Month: March 2022

Axis-Citi deal RoA accretive; will stick with banks in a rising rate scenario: Macquarie Capital

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

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The banking sector has had its fair share of tests in the past year. While the sector is showing a credit growth of 8.5 percent as compared to 6.5 percent last year, but on the macros front, growth estimates have been cut.

State Bank of India (SBI) is up 36 percent on a year-on-year basis, whereas ICICI Bank is up 26 percent. The bigwigs in the space including HDFC Bank and Kotak have been flat.

To understand how banks will fare going ahead, CNBC-TV18 spoke to Suresh Ganapathy, Banking Analyst, Macquarie Capital Securities.

Ganapathy said that he will stick with banks in a rising rate environment. He cited that 10-11 percent nominal GDP growth should result in 13-14 percent credit growth. However, he cautioned that there is a 200-300 basis points downside to credit growth in case GDP estimates are revised lower. He also mentioned that existing loans could get repriced higher in case of a hike in rates.

Citigroup recently announced that it’s selling Citibank’s India retail business to private lender Axis Bank for USD1.6 billion. The transaction comprises the sale of consumer banking businesses of Citibank India, which include credit cards, retail banking, wealth management, and consumer loans.

Also Read: Citi deal will take 9-12 months to get all approvals; cards biz to grow 57%, says Axis Bank CEO Amitabh Choudhry

On the Citi-Axis deal, he said that the price paid is reasonable. He believes it to be the deal to be accretive from a return on assets (RoA) standpoint. He added that improvement in RoA and margin are triggers for Axis Bank. He said that Macquarie has a neutral call on Axis Bank with a target price of Rs 790 per share.

Also Read: Axis Bank’s margin may increase 20 bps with Citi deal: JM Financial

On Kotak Bank, he said that there is some element of uncertainty about Uday Kotak eventually retiring.

He said, “Based on our interactions with the investors, a lot of the FII investors who own Kotak a lot, they are a bit worried about management transition; though it is about 2 years away, the fact that both Uday Kotak and Deepak Gupta who has been in the bank for a very long period of time and been on the board, going off in two years means there is some element of management uncertainty until the time there is clarity, it’s going to be a bit difficult.”

For HDFC Bank, he sees better products now that the ban has been removed. He said that the scarcity premium for HDFC Bank is reducing as there are other investment options available in banks.

“The bigger problem is lack of substitutes in the earlier cycle. Today, ICICI is doing very well and catching up and probably Axis will catch up. So there are more alternatives available for investors. Therefore, now that you have better substitutes available, the amount of scarcity premium awarded to HDFC Bank knowing that they will do well irrespective of the cycle and there is no other choice gets removed. So that partially explains why sustainably that multiple no longer is going to be there for HDFC Bank,” said Ganapathy.

Watch the video for the full interview.

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

Healthcare VC HealthQuad closes second fund at $162 million

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

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HealthQuad, a healthcare venture capital fund, has marked the final close its second fund at $162 million. As per the firm, this is more than twice than its target size at launch.

Global biopharmaceutical MSD led the commitments from a pool of global financial investors, strategic institutions in pharma and healthcare, development financial institutions (DFI), funds of funds and large European conglomerates.

“Our investment in HealthQuad will contribute to a robust and sustainable healthcare ecosystem through innovative solutions in financial inclusion, patient engagement, and supply chain, in India and around the world,” said Carmen Villar, VP Social Business Innovation at MSD.

Also Read | Microsoft launches Founders Hub platform in India to empower startups’ vision, drive innovation

The firm, which counts Medikabazaar, Ekincare, Healthifyme and Qure.ai in its portfolio of invested companies, from its HealthQuad Fund-II will be investing in 10 to 15 young private companies across high-growth segments of the healthcare sector in India. The fund has already deployed $60 million across companies till date.

“The close of our second fund marks a significant step for HealthQuad as we continue to invest in one of the world’s most promising healthcare markets. India’s healthcare industry is compounding at ~20% growth rate and is likely to be a $372 billion industry by end of this year. The new-age innovative models are fuelling the rise of the Indian health-tech market which is growing at 25% annually and is poised to reach $21 billion by 2025,” said Charles-Antoine Janssen, Co-founder and Chief Investment Officer of HealthQuad.

“We have been investing in the healthcare market in India since 2016 and are grateful for the meaningful partnerships we are building with world class, path breaking entrepreneurs who emerge from India’s growing pool of 8,000+ health tech companies,” Janssen added.

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

EV fires: Ex-Tesla man’s startup makes testing devices, algorithms to check battery mishaps

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

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Amid concerns over the safety of electric vehicles (EVs), MakerMax, a startup led by an ex-Tesla engineer from India, announced that it has developed testing devices and algorithms that can arrest battery fires, thereby preventing loss of property and lives, Mint reported.

A spate of incidents recently put the spotlight on safety of EVs and the thermal efficiency of lithium-ion batteries that power them.

In the past five days, four incidents of two-wheeler electric vehicles catching fire have been reported. In the latest incident, an electric scooter from Pure EV caught fire on the outskirts of Chennai.

Also read: Explained: Why EVs are catching fire? Can such accidents be prevented?

Prior to that, an Ola S1 Pro scooter caught fire in Pune, while another incident was reported on March 28 from Trichy in Tamil Nadu. The most tragic incident occurred in Vellore this week when a Praise Pro model of Okinawa electric scooter caught fire, resulting in the death of a man and his 13-year-old daughter.

The government has ordered a probe into the Pune fire incident. Speaking in the Lok Sabha, Road Transport and Highways Minister Nitin Gadkari said the incidents may have taken place due to higher temperatures.

According to British Columbia-based MakerMax, its Device M201 captures the five vital internal characteristics of batteries within minutes at various touch points such as factory, warehouse, dealer end, servicing and builds the benchmark data, which can be used to predict abnormal behaviour, deterioration, and safety index of a battery. The benchmark is compared with its vital characteristics through the algorithms developed by the company.

Also read: EV fire: Battery packs coming into India not designed for Indian market, says Ather Energy

Additionally, MakerMax also designs pressure, temperature, and gas sensors, which can be placed at vulnerable zones in the battery to trigger an alarm at three different levels. MakerMax is collaborating with manufacturers to place these sensors in the battery.

“We need to tackle this urgent and critical issue comprehensively, starting with the batteries that are already in use in thousands of E-scooters while we are designing safer batteries for the future,” Akshay Gill, Founder-Director of the startup and ex-Tesla R&D engineer, told Mint. 

Also read: EV fire cases lead to discomfort in potential buyers; rigorous validation must: Former ARAI director

According to Gill, the batteries on electric two-wheelers in India lack enough mechanical safety features.

“One suggestion to help contain the fire and minimise the damage could be dividing the battery into three or more mutually sealed compartments with pressure release valves rather than one thick metal box that has no outlet for expanding gases and is a potential bomb,” he said.

It is also important to raise awareness among customers about ways to keep the batteries safe while charging and identifying signs of a potentially unsafe battery, he said.

Also read: Own an EV? Here are precautions you need to take

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

Trade setup for Apr 1: Can Nifty50 scale the 17,500 hurdle soon? From market cues to technical signals to key levels to track

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

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At 8:33 am on Friday, Singapore Exchange (SGX) Nifty futures — an early indicator of the Nifty index — were up 84 points or 0.5 percent at 17,452.5, having shed as much as 130 points earlier in the day.

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

Govt finalises borrowing plan; to borrow Rs 8.45 lakh crore in first half of FY23

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

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The Centre on Thursday said it finalised its borrowing programme for the first half of the 2022-23 fiscal, under which it will borrow Rs 8.45 lakh crore out of a gross market borrowing of Rs 14.31 lakh crore estimated for the financial year, a government press release said.

According to the press release, the borrowing is scheduled to be completed in 26 weekly tranches of Rs 32,000-33,000 crore and will be spread under 2, 5, 7, 10, 14, 30 and 40-year securities and Floating Rate Bonds (FRBs) of various tenures. The share of borrowing under different maturities will be — 2 years (6.15 percent), 5 years (13.85 percent), 7 years (10.77 percent), 10 years (20 percent), 14 years (15.98 percent), 30 years (13.25 percent), 40 years (13.85 percent) and FRBs (6.15 percents) various tenures that will be issued on a fortnightly basis, the release said.

Also read: Centre’s fiscal deficit touched 82.7% of this year’s target by end of February, govt data shows

The government will continue to carry out switching of securities to smoothen the redemptions, the statement said, adding, “The government may continue to exercise greenshoe option to retain an additional subscription up to Rs 2,000 crore against each of the securities indicated in the auction notification.” Weekly borrowing under Treasury Bills in Q1FY23 is expected to be Rs 33,000-34,000 crore with net borrowing of Rs 2.40 lakh crore during the quarter — Rs 13,000 crore under 91 DTBs, Rs 12,000-13,000 crore under 182 DTBs and ₹8,000 crore under 364 DTBs in each auction to be held during the quarter, the release said.

“To take care of temporary mismatches in government account, the Reserve Bank of India has fixed the Ways and Mean Advances (WMA) limit for H1 of FY 2022-23 at Rs 1,50,000 crore,” the release stated. The press release added that the Centre and RBI are working together to bring out a framework to issue Sovereign Green Bonds.

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

Retail inflation for industrial workers eases to 5.04% in February

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

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Retail inflation for industrial workers eased to 5.04 percent in February from 5.84 percent in January this year mainly due to lower prices of certain food items. Inflation based of the consumer price index for industrial workers (CPI-IW) was at 4.48 percent in February 2021, a labour ministry statement said.

Food inflation stood at 5.09 percent in February 2022 against 6.22 percent in the previous month and 4.64 percent during the corresponding month a year ago. The All-India CPI-IW for February 2022 decreased by 0.1 points to 125 points from 125.1 points in January this year.

The maximum downward pressure in current index came from food & beverages group contributing 0.30 percentage points to the total change, the ministry said. At item level, rice, beetroot, cabbage, carrot, drumstick, French-been, lady’s finger, onion, potato and tomato, etc are responsible for the fall in index.

Also Read | India’s external debt rose to $614.9 bn at end of December 2021

However, this decrease was checked by goat meat/Mutton, Poultry Chicken, Apple, Chili Green, Parwal, Kerosene Oil, Doctor’s/Surgeon Fess, Medicines Allopathic, Bus fare and Private Tuition/Coaching etc. putting upward pressure on the index. At centre level, Salem recorded the maximum decrease of 4.7 points, followed by Tirunelveli with 3.7 points.

Among others, 5 centres recorded decrease between 2 and 2.9 points, 4 centres between 1 and 1.9 points and 28 centres between 0.1 and 0.9 points. On the contrary, Thane recorded the maximum increase of 2.9 points followed by Bhilwara with 2.1 points. Among others, nine centres recorded increase between 1 and 1.9 points and 35 centres between 0.1 and 0.9 points. Rest of the three centres’ remained stationary.

The Labour Bureau, an attached office of the Ministry of Labour & Employment, has been compiling Consumer Price Index for Industrial Workers every month on the basis of retail prices collected from 317 markets spread over 88 industrially important centres in the country. The index is compiled for 88 centres and All-India and is released on the last working day of succeeding month.

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

Global fund managers turned more defensive in March: Poll

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

Listen to the Article (6 Minutes)

Global fund managers maintained a cautious stance in March, increasing recommended bond holdings and cash reserves and suggesting reduced equities exposure, a Reuters poll found.

The March 21-31 survey captured this defensive strategy many fund managers adopted after the Russia-Ukraine war broke out. The February survey was taken partly before Russia’s February 24 invasion but had still hinted at caution.

Recommended equity allocations were lowered to an average of 48.5 percent of the model global portfolio of 35 fund managers and chief investment officers in the United States, Europe and Japan, the lowest since end-2020. It was at 49.5 percent in February.

Equity markets have suffered from speculation the U.S. Federal Reserve would hike interest rates more aggressively than previously thought.

But the S&P 500 has staged a quick rebound, up 11 percent since March 8, its biggest 15-day percentage gain since June 2020 when the market was recovering from a steep sell-off near the start of the COVID-19 pandemic.

In the last month, asset managers increased their cash buffer to 4.5 percent, from 4.2 percent, the highest since November 2020.

“Our view is markets are close to pricing in our central scenario, where the Federal Reserve continues on its policy tightening cycle and in turn reduces inflation without causing a significant growth slowdown,” said Craig Hoyda, senior quantitative analyst at abrdn.

“However, we view risks as skewed to the downside, with risks of a global recession within the next two years as 20 percent-30 percent.”

The spread between US 2-year and 10-year Treasuries flashed signs of a recession on Tuesday when it briefly inverted before turning positive again.

This inversion, when sustained, has previously been an accurate predictor of recession.

Not all fund managers were as cautious, especially given the increase in inflation to multi-year highs in nearly every major economy.

“In an inflationary environment, equities are the only large and liquid asset class accessible to all that can generate significant real returns,” said Christopher Rossbach, chief investment officer at J. Stern & Co.

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

‘No sale, no profit, no tax’: Some crypto traders plan to put portfolios on hold for years

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

Listen to the Article (6 Minutes)

India begins taxing all profits by trading cryptocurrencies at the rate of 30 percent from April 1. While many small investors have offloaded their portfolios, some big ones say they will continue trading. Many of those also say they will hold on to their portfolios for years until taxes are lowered.

The trend seems to be that only those who can afford to pay the 30 percent tax or those who can keep their portfolios on hold for years will stay back in the Indian crypto community. Those with small holdings or no other means of income largely cashed out by the night of March 31.

On Twitter, an investor, Vivek Singh, said that the tax amount was huge, and he had offloaded his portfolio. “A profit of 30 percent is hard to come by for me and it’s too much risk,” his tweet read.

Many like him rued the steep taxes for exiting the crypto market. An investor named Vicky Kumar tweeted: “I am going to quit because I’m a small investor. My (financial) condition is bad, so I can’t pay 30 percent tax and 1 percent TDS.”

Earlier, Kshitij Purohit, lead of commodities and currencies, CapitalVia Global Research, had told CNBC-TV18: “Because taxes are greater than expected, investors are lowering their positions before April 1.”

Also Read: Crypto tax kick in: Here’s what experts suggest for investors

Others like crypto collector Vivek Sinha said: “I earn Rs 1 lakh to Rs 8 lakh weekly. It is a very high tax but I am going to do it (continue trading in crypto) for my freedom. It’s better than a job.”

Another person who goes by Plan-D on Twitter said: “Won’t quit but also won’t sell. Holding is the way. No sale, no profit, no tax.”

Another person named Nishant Nirmale tweeted: “Stopping my daily trade now. Only way is to hold going forward. Unfortunately will miss out on good opportunities.

Sarbashis Kahali, another collector, said he had uninstalled the crypto apps and would wait for a few years. He also hopes to cash out if the law changes. Some tweets suggested investors are willing to wait until the next election in hopes a new administration would listen to their calls to reduce the steep 30 percent tax.

Also Read: Quit India movement in crypto may accelerate

Another investor Suraj Pandey tweeted that he was quitting but only Indian crypto exchanges. “Sending my money to my friend who lives in Thailand. So, he bought crypto on my behalf in Binance. I can also trade using his Binance account in India.”

Nishchal Shetty, the founder of WaxirX, tweeted that the crypto tax would lead to a flight to foreign exchanges, trade without KYC, grey markets, a large pool of tax defaulters, and huge TDS refunds. The community says that if high taxes continue, India will have to grapple with high tax evasion.

Also Read: Tax on crypto: Where things stand on regulation of virtual assets

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

Russia sanctions stall NTPC thermal project in Bihar: Power minister

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

Listen to the Article (6 Minutes)

Construction of state-run NTPC’s Barh thermal power project in Bihar that has involvement of Russian entities has been affected due to various sanctions against Russia, Parliament was informed on March 31. “In so far as Ministry of Power is concerned, NTPC’s Barh Super Thermal Power Project, Stage-I (3X660 MW), which is presently under construction, has involvement of Russian entities,” Power Minister R.K. Singh said in a written reply to the Lok Sabha on March 31.

About the impact in terms of various sanctions on this project along with project cost, expenditure incurred and anticipated date of commissioning, the minister told the House that there is difficulty in payments and renewal of bank guarantees due to the exclusion of Russian banks from the SWIFT international payments system.

Also read: Russian-Ukraine war: UK slaps 14 new sanctions on Putin’s ‘propagandists,’ state media

The minister stated that supplies of balance equipment/material from Russian entities may get affected. The visit of engineers/technical advisors from Russia for project commissioning activities may get affected, he added.

The approved cost of the project is Rs 21,312 crore and total expenditure incurred till February 2022 is Rs 19,738 crore. The minister told the House that the anticipated commissioning date of the project is in the second quarter of 2023-24.

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