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Market outlook of the week: Q3FY24 earnings and global cues to drive sentiments

ICICIdirect 12 Mins 05 Jan 2024
  • Midcap and small cap indices outperformed with >2% gain last week, outperforming Nifty which ended flat for the week indicating pause in upward momentum.
  • Indian equities relatively outperformed global peers as most indices closed 1% down for the week.
  • Jan24 target maintained at 22,300: Going forward, we maintain our positive stance with Nifty target of 22,300 in January 2024 and strong support at 21,300.
  • Breadth continues to remain strong as percentage of stocks above 50day ema remain at 88%.
  • Global setup strong: Global equity markets are on the cusp of challenging their past couple of year highs and expected to do well in coming weeks.
  • Sectorally, BFSI, IT, Pharma, Metals are expected to outperform.

BFSI business Q3FY24 update – robust performance

  • Indian banking industry witnessed continued robust traction in credit growth at ~16% YoY, led by strong retail credit demand & working capital across lenders.
  • Competitive intensity on deposits remains elevated with repricing of term deposit rates driving strong accretion. Thus, majority of incremental inflow came as term deposit while CASA inflow remained subdued.
  • Change in asset mix and increase in CD ratio seen to support margins.

Business Update Q3FY24 (Rs crore) provisional data


Advances (in Rs Cr)

YoY (%)

Deposits (in Rs Cr)

YoY (%)

CASA ratio (%)


South Indian Bank






Steady growth in advances. Gradual improvement in CD ratio

Federal Bank






Advance growth at lower end of the guidance. Competition intensity on liabilities seems continued

CSB Bank






Sequential growth in advances remain relatively muted. Liabilities accretion strong with focus on term deposits

IndusInd Bank






Credit off-take in-line with guidance. Focus on deposit accretion continue. Revival in micro-finance book and new entry segment (home loans & small business loans) remain watchful







Advance trajectory remained healthy, however, deposit accretion, which remained key focus area post-merger, witnessed slower growth at 1.9%. Management commentary on liabilities trajectory remains crucial

Bajaj Finance






Despite ban on issuance on EMI cards and increase in risk weight on unsecured loans, delivered robust growth in AUM driven by customer acquisition

Mahindra & Mahindra Financial






AUM growth healthy, though disbursement a tad slower at 7% YoY. Uneven rainfall and anticipated margin pressure remains a challenge to attain targeted RoA

L&T Finance (Retail book)






Healthy growth in retail segment driven by 25% YoY growth in disbursement. Proportion of retail segment up at 91%, much faster than target

Auto - Inventory destocking takes centre stage for December 2023

  • Wholesale dispatches for the month of December 2023 came in muted across most of the categories amidst the OEM’s thrust on retails/inventory liquidation ahead of calendar year change.
  • Key outperformer on the segmental front this time around was the CV space with healthy MoM recovery especially in the M&HCV space (both trucks as well as Buses). Key outperformers within key segments were TVS Motors in 2W, M&M in PV space & VECV arm at Eicher Motors in CV domain.
  • In 2-W pack, Royal Enfield brand at Eicher Motors reported 7% YoY de-growth at 63,387 units (below expectations). Market leader Hero MotoCorp reported flattish volumes at 3.94 lakh units. Meaningful & tangible exports recovery was still elusive.   
  • In PV space, Maruti Suzuki (MSIL) sales volume for the month were down 1.4% YoY at 1.36 lakh units. Mini and compact segment volumes fell below the 50k mark, lowest in recent past. Volumes at M&M were up healthy 23.7% YoY at 35,174 units. M&M was the clear outlier and is expected to retain its robust growth trajectory amidst healthy order book and capacity expansions.
  • In CV segment, Tata Motors (TML) reported CV volumes of 34,180 units up 0.7% YoY and 22% MoM. VECV volumes at Eicher Motors were up 11% YoY to 8,026 units
  • In tractor space, volumes were down high double-digit YoY across both the listed players i.e. Escorts and M&M.
  • For FY24E, we expect industry to clock single digit volume growth. We continue to be structurally positive on the PV and CV space domestically.

Mining Companies report healthy volume growth for December 2023

  • NMDC reported a healthy production volume growth of 24% YoY to 4.5 MT (million tonne) for December 2023. Corresponding sales volume were also up 26% YoY to 4.2 MT in December 2023. Cumulative production and sales volume for 9MFY24 stood at 31.8 and 32.0 MT respectively (healthy double digit YoY growth).
  • Coal India reported coal production of 72 million tonne (MT) in December 2023 (up 8.2% YoY) with cumulative production in FY24 on YTD basis coming in at 532 MT (up 11% YoY). Corresponding Sales volume figure stood at 66.6 MT (up 6.1% YoY) and 552 MT (up 8.7% YoY).
  • MOIL India reported Manganese production volume growth of 31% YoY to 1.85 lakh Metric Tonnes (MT) in December'23. The cumulative production volume for FY24 on YTD basis reached 12.73 lakh MT (up by 41% YoY), while the sales volume surged to 11.01 lakh MT (up by 40% YoY).

Draft CERC paper on Tariff from FY25-29 : Positive for Power Companies

CERC has announced Draft tariff regulations for 2024-29. The key takeaway includes

  • The regulated ROE for thermal plants and run on river hydro plants remains unchanged at 15.5%,
  • The same for transmission assets has reduced from 15.5% to 15% ,
  • ROE’s for Pumped hydro storage and run on river with pondage has increased from 16.5% to 17%,
  • Capex on emission control equipment’s will also attract regulated ROE which will MCLR of SBI + 350 bps with a ceiling of 14%,
  • Normative PAF is pegged at 85% for all thermal plants while normative PLF to earn incentive is at 85%


  • From segment and stock perspective, the regulations are positive for hydro generating companies like NHPC and SJVN who will be investing into pumped hydro projects coupled with capacities getting commissioned on pondage basis.
  • Allowing ROE on emission control equipment and no cut in ROE’s for Thermal plant will benefit NTPC given majority of capex on emission control equipment will get commissioned in the said tariff control period.
  • Powergrid on the other hand, will be affected to some extent given ROEs are proposed to be cut by 50 bps on projects commissioned after 1st April 2024 but at the same time proportion of fixed projects will be low in the projects commissioned between 2024-29.

Hidden Gem

Saregama India - Proxy play on digital music consumption (CMP: Rs 374 ; TP: Rs 445)

  • Saregama India (Saregama) is India’s oldest music label owned by RPSG Group with ~1.5+ lacs songs, which is monetized by licensing over various formats such as digitals (streaming, YouTube), physical (Carvaan) and television. Apart from music, it is also into TV serials /(Tamil), creates low budget films as well as web series for OTT platforms through Yoodlee Films and has Artists and Events management business.
  • Licensing Revenues to remain robust: The management guidance for music licensing revenue (B2B) growth at 22-25%, will be led by higher share in new content across Hindi and regional languages.
  • We estimate ~24% CAGR in B2B (licensing) music sales in FY23- 25E to Rs 692 crore as monetisation of existing IPs via digital platforms and new music acquisition as well as catalogue acquisition will drive growth. Furthermore, Transition to subscription model (very miniscule currently), can be key game changer as the company has indicated that streaming platforms income could go up by ~ 150% to 300% as the market moves from a free model to a paid model.
  • New acquisition; other segment to add to growth: Saregama recently announced acquisition of Pocket Aces Pictures is a complementary growth enabler with content positioning, age group focus (among youth), digital presence and distribution strength (through influencer access), Most importantly, access to ~95Mn digital followers of Pocket Aces coupled with influencers and creates a big marketing leverage as well as a pitch point for content acquisition and well as marketing.
  • Consequently, the company expects the combined entity revenues to grow at 27-28% on medium term given the synergy. We estimate ~33% CAGR in TV & films, Events in FY23-25E to Rs 279 crore, also aided by Pocket Aces consolidation.
Source: ICICIdirect Research

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