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Reliance Jio clocks strong subscriber adds in Q1

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Reliance Jio.

Jio’s gross subscriber additions, though down 14 per cent QoQ, were still healthy at 26.7 million due to continued traction on new JioPhone offer, foreign brokerage, Jefferies said in a report.

This along with lower churn, resulted in 14.3 million net additions in Q1. Assuming 0.6m additions on Jiofiber, Reliance Jio added 13.8m mobile subscriber on net basis which surprised positively given 1Q was impacted by Covid.

“We expect Jio’s subscriber additions to remain robust led by recent capacity additions, JioPhone offers and launch of JioPhone Next”, the report said.

Jio reiterated that its device and capacity strategy is in place to gain the next 200m subscribers. “We marginally tweak estimates to factor the results and see Jio gain 530m subscribers by Mar-24. Over FY21-24, we expect RJio to deliver 15% CAGR in revenues and 20% Cagr in profits. We maintain our valuation for RJio at US$90bn”, the report said.

Blended ARPUs at Rs138 were flat QoQ, marginally below estimates. With share of JioFiber rising in total revenues every quarter, stable blended Arpus imply that mobile Arpus would have fallen QoQ, This would be largely due to bulk of the subscriber additions taking place in the lower ARPU feature phone segment. With Jio’s subscriber mix shifting towards JioPhone, ARPUs are likely to be lower, the report said.

The sharp increase in data usage is attributable to JioFiber subscriber whose avg. data usage is 300GB/month. Limited benefits of operating leverage seen. Despite healthy growth of 4% QoQ, Reliance Jio’s margins were flat QoQ at 48%. Reliance Jio’s incremental Ebitda margin was low at 51% due to sharp rise in license fee (+9% QoQ) and network operating costs (+4% QoQ).

As highlighted in our analysis of Jio’s FY21 annual report (link), Jio is yet to recognize the entire Fiber usage charges it incurs. As it does that, its network operating costs should rise sharply and keep incremental margins lower than 60-70% seen usually in telecom businesses, it added.

Business

Zomato shares decline 9%, market cap falls below 1L cr

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Shares of online food aggregator Zomato declined 9 per cent intraday on Friday.

Analysts are linking the decline with unsupportive valuations. Over the past one-month period, Zomato shares fell nearly 18 per cent.

Listed in July 2021, Zomato shares are, however, up more than 50 per cent from its IPO issue price of Rs 76. On Friday’s closing, it was at Rs 114 per share.

“The costs have escalated due to the tax imposed on the aggregator, along with the fact that the lockdown is also not currently happening, which also appears to be a weakness,” said Ravi Singhal, Vice Chairman at GCL Securities.

With Friday’s losses, the company’s market capitalisation fell below the 1 lakh crore-mark, NSE data showed.

According to Ravi Singh, Vice President and Head of Research, Share India Securities: “The technical setup in Zomato stock is in bearish formation on intraday and daily which may drag the stock up to Rs 112-110 levels in the near term.

“The valuations of the company are also not supporting the growth. Zomato is facing tough competition from Swiggy in many ways, mainly having a thinner Metro restaurant network and density versus Swiggy. We recommend investors to maintain the sell position in the stock.”

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Decline in equities continue for 4th straight sessions

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The 30-scrip Sensitive Index (Sensex) and broader 50-scrip Nifty on the National Stock Exchange (NSE) extended their losses from the previous three consecutive sessions and declined on Friday.

At 10.25 a.m., Sensex traded at 58,593 points, down 0.9 per cent from the previous close of 59,464 points. It opened at 59,039 points.

Nifty traded at 17,599 points, down 0.9 per cent from the previous close of 17,757 points. It opened at 17,613 points.

Bajaj Finserv, Tech Mahindra, Coal India, Adani Ports, Bharti Airtel were some of the top losers, NSE data showed.

Top gainers during the early trade were Hindustan Unilever, Tata Consumers, Bajaj Auto, Hero MotoCorp, and Power Grid Corporation.

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Business

Decline in equities continue for 4th straight sessions

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The 30-scrip Sensitive Index (Sensex) and broader 50-scrip Nifty on the National Stock Exchange (NSE) extended their losses from the previous three consecutive sessions and declined on Friday.

At 10.25 a.m., Sensex traded at 58,593 points, down 0.9 per cent from the previous close of 59,464 points. It opened at 59,039 points.

Nifty traded at 17,599 points, down 0.9 per cent from the previous close of 17,757 points. It opened at 17,613 points.

Bajaj Finserv, Tech Mahindra, Coal India, Adani Ports, Bharti Airtel were some of the top losers, NSE data showed.

Top gainers during the early trade were Hindustan Unilever, Tata Consumers, Bajaj Auto, Hero MotoCorp, and Power Grid Corporation.

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