Toyota beats Q1 2020 estimates, raises FY18 view

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International Corp Business Machines (NYSE: IBM) said on Sunday that the world’s largest hybrid cloud provider is planning to acquire the open-source software company Red Hat Inc. for 63% above Friday’s closing price of $116.68 per share. If the deal is closed, it would be a record for software acquisition. However, the high price offered by IBM has sparked criticism from analysts who doubt the benefits that the buyout may offer, while pointing out that a bidding war may soon start.

Importance of Red Hat acquisition

IBM said Red Hat (RHT) accepted the buyout offer of $190 a share in cash, taking the latter’s enterprise value to about $34 billion. Red Hat shares, which closed at $170 yesterday, have so far gained

$54 in the past three trading sessions. With 176 million shares of Red Hat floating, the company had a market cap of $29.916 billion as of yesterday’s close.

IBM said the acquisition deal had already been endorsed by the Board of Directors of IBM and Red Hat but remains subject to Red Hat shareholders and regulatory approvals. If everything goes according to plan, the buyout will be completed in the second half of 2020. A hybrid cloud is an agreement whereby a company manages part of its data in a public cloud service and some of its data on servers in its own premises, often for regulatory reasons, in the case of financial institutions or healthcare services. Additionally, Red Hat will be the “distinct unit” of IBM Cloud, headed by President and CEO Jim Whitehurst, who will report to Rometty. IBM said the Red Hat partnerships with AWS, Azure, GCP, and Alibaba would continue to “build and enhance.”

A successful acquisition could make Red Hat an enterprise sales engine. It is a company with a turnover of $3 billion and a target of $5 billion. While this is a small amount for a company such as IBM that generates 19 billion dollars per quarter, it is a crucial addition. In the latest earnings report of Red Hat in September, the company posted revenue and outlook below Wall Street expectations.

Commenting on the acquisition, Ginni Rometty, IBM’s chairman, president, and chief executive, said “The acquisition of Red Hat is a game-changer. It changes everything about the cloud market. We will be the undisputed No. 1 leader in hybrid cloud. Our IBM cloud platform is growing like crazy.”

Referring to hybrid cloud as an emerging $1 trillion market, Rometty further said: “Most companies today are only 20% along their cloud journey, renting compute power to cut costs. The next 80% is about unlocking real business value and driving growth. This is the next chapter of the cloud. It requires shifting business applications to hybrid cloud, extracting more data and optimizing every part of the business, from supply chains to sales.”

IBM reported that revenue in the third quarter of the technology and cloud platform segment, including IBM Cloud, was $8.3 billion year-on-year, with analysts expecting $8.43 billion. This earnings report affected IBM stocks as some analysts complained that segments such as Watson AI and IBM Cloud do not grow fast enough.

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However, Red Hat does not own a public cloud service, and analysts doubted whether a combined entity could really make IBM’s cloud service any stronger. In the latest August figures from the research firm Gartner, IBM Cloud was fifth in cloud revenues behind Amazon.com Inc.’s (AMZN) Amazon Web Services, Microsoft Corp.’s (MSFT) Azure, Alibaba Group Holding Ltd. (BABA) and Alphabet Inc.’s (GOOG) Google Cloud Platform.

Jefferies analyst John DiFucci, who has a “hold” rating and a price target of $190 on Red Hat, asked if an IBM acquisition could harm the Red Hat brand.

In a note to clients, DiFucci wrote: “In regard to the IBM/Red Hat combination, we question whether this will have a negative effect on Red Hat’s business. As an Operating System vendor first, its neutrality to all hardware vendors was an important characteristic in our opinion. The IBM acquisition certainly calls that neutrality into question.”

The debt burden of the deal led rating companies to reconsider IBM’s credit rating. S&P Global Ratings reduced its IBM credit rating to “A” from ” A+,” and Moody’s is reviewing “A1” rating of IBM for a possible downgrade. Some analysts have suggested that other big enterprises might soon make an open offer.

In particular, Cowen analyst Gregg Moskowitz, who maintains an outperform rating and a price target of $ 190 on Red Hat, said other bidders could come up.

According to a filing by the Securities and Exchange Commission, the dissolution fee amounts to 975 million US dollars. If it’s a small amount, Red Hat could be courted by Cisco Systems Inc. (CSCO), Google or Oracle Corp.( ORCL). In this case, the high termination fee would prevent Red Hat from terminating the deal.

The doubts created by the acquisition and the overall weakness in the market have turned IBM weak. However, considering the mid to long-term prospects, fundamentally, the stock is poised for a bullish reversal.

Technically, the stock has broken the major support at 135. The next major support is expected to come near 115 levels. Furthermore, the stochastic indicator reflects an oversold scenario. As a result, a sharp bounce back can be expected in the days ahead.

To generate profit from the impending reversal, we are planning to invest in a call option contract. The contract should be valid for a period of one week. Additionally, at the time of investing in the option, we prefer IBM to trade near $115 in the NYSE.

Disclaimer:The trading analysis offered here is our opinion. It is not provided as trading advice, merely an indication of our trading plan. We cannot guarantee success and we encourage traders to incorporate a strong money management strategy to limit losses. Please use this article as part of your own research before formulating strategies prior to trading.

Profit

Suzuki posts 11 per cent fall in Q3 profit, hit by slowing India demand

Japan’s fourth-largest automaker posted an operating profit of $471.34 million for Q3.

What’s driving Bajaj Auto’s profitability?

Bajaj Auto with a market share of 12 per cent (in two-wheeler) saw 18.5 per cent growth in profit (of combine business 2W+3W) to Rs 4,675.18 crore in FY19 as against Rs 4,068.10 crore in FY18.

M&M, MVML Q4 profit slips 16% YoY to Rs 969 crore, beat Street estimates

Operating profit margin of M&M and Mahindra Vehicle Manufacturers (MVML) declined to 13.50 per cent from 15.10 per cent.

Minda Corporation consolidated Q4 PAT up 1%

The company had posted a net profit of Rs 38.67 crore in January-March quarter a year ago.

Suzuki posts 11 per cent fall in Q3 profit, hit by slowing India demand

Japan’s fourth-largest automaker posted an operating profit of $471.34 million for Q3.

What’s driving Bajaj Auto’s profitability?

Bajaj Auto with a market share of 12 per cent (in two-wheeler) saw 18.5 per cent growth in profit (of combine business 2W+3W) to Rs 4,675.18 crore in FY19 as against Rs 4,068.10 crore in FY18.

M&M, MVML Q4 profit slips 16% YoY to Rs 969 crore, beat Street estimates

Operating profit margin of M&M and Mahindra Vehicle Manufacturers (MVML) declined to 13.50 per cent from 15.10 per cent.

Minda Corporation consolidated Q4 PAT up 1%

The company had posted a net profit of Rs 38.67 crore in January-March quarter a year ago.

AutoNation quarterly profit beats on higher earnings per vehicle

AutoNation Inc, the largest U.S. auto dealership chain, on Friday reported a better-than-expected quarterly profit, as it earned more per vehicle sold.

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India Inc logs double-digit topline growth

After including banking and finance companies, the sample’s sales grew at a similar rate of 17.5 per cent.

India Inc set to report lower revenue, profit growth in Q3

Revenue growth will dip by up to 5 percentage points on average to 12-13%, Crisil said.

Toyota profit zooms to Rs 965 crore in FY18 driven by Innova, Fortuner

Profit after tax rose 73%, driven by favourable currency movement, increased localisation and sustained cost cutting.

Toyota lifts full-year profit forecast on weaker yen

The increase represents largely flat profit in the year to March versus last year.

Goodyear India Q2 profit down 31.42% at Rs 28.74 crore

Total income during the period under review stood at Rs 499.12 crore. It was at Rs 425.26 crore in the same quarter last fiscal.

Eyeing elusive profits, Ford looks to contain costs in India

Ford is also understood to have halted plans to launch any independent all-new car till the year 2020, looking at introduction of products that would be jointly developed with Mahindra & Mahindra.

Setco posts two-fold revenue growth at Rs 137.3 cr in Q1 FY19

The company reported an EBITDA margin of 15.1 per cent, which is the best for the first quarter in any fiscal year. It posted a net profit of Rs 8.2 crore, compared to a loss of Rs 11.8 crore in the corresponding period.

Imperial Oil posts quarterly profit on refining, chemicals strength

Imperial Oil, which is majority owned by Exxon Mobil Corp , said its downstream net income rose to C$201 million from C$78 million, a year earlier. Chemical net income rose about 22 percent to C$78 million.

Shriram Transport Q1 net up 24% at Rs 573 cr

Total income during the quarter under review stood at Rs 3,739.85 crore as against Rs 3,118.68 crore in the year ago period.

Ford profit falls by almost half, misses Wall St estimates

The No. 2 U.S. automaker reported a second-quarter net profit of $1.07 billion, or 27 cents a share, compared with $2.05 billion, or 51 cents a share, a year earlier

PSA posts profit gain as Opel turnaround takes root

Net income rose to 1.481 billion euros ($1.73 billion) as revenues jumped 40 percent to 38.6 billion euros, the Peugeot maker said in a statement.

Ceat posts multifold jump in Q1 profit at Rs 71 cr

Revenue from operations rose to Rs 1,706.33 crore as compared with Rs 1,459.72 crore in April-June, 2020-18, Ceat said in a regulatory filing.

India Inc likely to report double-digit profit growth for 3rd quarter in a row

Operating profit for the June 2020 quarter is likely to grow by 15 per cent.

Ola’s losses widen to Rs 4,898 crore in FY’17

The company also saw its employee-related expenses growing about 24% to Rs 572.1 crore, while finance costs escalated to Rs 28.7 crore in FY17.

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Editor’s Pick

Skoda to fund dealers’ April-June fixed cost, new launches on schedule

With Covid-19 hit GDP, India’s domestic vehicles sales might shrunk by 27.82% in FY21

Hero MotoCorp extends duration of warranty, free service till June 30

Indian passenger vehicle sales to see 2-4% growth in FY21: SIAM

Harley Davidson launches 2020 Low Rider S in India, priced at Rs 14.69 lakh

Top 10 PVs sold in FY20; Maruti Suzuki sweeps seven spots

Hyundai aims growth amid 2020 challenges: SS Kim

Ford India extends service, warranty period till June 30

Mahindra retains third position in PV sales during FY20 beating Tata Motors

Rapido partners with multiple companies for essential item supply

Opinion: 15 ways the Indian Auto Industry will change post-Covid 19

The haemorrhage that entire mobility eco-system will go through with coronavirus impact on auto sector, will ensure the industry does not return to its “normal” state, as before. The norms will have changed. Right from manufacturing, HR practices, operating styles, sourcing, policy support to retail, communication and emergency response mechanisms.

Hero MotoCorp liquidates entire BS-IV stock with ‘limited financial impact’

Car makers to release Rs 1800 crore advances to dealers under Covid-19 package

Opinion: What automobile dealers need to do during lockdown?

Mahindra Group to start manufacturing ventilators, offer Mahindra Holiday Resorts facilities for temporary care, says Anand Mahindra

Anand Mahindra, the chairman of Mahindra & Mahindra will be offering his 100% salary to deal with the containment of Covid-19.

Financial Results

Subros Q3 PAT down 22% at Rs 13.35 crore

Company’s consolidated revenue from operations also declined to Rs 465.61 crore during Q3 FY’19, down 8.8 per cent as compared to Rs510.69 crore in the corresponding period a year ago.

Maruti Suzuki consolidated Q3 profit up 4% at Rs 1587.4 crore

The company had posted a consolidated profit of Rs 1524.5 crore in the same quarter last year.

Maruti Suzuki Q2 PAT down by 39% at Rs 1391.1 crore

The company’s revenue also declined 24.26 per cent to Rs 22,443.9 crore as against Rs 169,97.9 crore in the same quarter last year.

Three Japanese Directors resign from Maruti Suzuki Board after dismal Q1 results

Kazunari Yamaguchi, Kazuhiko Ayabe and Toshiaki Hasuike have resigned from the board of the company with effect from 26th July 2020, the company informed BSE in the regulatory filling. ​ ​​

Subros Q3 PAT down 22% at Rs 13.35 crore

Company’s consolidated revenue from operations also declined to Rs 465.61 crore during Q3 FY’19, down 8.8 per cent as compared to Rs510.69 crore in the corresponding period a year ago.

Maruti Suzuki consolidated Q3 profit up 4% at Rs 1587.4 crore

The company had posted a consolidated profit of Rs 1524.5 crore in the same quarter last year.

Maruti Suzuki Q2 PAT down by 39% at Rs 1391.1 crore

The company’s revenue also declined 24.26 per cent to Rs 22,443.9 crore as against Rs 169,97.9 crore in the same quarter last year.

Three Japanese Directors resign from Maruti Suzuki Board after dismal Q1 results

Kazunari Yamaguchi, Kazuhiko Ayabe and Toshiaki Hasuike have resigned from the board of the company with effect from 26th July 2020, the company informed BSE in the regulatory filling. ​ ​​

JBM Auto Q3 net profit jumps 15.22% at Rs 19.83 crore

Sales, for JBM Auto during Q3 FY19, stood at Rs 429.89 crore as against Rs 396.35 crore a year ago, thereby posting a rise of 8.46 percent.

Setco Automotive Q3 net profit drops by 35% at Rs 7.21 cr

The company posted Profit after Tax of Rs 7.21 Cr. in Q3FY19, down by 35% YoY due to the normal tax rate of 34% applicable in FY19 as compared to 21% in FY18 (actual rate was 8% in Q3FY18).

Hero MotoCorp Q3 PAT dips 4.5% to Rs 769.1 cr

The company had posted a PAT of Rs 805.43 crore for the same period previous fiscal, Hero MotoCorp said in a regulatory filing.

Mitsubishi Motors Q2 profit rises 22%, beats estimates

Operating profit at Japan’s sixth-largest carmaker was 28.8 billion yen ($254 million) in July-September from 23.6 billion yen a year earlier.

Goodyear India Q2 profit down 31.42% at Rs 28.74 crore

Total income during the period under review stood at Rs 499.12 crore. It was at Rs 425.26 crore in the same quarter last fiscal.

JK tyres Q2 profit surges three times at Rs 51.95 crore

The company had posted Rs 17.43 crore consolidated profit for the same period last year, as per company release.

TVS Motor Company posts revenue growth of 22% in Q2 of FY19

Total revenue grew to Rs. 4994 Crores in the current quarter of 2020-19 from Rs. 4098 Crores in the quarter ended September 2020.

Coal India first quarter net profit surges 61% to Rs 3,786 crore

The coal mining company had reported Rs 2,350.78 crore profit in the year-ago quarter.

Setco posts two-fold revenue growth at Rs 137.3 cr in Q1 FY19

The company reported an EBITDA margin of 15.1 per cent, which is the best for the first quarter in any fiscal year. It posted a net profit of Rs 8.2 crore, compared to a loss of Rs 11.8 crore in the corresponding period.

Ford profit falls by almost half, misses Wall St estimates

The No. 2 U.S. automaker reported a second-quarter net profit of $1.07 billion, or 27 cents a share, compared with $2.05 billion, or 51 cents a share, a year earlier

Ceat posts multifold jump in Q1 profit at Rs 71 cr

Revenue from operations rose to Rs 1,706.33 crore as compared with Rs 1,459.72 crore in April-June, 2020-18, Ceat said in a regulatory filing.

ONGC fourth quarter net profit up 36.2 per cent at Rs 5,915 crore

Total income of the company during the quarter rose 5.3 per cent to Rs 27,703 crore from Rs 26,361 crore in the corresponding quarter previous fiscal.

BPCL fourth quarter net profit up 45 per cent at Rs 2,674 cr

Bharat Petroleum Corp (BPCL), the nation’s second-largest fuel retailer, today posted a 45 per cent jump in net profit for the quarter ended March 2020 at Rs 2,674 crore on a standalone basis as compared to Rs 1,842 crore reported for the same quarter previous fiscal.

Sundaram Finance reports 16% rise in profit for FY 17-18

The quarter registered net profit of Rs 131crore as compared to Rs 139 crore for the corresponding quarter last fiscal.

Tata Motors Q4 net profit down 50% at Rs 2,176 cr

The company had posted a net profit of Rs 4,336.43 crore during the January-March quarter of the previous fiscal, Tata Motors informed in a regulatory filing.

Tata Motors revs up ahead of Q4; what to expect

Brokerage firm Motilal Oswal sees 11.30 per cent year-on-year (yoy) rise in net profit of Tata Motors.

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