Daily Market Analysis

Daily Market Analysis – 14th June 2021 (Adani)

bySudhanva DharmadhikariJune 14, 2021

The infrastructure push in the country has been gaining momentum steadily. Last week Reliance Infra raised up to Rs.550 crore by preferential allotment of shares to reduce debt and fund future growth. Adani group has incorporated a new wholly-owned subsidiary Adani Cement Industries increasing the competitiveness in the booming cement sector which is expected to do well in the coming years. India’s robust domestic demand is one of the major reasons for the bullishness in the cement sector. ICICI raised Rs.3,001 crore via infrastructure bonds which is another reflection of the expectations of infra development in the country.

Adani Group stocks pummeled between 5%-20% as reports pertaining to the NSDL freeze on 3 FPI accounts surfaced. This freeze makes it impossible for the three FPI accounts – Abula Investment Fund, Cresta Fund and APMS Investment. Together, they own over Rs.43,500 crore worth of shares in four of the Adani group companies. The promoter group holds a majority stake in Adani Transmission (74.92%), Adani Enterprises (74.92%), Adani Total Gas (74.80%), and Adani Green (56.29%). The NSDL freeze is reportedly due to an “Inadequate beneficial ownership document” under the Prevention of Money Laundering Act (PMLA). There is a need to remain cautious as the impact of this freeze could have a long-term bearing on the future of the Adani group and its corporate governance standards.

The Indian IPO market is expected to see a bumper revival after a slow FY 2020-21. The bullish market has set up a great platform for the IPO season. Over a dozen financial services companies have filed draft papers for IPO issues worth close to Rs.55,000 crores. The major chunk of this issue will come from the record-breaking Paytm IPO which plans to raise upwards of Rs.22,000 crore from the issue. This week alone will see 4 companies launching their IPOs worth Rs.9,123 crore collectively. Shyam Metalics and Sona BLW Precision Forgings will launch on Monday while Krishna Institute of Medical Sciences and Dodla Dairy will open for public subscription on Wednesday. Meanwhile, LIC is looking to raise up to Rs.25,000 crores from anchor investors in the IPO issue.

Also read: New Income Tax Portal For e-Filing 2.0 | Portal Features & Benefits (fintoo.in)

Auto companies cut down on costs to increase the spending in R&D towards Electric Vehicles (EVs) by around 6.5%. Mahindra and Mahindra are expected to spend Rs,3.000 crores as Capex towards EVs in the next three years. Tata Motors will look to spend the same amount this year focused on EVs. Tech companies including Tata Elxsi and Capgemini have been bagging new projects to support this R&D initiative by the Automakers. Infrastructure development still remains one of the major laggards in this segment. India is expected to see major growth over the next five years in the EV segment.

Axis Bank is planning to increase its stake from 13% to 20% in max life insurance company over the next 12 to 18 months. According to the deal, there will be no change in the brand but Axis bank will become the joint venture partner stated in the tagline. Max life renewal premium has been on the growth and so is the product line with 14 new product launches and variants over the last year. Max life also recorded a 22% rise in their total new business premium to Rs.6,826 crores.

Oil prices hit an all-time high again for the third week. The outlook for demand has improved drastically. Brent crude was up 0.2% rising by almost 1.1% in the last week. US west texas intermediate was also up by 0.2% rising by 1.9% in the last week. Goldman Sachs expects the Brent crude prices to touch $80 per barrel with the increase in worldwide economic activity. OPEC+ has kept the supply under control since the demand was wiped out in 2020. There needs to be a supply revival from OPEC+ to meet the rising demands to help keep the oil prices under check.

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Daily Market Analysis

Daily Market Analysis – 11th June 2021 (Tata)

byDurgesh BhoirJune 11, 2021

Tata Digital is set to acquire majority stake in e-pharmacy 1MG

This investment is in line with Tata group’s vision of creating a digital ecosystem that specifically addresses consumer needs across various categories. This is the second major investment of the company in an Indian startup. Recently they announced a $75 million investment in fitness startup Curefit and the current deal is a primary and secondary share sale worth $250-$270 million along with other investors. $160 million will be in the form of primary infusion into the company and Tata Digital is expected to own almost 60% in 1MG and will increase its shareholding in the e-pharmacy startup in the coming months. With this fundraising, 1MG’s valuation is expected to cross $450 million from $270 million before the deal.

SEBI is considering one more option/avenue for retail investor to buy shares in IPOs

SEBI – India’s capital market regulator may open one more avenue for retail investors to pay for shares that are offered in IPOs. The talk is going on with the central bank and payment banks so that these payment banks can accept money from IPO applicants though they are not allowed to accept IPO subscriptions. The main purpose of this is to ease out the efforts involved in subscribing to new share sales and allow investors in smaller cities and towns to buy stocks. Also, involving payment banks in this process can actually make the entire process quicker and faster as app-based payment reach is much higher in Tier 2 or Tier 3 cities.

Home and personal care segment – Galaxy Surfactants Limited

In an interview with Mr. Saurabh Mukherjea – Founder & Chief Investment Officer of Marcellus Investment Managers, he was asked to identify a champion from the mid and smallcap space. According to him, the cleaning and personal care segment is something that can be recommended and he has identified one company in this segment i.e. Galaxy Surfactants Limited. This is the largest manufacturer of surfactants in the country and supplies to companies like Unilever, P&G and so on. The company has a large business which goes into personal care products like lotions and skincare and so on. The company has a substantial export franchise. Profit after tax (PAT) has been at around 20-22 percent for the last 5 years with a strong balance sheet, clean management team, and strong R&D capability.

Sharp decline in auto registrations

Retail sales of automobiles were badly hit in the month of May as vehicle dealerships shut across most states because of localised lockdowns imposed by state governments. Vehicle registrations fell 55% to 535,855 units on a month-on-month basis this May. This decline is even more noticeable at 70.6% when compared with 1,822,566 units sold in May 2019. Retail sales of vehicles were negligible in May 2020 due to the nationwide lockdown. This time not only urban markets but rural areas are also badly hit.

Registrations in different auto segments:

Vehicle segment – dipped 59% to 85,733 units
Two-wheeler – fell by 52.5% to 410,757 units
Commercial vehicles – fell by 65.9% to 17,534 units
Tractor sales – fell by 56.6% to 16,616 units in May

Also read: Quick tips for financial planning in 2021 – Fintoo Blog

India’s agriculture exports have shown a jump of 17.34% in FY21

India is seeing growth in the export of cereals, non-basmati rice, wheat, millets, maize and other coarse grains in spite of pandemic disruptions which is driven by the government’s policy-level interventions as well as the expansion of products into new markets.

The export of agriculture has been stagnant for the last three years. However, the same during 2020-21 grew 17.34% to $41.25 billion. In 2017-18 and 2018-19, it was around $38 billion and thereafter declining to $35.16 billion in 2019-20.

Major contributor towards this growth is “various programmes from agriculture policy December 2018.

Highest growth has been recorded in Indonesia, Bangladesh and Nepal.

IIFL Home Finance plans to raise Rs. 1,000 Cr via bond sale

IIFL Home Finance is planning to raise Rs. 1,000 Cr in bonds and targeting 18% growth in this fiscal year despite challenges faced by them. The company has solid co-lending arrangements with Standard Chartered Bank, ICICI Bank and Central Bank of India to grow its loan portfolio. As of March 2021, its loan portfolio stood at Rs. 14,439 Crore. The AUM by way of securitization and off-balance sheet exposure was at Rs. 20,700 Crore. The company is seeking approval from SEBI for the bond issue. Issuing non-convertible debentures are one of the options the company is looking for fundraising.

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Daily Market Analysis

Daily Market Analysis – 10th June 2021 (Adani)

byYash ChhedaJune 10, 2021

Adani Group plans launch IPO and hive off it’s airport business

The Adani Group has begun preliminary talks to separate its airport business from the holding entity Adani Enterprises Ltd. It is expected to raise $500 million through a private placement of shares in Adani Airports Holdings. Adani controls Mumbai airport, India’s second busiest, as well as six regional facilities – Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram. It is targeting a valuation of ₹25,500-29,200 crore ($3.5-4 billion) for the business. The group is awaiting better air passenger numbers after the Covid. The unit has become the country’s top airport platform, catering to at least 10% of India’s air passenger traffic, exceeding 200 million people in FY20.

Adani Wilmar prepares to launch IPO of nearly $1 billion In 2021

Gautam Adani-led port-to-power conglomerate Adani Group is preparing to raise nearly $1 billion in 2021 through an initial public offering (IPO) by Adani Wilmer, which aims to be the largest food company in India by 2027, is trying to muscle its way into the fast-growing consumer segment and unlock value through the IPO. If the plans fructify, it will be the seventh firm to be listed from the diversified group’s stable. “Most of the Adani Group business is infra-related. It’s a good opportunity now to showcase their consumer business.

Also read: What is an IPO? | How to choose in which IPO to Invest? – Fintoo Blog

FMCG sector sees drop in sales for two consecutive months

India’s fast-moving consumer goods (FMCG) market contracted by a third in May from the preceding month due to lockdowns and restrictions in most states that led to a significant drop in orders from local grocers. FMCG sales declined by 32%. In April, sales had shrunk by 16%. The reason can be because companies focus on providing the essential key products rather than the entire range of products. The personal care segment declined by 52% as consumers avoided stepping out of their homes. During this lockdown, people didn’t expect shortage and controlled their essential shopping rather than piling up and creating unnecessary demand.

Yes Bank jumps 6%, board to consider fund raising

Shares of Yes Bank surged 6% on Monday after the private lender announced the board meeting to be held on Thursday, June 10, 2021, to consider the fundraising. The board will consider and approve, seek shareholders’ approval for borrowing/raising funds in Indian/foreign currency by issue of debt securities including but not limited to non-convertible debentures, bonds, Medium Term Note (MTC). The company had reported a net loss of Rs 3,787.75 crore for the quarter ended March as against a net loss of Rs 3,668.3 crore in the year-ago quarter due to a rise in provisions.

Cabinet Allocates 5 MHz spectrum for Indian Railways to improve communication and signalling

The Union Cabinet on Wednesday allocated a 5 MHz spectrum in a 700 MHz band for Indian Railways in order to boost hi-speed radio communication. 25,000 crore will be spent in the next 5 yeasts for signal modernizations and 5g spectrum implementation in Railways. This will improve the signaling train protection system and ensure seamless communication between two loco pilots and guards. It will also enable the Internet of Things-based remote asset monitoring especially of coaches, wagons and locos, and live video feed of CCTV cameras in the train coaches to ensure efficient, safer, and faster train operations. The modern rail network will result in reduced transportation costs and higher efficiency.

ITC

ITC – A Giant about to get un-shackled. It is going to split into three companies in the next 12-18 months. ITC Hotels business manages large amounts of top quality hotels in India and abroad and also has a huge land bank and this will give rich valuation to ITC Hotel business as well. Analysts are expecting an ITC share that is trading at Rs. 205-215 levels to have a valuation of Rs. 1500-2000 (combined value of all three demerged shares) by 2026-27 (5-6 yrs from now).

The three companies which are likely to get formed are:

ITC Cigarette Division
ITC Hotel Division
ITC Agro & Consumer Division

The fourth division which is Infotech is likely to get sold as it is not a focus area for the company. Once this Demerger is done, ITC Cig Division share will get the highest valuation, followed by ITC FMCG share and followed by ITC Hotel Division.

Paytm unit seeks RBI exemption from NBFC

Paytm Entertainment – a subsidiary of fintech giant Paytm – faces the risk of being classified as a Non-Banking Financial Company (NBFC) after it lent money to a joint venture business that exceeded the central bank’s limits. RBI rules say if a company derives 50% of its total assets and income from financial assets, it needs to register with the central bank as an NBFC. They have approached the Reserve Bank of India, seeking exemption from being categorised as a finance company as it is not in the business of lending.

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Daily Market Analysis

Daily Market Analysis – 9th June 2021 (ICICI)

byYash ShahJune 9, 2021

Axis MF added most folios in FY21; followed by ICICI, whereas HDFC loses client base

The Axis Mutual Fund beat the top three mutual funds in the industry to record its largest addition to new folios in FY-21. It added 20,42,150 new folios in FY-21 whereas ICICI added 20,42,016 new folios. In this, ICICI remained the winner in the top three which include HDFC Mutual fund & SBI Mutual fund. Mirae AMC also managed to add another 8.26 lacs new folios in this similar period, whereas ABSL AMC lost 1.20 lacs folios.

The increasing investor awareness along with the right asset allocation since years helped Axis Mutual fund to come up as a leader for the said period, whereas, for ICICI AMC, sectoral funds where it has dominance in the IT & Pharma sector funds might have played a pivotal role in the performance of the AMC, whereas acc. to the ICICI AMC’s MD & CEO, Mr. Nimesh Shah, delivering good returns throughout all market cycles with zero default rate for nearly two decades helped them throughout.

The story of IPOs to look out for

The Ed-Tech Startup Byju’s is planning to go public before April 2023. On April 5, the startup acquired Aakash Educational Services Ltd. cracking a deal worth $1 Billion (7300 Cr.) marking its biggest acquisition to date. Byju’s, the most valued ed-tech startup in the country, is backed by marquee investors like Mary Meeker, Yuri Milner, Chan-Zuckerberg Initiative, Tencent, Sequoia Capital, Tiger Global and others. It is estimated to have raised over USD 2 billion in funding to date.

As the Pandemic situation has enticed the educational systems all over the world to restructure the way they work, Byju’s should be an interesting IPO to watch out for. While the current valuation of Byju’s is $16.5 Billion which is amongst the highest globally whereas that of Unacademy stands at $2 Billion.

Also read: Wealth Habits – Learn, Unlearn and Relearn – Fintoo Blog

Vedanta gets a nod to acquire Videocon

The Bankruptcy court of India gave a nod to Anil Agarwal’s Twin Star Technologies (a part of the Vedanta Group) to acquire Videocon Industries Ltd. The company will put up 5 billion rupees within 90 days and the rest as non-convertible debentures over a period of time.
Videocon’s debt stood at over 635 billion rupees in 2019, out of which, 574 billion rupees was owed to over three dozen banks and other financial creditors.

Paytm IPO moves an inch ahead

Recently Paytm came up with a draft red herring prospectus that gives the employees of the company the option to sell their shares ahead of the IPO. The company, whose investors include Berkshire Hathaway Inc., SoftBank Group Corp., and Ant Group Co., is seeking to raise about 218 billion rupees ($3 billion) at a valuation of around $25 billion to $30 billion.
Paytm’s public market debut will include a mix of new and existing shares to meet regulatory obligations in India. The country’s regulations require that 10% of shares are floated within two years and 25% within five years. Paytm Is Said to Target $3 Billion IPO, Largest Yet in India.

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Daily Market Analysis

Daily Market Analysis – 8th June 2021 (Mutual Funds)

byfintooJune 8, 2021

Franklin Templeton AMC slapped with a fine of 5 crore; Banned from launching new debt mutual funds

The SEBI has banned Franklin Templeton AMC from launching debt schemes for the next two years. Rs 5 crore penalty has been levied for “several irregularities” in the running of its six debt schemes that were wound up in April 2020. The irregularities extend to failures to exercise adequate due diligence, carry out valuation of securities as per the principles of fair valuations and ensure a robust risk management framework.

A refund of Rs 451 crore management and advisory fees with 12% interest has also been ordered along with separate adjudication proceedings against the CEO & Directors.

SEBI asks mutual funds to classify debt schemes on credit, interest rate risk basis

AMCs will have to classify all debt schemes in terms of a potential risk class matrix, based on interest and credit risk, SEBI announced. AMCs will have full flexibility to place single or multiple schemes in any cell of the Potential Risk Class matrix.

Interest rate risk will be now categorized into three buckets. The lowest risk bucket Class I with a Macaulay Duration of up to a maximum of 1 year, Class II-moderate risk bucket to have MD up to 3 years and the class III can have MD above 3 years. Class I schemes will have debt paper with a maximum residual maturity of 3 years and Class II schemes with a maximum residual maturity of seven years, while maximum residual maturity has not been fixed for Class III. Credit risk will also be divided into three categories- greater than 12, greater than 10 and less than 10.

It is another progressive step to ensure the potential risks in a debt scheme are appropriately revealed to the investors and support informed decision-making.

Also read: The Five Secrets You Never Knew About Mutual Funds – Fintoo Blog

Piramal Group Likely To Complete DHFL Takeover By August

The NCLT has approved a resolution plan submitted by Piramal Group. Piramal Group’s resolution plan, which offered Rs 37,250 crore for DHFL, was approved by the committee of creditors in January with a majority. Once this happens, the equity of existing shareholders is said to be written down to zero and DHFL shares to be delisted.

DHFL’s fixed depositors are part of the committee of creditors and those with dues up to Rs 2 lakh will receive full payment on their principal amount. Depositors with dues between Rs 2-10 lakh will get 40-43% of their principal outstanding. Those with dues higher than Rs 10 lakh are likely to be repaid through a mix of cash and securities on a pro-rata basis.

RBI implements operational flexibility for reporting FPI deals in G-Secs

The RBI is to provide operational flexibility for reporting Over the counter transactions in Government securities transactions undertaken by the Foreign Portfolio Investors . The new rules will come into effect from June 14.

Due to this announcement, the information about trades undertaken by domestic counterparties with FPIs must be disseminated by the Clearcorp Dealing Systems India Ltd (CDSL) after one part of the trade is reported on the NDS-OM platform by the domestic counterparty with a suitable qualifier to indicate that the trade is awaiting counterparty confirmation.

Also watch: Daily Market Analysis – Sensex, Nifty, Go Air IPO & Debt Schemes – YouTube

Rising fuel prices in India- reasoned by Union Petroleum and Natural Gas Minister Dharmendra Pradhan

The recent surge in global crude oil prices is the major cause of the fuel price hikes in India. Its price has gone over USD 70 (per barrel) in the international market. This negatively impacts consumers here, as India imports 80 percent of its oil requirement.

He added, it is up to the GST Council to decide whether fuel should be brought under the Goods and Services Tax, which, many believe, would substantially bring down prices.

FIIs Invest 3K Crore in First 4 Days of June After Withdrawing 18K Crore in April

FIIs have net invested Rs 3,049.81 worth of Indian equities in the first four trading days of June. It is too early to make a call with certainty but this data shows that FIIs might be changing their outlook to India to a more positive one as COVID 19 infections drop and the vaccination drives in various states gather pace.

Economies across the world have also opened up and exports from India are going up with Indian merchandise exports up 67.39% to $32.21 billion in May compared to May 2020 and goods exports are up 195.7% in April 2021 compared to 2020.

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Daily Market Analysis

Daily Market Analysis – 4th June 2021 (Flipkart)

byAkshay ShahJune 4, 2021

3 Years after exit, SoftBank looking to reinvest in Flipkart

SoftBank Vision Fund has held discussions with Flipkart to invest around $600-700 million, three years after the Japanese group exited the Indian online retailer by selling shares to Walmart Inc. This would mean that Flipkart will stay on as a private company for longer than what was being earlier talked about going Public early next year.

Flipkart is pushing to build an ecosystem in order to compete with Amazon, Reliance and the Tata Group. While it leads in fashion e-commerce with Myntra. Online payments player PhonePe, which was a part of the Flipkart Group, was spun off from the e-commerce company last year. In April, the online retailer acquired Cleartrip to strengthen its presence in the travel and hotel booking space. Last year, Flipkart invested ₹1,500 crore to pick up nearly 8% stake in brick-and-mortar fashion retailer Aditya Birla Fashion and Retail Ltd (ABFRL) and also bought a 27% stake in Arvind Fashions’ subsidiary Arvind Youth Brands. Other recent investments include Shadowfax, a logistics startup and Ninjacart, a fresh produce supply chain company.

If the deal materialises, it will be a big move by SoftBank in India’s e-commerce market, which it has reordered with massive cash infusions.

Also read: How To Select Your SIP Investment As Per Your Goal – Fintoo Blog

DMart acquired as many as seven properties worth ₹400 crore

DMart goes on a property acquisition spree during COVID-19 as the company looks to increase its footprint by taking advantage of the subdued real estate prices. The company has the same ideology as that of McDonald’s that is instead of leasing the property it purchases the property in this way the Assets of the company increases and also the ecosystem that it will build near its property increases the value of the property multifold times. DMart has increased its presence in places such as Mumbai, Hyderabad, Pune and Bengaluru with the recent property acquisition.

Rossari Biotech to acquire Unitop Chemicals

Rossari Biotech a specialty chemicals company on Wednesday announced that it will acquire Unitop Chemicals, a supplier of surfactants, emulsifiers, and specialty chemicals, for ₹421 crores. Rossari will be acquiring 100 percent of the equity capital of Unitop Chemicals. The acquisition will be done on an all-cash basis as the company concluded a preferential issue of equity aggregating to ₹300 crores to augment the strength of its balance sheet. In this way, the company won’t be adding any additional debt to its book and would just use the money raised from equity to fund its acquisition.

This acquisition will bring complementary dimensions to Rossari Biotech and help expand its product portfolio, presence in adjoining areas of specialty chemical segments, pooling together of related technologies, larger international exposure, better domestic market reach, well-experienced and competent talent pool, and increased end-user industry applications.

RBI’s Monetary Policy Committee meeting

India’s Monetary Policy Committee meeting announced that the panel is maintaining repurchase rate unchanged at 4%. The RBI expects the economy to expand 10.5% in FY2022E, and its view on GDP growth rate after a slew of recent high-frequency indicators showed a hit to activity will be key to watch out for. RBI’s current reading is underpinned by expectations of a normal monsoon, a return of pent-up demand once lockdowns end and an improved pace of vaccination. A rise in input and wholesale costs due partly to supply disruptions caused by the pandemic are beginning to feed into retail inflation — the measure targeted by the RBI to decide its monetary policy setting. That could nudge the central bank to revise its forecast, which is pegged at 5.2% for H1 FY2022, 4.4% for the Q3 FY2022E and 5.1% for Q4 FY2022E.

Model Tenancy Act

The Centre on Wednesday had approved the Model Tenancy Act(MTA), 2021 with a provision to set up district-wise rental courts, authorities and tribunals across the country for adaptation of enacting fresh legislation or amending existing rental laws.

India has over 1 crore units which are lying unutilised, and the number may be much higher now. The MTA will unlock vacant houses for renting purposes and promote private participation in addressing the housing shortage. This move will be a big boost for the rental housing space in India.

Balanced Advantage Funds have cut their exposure to Equity

Fund Managers have reduced their equity stake in Balanced Advantage Funds as they see that the valuations of the companies are no longer cheap and the current bullish run of the market is due to the excess liquidity present in the market. Fund managers feel that there is a bubble in the market which would bring a correction in the market. Most of the fundhouses have reduced their stake towards equity to approximately 30-35% of the total portfolio and are currently sitting on cash reserves.

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Daily Market Analysis

Daily Market Analysis – 3rd June 2021 (Tesla)

byBhavin ShahJune 3, 2021

Tesla preparing its India arrival

The EV makes is closely following changes in GST that may reduce the cost of owning an electric car. Tesla is recruiting its India leadership and senior-level roles as it gears up to break into one of the world’s emerging car markets. Tesla has picked up Karnataka to set up its first plant. Under PLI manufacturing incentive will keep on rising. Major pushback for Tesla will be the major middle-class population and lack of charging infrastructure.

Mercedes-Benz’s out of the box thinking

The most successful luxury brand in the country has plans to stay at the top, even as a pandemic has taken a toll on its business in the country. The German luxury carmaker with its new ROTF (Retail of The Future) model will be a direct D2C business model, the company will have franchise partners in India and under the new model, they will have a low market and investment risk. The company will own the entire stock of cars so it will be invoicing cars to customers directly, the franchise will be responsible for sales, customer relations, and lead generation. Not owning the inventory, the franchise partners will have access to centralized stocks owned by the company, this will help the customer with more options on the model, variant, and color of their preference and no longer limit their choice to inventory available at the franchise only. Customers can avail best prices from the company itself under the new model, the model is expected to start from a quarter of CY 2021. As of now, it seems like a masterstroke by the company to stay ahead of the competitors and increase market share.

Pent-up demand coming soon – Electronics, Mobile & Auto

Consumer electronics, smartphones, and auto companies are raising production this week after plants were shut for more than 2 weeks on the back of rising covid cases. Companies are expecting sales to normalize soon as pent-up demand comes into play. Companies to track Maruti, Tata Motor, M&M, Bajaj auto, hero moto.

Also read: What Is Reverse Mortgage? How You Can Benefit From It – Fintoo Blog

Radico Khaitan Ltd – Good times ahead

The company reported a 2-fold jump in profit for Q4. Strong demand led to a 30% rise in revenue to 2881.19 crores compared to last where it stood at 2209.11 crores. The company experienced YoY growth in most markets they perform, despite the pandemic company reported strong earnings expansion. For a full year companies net profit rose by 20.96%, revenue rose to 10.08%. For the first time sales have crossed 10,000 crores. Unlike last year’s partial and localized lockdown, this year has not disrupted the company’s business. Plants running at optimum capacity and the company declared a dividend of 2.40 per equity share

Motherson Sumi Robust Q4

The share price rallied by 13% on the back of splendid Q4 performance. Net profit rose to 713.62 crores compared to 183.38 crores. Revenue rose by 17.57%, EBITDA by 38.7%, and margin by 10.1%. Dividend of 1.50 per equity share declared. Semiconductor shortage globally is likely to a headwind for OEM productions. Vivek Chand Sehgal (chairman) Q4 results are a reflection of our hard work that our teams have put in globally and sets the tone for us to achieve our Vision 2025 targets.

India walking the talk on Ethanol blending

The government has set up a target of 10% ethanol blending in petrol by 2022 and 20% ethanol blending in petrol from 2025 to 2023 which will help reduce the country’s dependence on costly oil export. This will be another big boost for the sugar industry after the failed crop season in brazil. The sugar industry will divert 6 million tonnes of surplus sugar to produce 7 billion liters of ethanol.

Snowman Logistics Ties-up with Dr. Reddy

The company announced a strategic partnership with Hyderabad-based Dr. Reddy’s to provide temperature-controlled end-to-end logistics solution for delivery of two dose sputnik covid-19 vaccine across India. This will give a huge boost to the company’s earnings and possibly more tie-ups with global vaccine manufacturers for delivery across India.

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Daily Market Analysis

Daily Market Analysis – 2nd June 2021 (Share)

byVishvesh PethkarJune 2, 2021

Reliance Industries Ltd share prices may jump 45%, which are already up 10% in 3 days

The rally in RIL share may continue if current Petrochemical spreads sustain, this will result in Re-Rating of Oil to Chemical stake sale by RIL, which may drive the stock price up by 45% from current levels.

The polymer spreads are at decade highs, helped by strong downstream demand from industries like Auto,Durables,Consumer Goods,Packaging and Medical supplies.

RIL share price has underperformed since the beginning of the year, with Nifty up 10.8% and RIL shares up only 8%. The sustained strong growth of petrochem performance will improve the stock performance as well, with Jefferies having a Target price of Rs.2580 and an optimistic target price of Rs.3150.

Carlyle Group to acquire a controlling stake in PNB Housing Finance

Private Equity firm Carlyle Group will acquire a controlling stake of more than 50% in PNB Housing Finance for Rs. 4000 crore.

The transaction is expected to be completed by 1st Jan 2022 and the Carlyle group will have the right to nominate the chairperson of PNB Housing Finance.

The Carlyle Group will own 50.2% stake through 2 of their entities namely Pluto Investments & Quality Investment holdings.

PNB will continue to be the promoter and a key stakeholder, till 31st March 2021 it held 32.65% stake,which will reduce to 20.3%.

Aditya Puri former MD of HDFC Bank will infuse capital of 25 crores into PNB Housing Finance for a stake of 0.2% through Family investment firm Salisbury Investments.Since this news the stock was up 20%.

The Carlyle Group has invested more than $1.7 billion of equity in 8 financial services companies as of March 2021, and $3.2 billion in India overall.

Also read: What is an IPO? | How to choose in which IPO to Invest? – Fintoo Blog

Auto Sales hit in May 2021 due to lockdown

Auto sector has been hit by the second wave and lockdowns across states.

Market Leader Maruti Suzuki reported 71% decline in sales in the months of May, along with them, Mahindra & Mahindra also reported 52% drop and Hyundai sales also declined by 48%.

Sales of Tractors, Private Vehicles, Commercial Vehicles and 2 Wheelers are going to be affected by the current lockdown like restrictions.

Tractor volumes are low since some rural areas are severely affected, Personal Vehicle and 2 Wheeler sales will likely be slow, along with that Commercial Vehicle volumes will be affected due to lower freight availability which will result in postponement of new orders.

Oil extends gains on OPEC supply discipline and demand prospects

Oil prices increased with OPEC sticking to cautiously bringing back the soil supply in the market in June and July, with the expectations of robust recovery in the USA and China the world’s 2 biggest oil consumers.

Brent Crude price is at $70 currently, after solid demand from USA and China, also the vaccine rollouts will only help to further rebalance the global oil market.

The producer group will return to 7 million barrels per day in June and 8.4 million barrels per day in July.

The ongoing talks about sanctions between Iran and the USA have hit a roadblock this week and it is unclear if they will be restored before Iran’s presidential elections on June 18, which will provide room for the demand to catch up.

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Daily Market Analysis

Daily Market Analysis – 1st June 2021 (GDP)

byVishal JoshiJune 1, 2021

India’s GDP grows 1.6% in fourth quarter, contracts 7.3% in FY 20-21

Amid the coronavirus pandemic, India’s gross domestic product (GDP) grew at 1.6% in the January-March quarter of fiscal year 2020-21, but witnessed a contraction of 7.3 per cent for the entire fiscal year.

This is the first full-year contraction in the Indian economy in the last four decades since 1979-80, when GDP had shrunk by 5.2%. This is also the second straight quarter of expansion since India exited a rare recession.

India’s GDP figures showed the growth at 3% in Q4 of FY20, while growth for FY20 came at 4%, an 11-year low.

Sector wise Q4 FY20 GVA Growth Analysis:

“Manufacturing sector”- accelerated to 6.9% in Q4 FY20 compared to a contraction 4.2% a year ago.
“Farm Sector”- down at 3.1%, compared to 6.8% a year ago.
“Construction Sector”- grew by 14.5% from 0.7% a year ago.
“Mining Sector”- shrank by 5.7 per cent, as against a contraction of 0.9% a year ago.
“Electricity, gas, water supply and other utility services Sector”- grew by 9.1%, against 2.6% expansion a year ago.
“Trade, hotel, transport, communication and broadcasting services Sector”- contracted by 2.3% from 5.7% growth earlier.
“Financial, Real estate and Professional services Sector”- grew by 5.4% from 4.9% growth a year ago.
“Public administration, defence and other services Sector”- growth fell to 2.3% from 9.6% a year earlier.

RBI Governor-led Shaktikanta Das Monetary Policy Committee, in its first bi-monthly monetary policy review for FY21, retained its GDP growth projection at 10.5% for FY21.

The economy, which was facing a slowdown even before the pandemic, now confronts a crash of consumer demand – constituting over 55% of the economy – as household incomes and jobs have declined. Unemployment soared to a near one-year high of 14.73% in the week ending May 23, according to the Centre for Monitoring Indian Economy, a Mumbai-based private think tank

Finance Minister Nirmala Sitharaman, who said on Friday that “no decision has been taken for another stimulus package”, has limited space due to a fall in tax collections and rising public debt.

11 year low growth in GDP, one-year high unemployment of 14.73%, no signs of stimulus package from government due to falling tax collections & rising public debt, seems to worsen the situation going forward for next year. Though GDP growth in Q4 has given hopes & experts are still positive while making optimistic Growth projections for the upcoming year.

Government approves four firms under PLI scheme for bulk drugs

The government has given approval to four waitlisted firms under the Production Linked Incentive (PLI) scheme for domestic manufacturing of bulk drugs.

The companies which have been given approval are — Solara Active Pharma Science Ltd, Rajasthan Antibiotics Ltd, Dhatri Lab Pvt Ltd and Vital Laboratories Pvt Ltd.

It envisages setting up greenfield plants in four different target segments with a total outlay of Rs 6,940 crore for the period 2020-21 to 2029-30.

The “PLI scheme” was launched by Department of Pharmaceuticals for promotion of domestic manufacturing of critical bulk drugs- KSMs/APIs. With this, a total of 46 applications with committed investment of Rs 5,355.44 crore and expected employment generation of about 11,210 have been approved by the government so far under the PLI Scheme for Bulk Drugs. Setting up of these plants will make the country self-reliant to a large extent in respect of these bulk drugs

“Solar active Pharma science Ltd.” is the only listed company out of the 4 approved companies. Due to the approval by the government under PLI scheme for domestic manufacturing, we can expect the positive growth in share prices of Solar active Pharma science Ltd in the longer term.

PSU banks plan Rs. 8,500-9,000 crore of QIPs

Public sector banks are expected to launch qualified institutional placement (QIP) offerings worth ₹8,500-9,000 crore in the next quarter amid a rebound in equity markets, according to sources in the know.

“Indian Bank”, “Bank of Maharashtra”, and “Canara Bank” expected to launch their offerings between July and September.

These QIP offerings are going to boost the PSU Banking sector. Such offering is also expected to provide cushion for further declines in the performance of the PSU banks. The launch of Rs 8,500-9,000 crore of QIPs can be considered as the relieving news for the investors. And the stocks of Indian Bank, Bank of Maharashtra, and Canara Bank should be kept on watchlist as with the execution of expected launch of offering between July & September has fair amount of chance to increase market shares.

Auto companies prepare financial packages to help dealerships

Several of India’s leading automakers are working on or rolling out incentive packages to support their dealers who have been hit hard by lockdowns in states to check the spread of the Covid-19 pandemic.

These incentives being planned or offered by “Maruti Suzuki”, “Tata Motors”, “Renault India”, “Toyota Kirloskar Motor”, “Daimler India Commercial Vehicles” and “Honda Motorcycle” & “Scooter India” include financial support to offset interest cost on inventory during the lockdown, extension in credit periods, insurance cover, salary support and vaccination expenses.

Companies are also working at quick resolution of claims to facilitate cash flow at dealerships, as retail outlets gradually open up with several state governments expected to ease restrictions over the next few weeks, as the number of Covid-19 cases falls.

These incentives are expected to help the dealers, who were badly affected by the pandemic, to improve their operation and sales & in-turn these are expected to help the auto companies to achieve growth in the net revenues.

Banks begin process of restructuring of loans up to Rs 25 cr

To provide support to small businesses hit by the second coronavirus wave, banks have initiated the process of restructuring pf loans up to Rs 25 Crore in line with the Covid-19 relief measures announced by the RBI earlier this month. Many lending institutions have got board approval for the resolution framework and eligible borrowers are being contacted For example, “Bank of India” has already sent messages to its eligible customers, meanwhile “Punjab & Sind Bank’s” debt recast plan has been approved by the board.

With this the Banking Sector can be expected to perform good at least for THEnext Quarter, though chances can’t be neglected to see the sector again in trouble 2-3 Quarters down the line.

Also read: Daily Market Analysis – 6th May 2021 (Global Economy) – Fintoo Blog

Has RBI really endorsed crypto transactions in India?

Hours after major Indian banks, including State Bank of India (SBI) and HDFC Bank sent emails to customers warning against using their services to trade in crypto currencies, the Reserve Bank of India (RBI) has clarified that banks cannot cite the 2018 circular for such communications. This is because the circular was quashed by the Supreme Court of India on a petition filed by Internet and Mobile Association of India in March, 2020.

Clearly, the clarification doesn’t mean that the RBI is endorsing crypto trading. The regulator, in fact, has not taken any position on the validity and legality of cryptocurrency transactions in India. It has only avoided a potential legal hazard—inviting contempt of the apex court by maintaining silence when a clutch of banks has used its old, invalid circular to keep the crypto lobby away. The RBI has only asked banks not to shoot from its shoulder. The language indicates high caution. Banks will not have the backing of the regulator and will have to deal in crypto at their own risk.

Pepperfry expects to join unicorn club soon, to launch IPO after booking profit

Online furniture company Pepperfry would be in the unicorn club – companies with a valuation of more than USD 1 billion – by the time its initial public offer hits the market,

The company has raised USD 235 million till date from Norwest Venture Partners, Goldman Sachs, Bertelsmann Investments India (BII).

Pepperfry announced plans to add 200 offline studios on FOFO (franchise owned franchise operated) across tier 2 and tier 3 towns. Studios contribute 30 per cent in the overall business. With new studios coming up, their contribution in business should be going to upwards of 40 per cent. The stores will come up with at least 100 new cities. The company has already opened over 70 studios across 40 cities in the last six years out of which 32 are based on the FOFO model.

Currently the online business model contribute to 70% in overall business, which is the main reason that amid the coronavirus pandemic, the company’s business is still in good position and it is further expected to grow once planned addition of 200 offline studios on FOFO model starts contributing to the overall business.

Work From Home (WFH) leads to surge in demand for office furniture rentals: Industry experts

Corporates and independent consumers are renting ergonomic curated products to make working from home more efficient, especially in metro cities, resulting in surge in furniture rentals, according to industry players.

Many companies have also tied up with “Fabrento” for providing a comfortable office set up to their employees, as told by Fabrento founder Sidhant Lamba.

“City Furnish” company has witnessed 40 per cent increase in demand for WFH solutions like study tables and chairs, announced by founder and CEO Neerav Jain.

In the Furniture Sector, such online rental marketplaces like Fabrento & City Furnish are expected to see high consumer demand and good profit-making opportunities for the next 6 months till WFH continues.

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Daily Market Analysis

Daily Market Analysis – 28th May 2021(RBI)

byfintooMay 28, 2021

RBI Annual Report

The RBI’s balance sheet grew 6.99% YOY to Rs. 57.07 trillion, while the rise in assets was due to an increase in foreign and domestic investment by 11.48 and 13.75%. The bank’s income declined 0.96% YOY as it transferred a surplus of Rs. 99122 crores to government, it fell to Rs. 1.33 trillion. Total expenditure decreased by 63.1%. The stock market bubble has been a worry for RBI, reiterated since August 22, 2020, where the RBI Governor had mentioned that there was a clear disconnect between the equity market and the real economy, where a surplus global liquidity is driving the asset prices worldwide. This asset price inflation in the context of an 8% contraction in GDP in 2020-21 poses the risk of a bubble. The drop in the market proved short-lived even though economic scars were long-lasting. The stock price index is mainly driven by money supply and FPI investments. Though the economic prospects also contributed to the movement, the impact has been relatively lesser. This assessment showed that liquidity injected to support economic recovery can lead to unintended consequences in the form of inflationary asset prices and providing a reason that liquidity support cannot be expected to be unrestrained and indefinite and may require calibrated unwinding once the pandemic waves are flattened and the real economy is firmly on a recovery path. The current report also has concerns about equity markets not reflecting real state of the economy. The impact of the second wave will be done in a month or two and if it is not contained will have long-lasting impacts on employment and output.

Also rea: RBI Monetary Policy – Fintoo Blog

Nifty Hits New High Today at 15455.55

View on Nifty remains bullish as long as 15100-15000 act as strong support for the index. Lot of positive trigger for markets like decreasing cases of Covid, GST meet, stimulus package and ample amount of liquidity to support the ongoing rally.

FMCG companies witnesses 50% Increase in e-commerce sales

The Covid-19 second wave and lockdowns in many states is making people click to buy than going out. While the growth in online sales in April and May was nearly as much as in last fiscal, the online sales in top cities has jumped 4-5% in last 2 months. Biscuit making companies reported online sales from e-commerce segment to around 15% in top 15 cities in April and May. Companies like Grofers have seen sales grew by 46% in April-May as compared to Feb-March period. Tata Consumers has setup separate vertical to cater to online category. Ecommerce as percentage of overall sales has doubled in FY21 compares to FY 20. With this structural change in consumption FMCG companies will see increase in sales with online market share taking away the lunch of offline retailers, going forward online consumption demand will keep increasing and sustain. Early movers will benefit exponentially in terms of gross sales.

Improvement in Q4 results for Kalyan Jewellers

Ramesh Kalyanaraman Executive Director attributed change to massive shift of consumers from unorganised sector to organised gold sector (better hygiene, more space). The shift has helped improve gross margin by 3% to 17% now. Net profit grew 54.1% YOY. Revenue declined 15.1% YOY. Has 30 showrooms in west Asia. Companies outlet increased to 116 in India, opening 9 in April of which 8 where in south India. Has plans to open 21 Showroom in India in current year. The stock should kept on watch list and see how the plans unfold in current year with timely execution of goals set, the company has fair amount of chance to increase market share and sales.

Biden Plans to Propose $6 Trillion Budget

The era of high spending looks likely to continue, President Biden is likely to propose $6 trillion spending for FY 2022 while total spending may rise to $8.2 trillion by 2031. Whereas Inflation fears are hovering over Biden’s spending plan, the White House has warned that anti-competitive practices have led to increase in construction cost, semi-conductor and shipping cost. Prices of lumber, steel, containers have spiralled upward causing inflation. Government is planning to tackle monopoly and supply shortage as price keeps on rising and hampering growth. The situation is still evolving, which need to be seen if the commodities prices would make a U-turn.

Crypto Exchange Survival at Stake in India

Crypto exchanges plan to approach the Supreme Court again to seek clarification that can RBI direct banks to stop dealing with them. Last month banks had stopped dealing with crypto exchanges on informal direction by RBI, while somehow they managed through payment processing companies. But recently, even the payment companies are shying away from dealing with the crypto-exchanges. High speculation and over leverage in crypto markets have led to wild swings in cryptocurrency, which is ultimately leading to client’s position being squared off, if additional premium is not provided. Situation is still evolving and some regulations do need to come to protect retail investors from highly speculative markets.

Government Stimulus Package for economy for the worst-hit sectors

The government is planning a stimulus package and direct relief for hospitality and MSME as they are the biggest employers and have been hit the worst amid second wave. ECLGS may be relaunched for MSME sector to avail loans without collateral. The discussion are at early stage and may be announced as state starts unwinding restrictions. The stimulus will give the economy necessary fire power to get back to growth after second wave, it will be a much needed boost for companies to kick start their business.

GST Council Meet Today

GST Council can consider zero rating or complete tax exemption on products crucially needed to fight against covid 19. Not only the products will be exempted but also inputs required to manufacture would also be exempted. This will lower the prices of life saving drugs and ventilators and oxygen cylinders, which will help overall population, decrease the death rate. The companies involved in the particular business will also benefit on increasing margin and sales.

Paytm Plans to file $3 Billion IPO

One97 communication may be planning to list Paytm this year around Diwali and targeting a valuation of $25-30 billion. Board meeting is scheduled today to approve then plan for IPO, the company has a high profile investor base like Softbank, Ant group, Berkshire Hathaway among others. Company is yet to make profit and last year’s cash burning was around 2500 crore. More details are awaited.

Trade war to start again?

The US Senate moved towards passage of a bill to confront china’s rise. This Bill would plow more than $100 billion into US R&D to foster semi-conductor manufacturing. Bill may include a wide array of measures directly targeting China on human rights and its influence in USA, which may not go well with china who has been importing millions of tons of agri products from USA under a trade agreement. Any retaliation is yet to be seen. If this thing affects the trade agreement and two world power again fighting on the economic front, then it could impact the world economy. This could be a key international trigger and needs to be followed closely.

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