its net debt by over Rs 300 crore during the second quarter of this fiscal and is targeting to further reduce it by Rs 1,850 crore by March 2017.

Q2FY16 in line but fault lines emerging in the India wireless narrative. Slowdown in data volume growth momentum and subdued stance on voice RPM (revenue per minute) drive cuts in our India wireless and consolidated estimates for Bharti even as the company reported, overall in-line Q2FY16 and improved performance in Africa. The India wireless narrative has weakened a tad with an increase in competitive intensity, raising questions on the timeline of the return to healthy shareholder surplus. Beaten-down valuations keep us positive. We retain ADD with a revised target price of Rs 410/share (from Rs 460).

Q2 earnings print in line at the consolidated level, but hit/miss mix disappointing

Bharti reported a marginally ahead-of-our-estimate Q2FY16 at the operational level even as higher-than-expected forex losses and effective tax rate (ETR) drove a substantial recurring PAT miss. Reported consolidated revenue, Ebitda (earnings before interest taxes depreciation and amortisation), Ebit (earnings before interest and taxes), and PBT (profit before tax) were 1.5%, 1.6%, 4.4% and 4.3% ahead of our expectations, respectively. However, one of the key sources of Ebitda beat was the India enterprise business; we view this as a low-quality beat given the inherent quarterly volatility of this business. Beat on Africa estimates, both revenues and Ebitda, was indeed a positive surprise; however, we had good quarters in the Africa business in the past only to be followed by disappointment in subsequent quarters.

India wireless – fault lines emerging

Bharti’s India business performance was decent as far as reported headline numbers are concerned. Better-than-expected cost control aided a marginal 0.7% beat in Ebitda despite a 1% topline miss. Reported revenue and Ebitda growth of 8% and 14% y-o-y (year on year) were healthy. However, in line with the trends reported by Idea, Bharti too saw (i) another quarter of sequential pressure on voice RPM and (ii) deceleration in data volume and revenue growth momentum. The latter was disappointing in the backdrop of sharp increase in Bharti’s absolute and relative investments on data network rollouts. We should perhaps not be reading a lot into quarterly trends in a still-evolving data story, but—Data trends reported by Bharti and Idea were weak for this stage of evolution of the data market; market growth rates would have been lower than Bharti’s and Idea’s, and management commentaries suggested that the strength of the multi-year data volume growth story is not a given.

A larger point we are trying to drive home is that the broader India wireless narrative took a beating on two key fronts (with the results and commentaries of the two bellwethers)—(i) voice RPM (revenue per minute) trajectory, and (ii) strength of the data volume growth story.

Cut estimates and target price to reflect weakened prognosis on India wireless

In line with the discussion above, we have cut our voice RPM and data ARMB (average realisation per MB) assumptions, resulting in sharp 3-6% cut in our India wireless Ebitda and 2-3% cut in consolidated Ebitda forecasts for FY2016-18e (estimates). Our EPS (earnings per share) estimates stand reduced by 2-19% for FY2016-18e with sharper cut in FY2016e EPS estimate reflecting higher-than-expected forex losses in Q2FY16.

Detailed Analysis

Consolidated results

Bharti reported consolidated revenues of Rs 238 bn (+0.7% q-o-q, +4.3% y-o-y), 1.5% ahead of our expectations, driven by ahead-of-estimates revenues in Africa, South Asia, and India Enterprise businesses. Ebitda came in at Rs 81.6 bn (down 1% q-o-q, +8% y-o-y), 1.6% ahead of our estimate on the back of better-than-expected performance in the Africa and India Enterprise businesses. The bulk of the Ebitda beat in fact came from the India Enterprise business–a low-quality beat, if you will, given the volatility of (and hence, difficult to forecast) this business on a quarterly basis. Recurring net profit fell 30% q-o-q and 50% y-o-y to Rs 7.66 bn, 31% below our estimate. The bulk of the miss was on account of higher-than-expected forex losses and higher-than-expected ETR.
India wireless segment

Bharti’s India wireless revenues were up 8% y-o-y and Ebitda was up 14%. Voice traffic declined 3% q-o-q but grew 7% y-o-y. Voice RPM declined 1% q-o-q and 9% y-o-y to 34.6 paise/min, in line with trends reported by Idea.  The important aspect here is the sustained weak trajectory of voice RPM at a time when stability or gradual improvement was expected. On the data front, Bharti reported data revenue and volume growth of 60% and 70% y-o-y, weaker than Idea’s on both counts.

Africa wireless

The performance of Africa wireless was a positive surprise after long; reported US$ revenues were broadly flat q-o-q despite the loss of external tenant revenues on account of tower sales and material currency pressure. On a constant currency basis, adjusted for impact of tower sale, revenues and Ebitda grew 5% and 10% q-o-q. Africa revenues and Ebitda came in 5% and 9% ahead of expectations.

Other businesses—DTH, Telemedia steady

Bharti reported healthy y-o-y comps across non-wireless India businesses with Ebitda growth of 16.5% y-o-y in Telemedia, 53% in DTH, and 27% in the Enterprise segment. On the Telemedia (wireline) front, the company saw accelerated net adds and another quarter of healthy ARPU (average revenue per user) increase (+4% y-o-y to Rs 1,066/month). Q-o-q momentum did slowdown in the DTH business as revenue growth slowed down; Ebitda declined q-o-q and churn increased to a multi-quarter high of 1.3%.