Author: Ankit Gohel

BPCL shares rise over 4% as govt targets stake sale by March 2020

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Bharat Petroleum Corp Ltd (BPCL) rallied over 4 percent in early trade on Monday after reports that the government is aiming to sell their stake in the company by March 2020. Finance minister Nirmala Sitharaman said that the government is aiming to complete the stake sale of BPCL.

BPCL shares rose as much as 4.36 percent to Rs 528 per share intraday on the BSE. At 10:15 AM, shares of BPCL gained 2.59 percent to Rs 519.65 per share.

Global brokerage Morgan Stanley maintained an ‘Overweight’ rating on the stock with a target price of Rs 571 per share. According to the brokerage house, the stake sale to a non-SOE could significantly re-rate sector multiples and could unlock $15-25 billion value for fuel marketers.

The stake sale should also reduce government intervention risk and improve marketing margins, Morgan Stanley added.

The privatisation of the national carrier and oil refiner is expected to help the government meet its divestment target of Rs 1 lakh crore in the current fiscal year.

A number of global oil majors like Saudi Aramco, Rosneft, Kuwait Petroleum, ExxonMobil, Shell, Total SA and Abu Dhabi National Oil Company have shown interests in BPCL and have had initial talks with the government on bidding for the latter’s stake in BPCL, reported IANS, citing industry sources.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Here is a list of Indian companies with highest ever quarterly losses

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Telecom operators Bharti Airtel and Vodafone Idea on Thursday reported record losses for the quarter ended September 30. The companies reported combined losses of about Rs 75,000 crore over heavy provisions made for outstanding government dues, arising from a Supreme Court verdict on annual gross revenue, leading them to post higher ever quarterly loss.

Vodafone Idea posted a Rs 50,921 crore loss for the quarter in the highest ever quarterly loss posted by any Indian company in recent memory. The losses included a provision of Rs 25,680 crore over government dues.

Bharti Airtel reported a consolidated net loss of Rs 23,045 crore after making made a provision of Rs 28,450 crore, more than 92 percent of the overall charge for exceptional items, after the Supreme Court ruling.

Here are some other companies that have reported huge quarterly losses in the last few years

Tata Motors

Tata Motors reported a consolidated loss of Rs 26,960.80 crore in Q3FY19 after it took one-time exceptional non-cash charge for asset impairment of 3.1 billion pounds. Net loss from joint ventures and associates amounted Rs 138 crore. The decrease was mainly on account of lower profitability in the JLR’s China JV (CJLR) due to market challenges.

Punjab National Bank

Punjab National Bank had reported a net loss of Rs 13,416.91 crore in the fourth quarter of fiscal 2018 due to a three-fold surge in provisions towards bad loans, which was taken upfront during the quarter.

The Nirav Modi-scam hit lender had made provisions of Rs 7,178 crore—amounting to 50 percent of the fraud amount.

Total hit to PNB on account of the Nirav Modi-scam was Rs 14,356.84 crore.

Bank of Baroda

After the merger with Dena Bank and Vijaya Bank, the state-run lender Bank of Baroda reported a consolidated net loss of Rs 8,875 crore in the fourth quarter of fiscal 2019. However, on standalone basis, the Bank posted loss of Rs 991 crore for the quarter ending March 31, 2019 on account of accelerated specific provisions on NPLs at Rs 5,550 crore.

State Bank of India

The country’s largest lender State Bank of India had posted a net loss of Rs 7,718 crore in Q4FY18 due to huge jump in provisions for non-performing assets (NPAs) under the Reserve Bank of India’s revised framework for resolving stressed assets. Total provisions during the quarter went up 66.55 percent QoQ to Rs 23,601 crore.

IDBI Bank

State-run lender IDBI Bank posted a loss of Rs 5,662.76 crore for the quarter ended March 31, 2018. Its net interest income slipped 44 percent YoY to Rs 915.47 crore. Provisions and contingencies jumped to Rs 10,544.34 crore in Q4FY18.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata AMC launches new open-ended equity scheme Tata Focused Equity Fund

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Tata Asset Management, the mutual fund arm of Tata Group, has launched an open-ended equity scheme, Tata Focused Equity Fund, that will invest in a concentrated portfolio of up to 30 stocks across market caps.

The benchmark for Tata Focused Equity Fund will be S&P BSE 200 TRI and will be managed by fund manager Rupesh Patel, the company said in a press release.

The new fund offering (NFO) will be opened for subscription from November 15 and will close on November 29.

“The fund aims to construct a portfolio of stocks on bottom up basis following the GARP — growth at reasonable price philosophy. The fund will follow multi cap approach without having any particular market cap bias or sector bias. Further, from a risk management point of view, we would aim to maintain optimal liquidity,” said Patel, senior fund manager at Tata Mutual Fund, announcing the scheme.

The company has kept a minimum investment amount of Rs 5,000 for the fund. There will be no entry load during the NFO while exit load will be 1 percent of the applicable net asset value (NAV), if redeemed or switched out on or before expiry of 365 days from the date of allotment.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Moody’s cuts India’s 2019 GDP growth forecast to 5.6% citing prolonged slowdown

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Rating agency Moody’s lowered India’s gross domestic product (GDP) growth forecast to 5.6 percent in 2019, from 7.4 percent in 2018 citing the ongoing slowdown in investment activity and cooling consumption demand.

Moody’s Investor Services expects Indian economic activity to pick up in 2020 and 2021 to 6.6 percent and 6.7 percent, respectively, but the pace to remain lower than in the recent past.

According to the agency, India’s economic growth has decelerated since mid-2018, with real GDP growth slipping from nearly 8 percent to 5 percent in the second quarter of 2019 and joblessness rising.

“Investment activity was muted well before that, but the economy was buoyed by strong consumption demand. What is troubling about the current slowdown is that consumption demand has cooled notably,” Moody’s said in a report.

Further, the rating agency believes that the recent government measures such as reduction in corporate tax, bank recapitalisation, merger of state-run lenders, infrastructure spending plans among others have failed to address the widespread weakness in consumption demand, which has been the chief driver of the economy.

Moreover, Moody’s also raised concerns over transmission of recent interest rate cuts by the Reserve Bank of India (RBI) which seems to hamper private investment as borrowing costs for corporates remain elevated.

Moody’s expects the RBI to go ahead with more rate cuts this year.

“Benign domestic inflationary pressures, subdued oil prices and easing in other parts of the world will allow the central bank to continue to pursue an accommodative monetary policy stance,” Moody’s said.

However, the transmission to lending rates continues to be hindered by the credit squeeze caused by disruption in the non-bank financial sector, it added.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Muthoot Finance surges 8% after stellar Q2 earnings

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Muthoot Finance rallied over 8 percent Thursday after it posted decent second quarter earnings led by robust loan asset growth.

The company reported 76.4 percent rise in Q2FY20 consolidated net profit at Rs 908.54 crore as against Rs 515.06 crore in the same period last year.

Total income of the gold loan provider increased to Rs 2,406.39 crore versus Rs 1,820.88 crore on year.

Consolidated Loan Assets under management achieved a YoY increase of 13% at Rs 40,390 crore as against last year of Rs 35,835 crore for H1 FY20, the company said in a regulatory filing.

Muthoot Homefin (India) Ltd (MHIL), its wholly owned subsidiary, increased its loan portfolio to Rs 2,098 crore as against previous year of Rs 1,775 crore, a YoY increase of 18%, the company added.

Further, Belstar Microfinance Private Limited (BMPL) , an RBI registered micro finance NBFC and subsidiary company grew its loan portfolio in H1FY20 by 53 percent to Rs 2,107 crore as against Rs 1,381 crore in the same period last year.

The subsidiary achieved a profit after tax of Rs 28 crore in Q2FY20 as against Rs 16 crore on year.

At 10:45 AM, shares of Muthoot Finance rallied 8.77 percent to Rs 706.60 on the Bombay Stock Exchange.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Emkay Global upgrades Ashok Leyland, raises target price

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ashok Leyland, the commercial vehicle manufacturer, received rating upgrade from brokerage house Emkay Global on expectations for an MHCV sales cycle recovery.

The brokerage upgraded the stock to ‘Buy’ from ‘Sell’ and also increased the Target Price to Rs 112 from Rs 63 earlier.

Emkay Global expects the MHCV industry to remain weak with a 30 percent fall in volumes in FY20E and sees a gradual recovery with a 7 percent CAGR over FY20-22E, driven by a low base, replacement demand, improving macros and likely implementation of a scrappage policy.

Ashok Leyland shares today rose 6 percent to Rs 84 per share intraday on the BSE.

A steep reduction in dealer inventories is also affecting wholesales. According to the Emkay Global report, dealer inventory days have reduced from 60-70 days in April 19 to 15-20 days in October 19.

The brokerage expects LCV industry volumes to decline 20 percent in FY20E, but recover to 6 percent CAGR over FY20-22E.

The brokerage house estimates that Ashok Leyland will sustain its domestic MHCV market share at around 34 percent while increasing domestic LCV share by 540 bps to 14 percent over FY19-22E.

The launch of the new LCV, Phoenix, is expected to support both volumes and market share, the brokerage said.

“Our 20-year analysis of Ashok Leyland’s stock price movement reveals that, hypothetically, investing in AL during cyclical troughs would have provided 2- 4x returns in the subsequent three years of cyclical recovery,” said Raghunandan NL, analyst, automobile and ancillaries, Emkay Global.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

SBI Research cuts India’s FY20 GDP growth forecast to 5%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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SBI Research has cut India’s gross domestic product (GDP) growth forecast for the fiscal year 2020 to 5 percent from 6.1 percent earlier on the back of global economic slowdown coupled by domestic woes.

In a research note issued on Tuesday, SBI Research said that it expects domestic GDP growth to slow down further from 5.0 percent in Q1FY20 to 4.2 percent on account of low automobile sales, deceleration in air traffic movements, flattening of core sector growth and declining investment in construction and infrastructure.

However, the research house believes the growth rate to pick up pace in FY21 to 6.2 percent.

“We believe this growth rate in FY20 should be looked through the prism of a synchronised global slowdown. India is also significantly lower in Economic Uncertainty Index when compared globally,” it said.

Further, IIP growth for September at –4.3% is quite alarming, it added.

Given the slowdown in growth, it expects larger rate cuts from the Reserve Bank of India (RBI) in December policy.

However, SBI’s research unit believes that such rate cut is unlikely to lead to any immediate material revival, rather it might result in potential financial instability as it believes that debt-financed consumption against an increasing household leverage had not worked in countries and India cannot be an exception.

Reliance on the monetary policy alone could be counter-productive while the role of the fiscal policy is of paramount importance.

“Markets are not unduly worried about fiscal deficit and await clarity from Government on the extent of fiscal slippage in current fiscal,” it added.

The alternative to targeting fiscal deficit is that like most advanced economies and several emerging market economies, India should target a structural deficit, which serves as an automatic counter-cyclical stabilizer.

The economic slowdown is not just restricted to the Indian economy, but has rather spread like a contagion from our Western and Eastern counterparts. The declining vehicle sales internationally and the overall industry slowdown is resulting in a moderation of global GDP growth to 3.2% in 2019 compared to the 3.8% in 2017, SBI Research added.

“The Government is doing the correct thing in addressing sector-specific problems. NBFC, Telecom, Roads, Power and Real Estate are sectors that require specific attention and there must not be any negative sector-specific policy surprises in the current uncertain environment! It is primarily only through such that we can come out of this slump and fiscal policy could only act as a supplement,” it said.

Further, SBI Research believes that Moody’s change in outlook from stable to negative will not have any significant impact.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow