Tag: Reliance

Reliance seeks shareholder nod to appoint Ambani as head for another 5 years at nil salary

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

Listen to the Article (6 Minutes)

Reliance Industries Ltd, India’s most valuable company, has sought shareholder’s approval to give Mukesh Ambani another five-year term as chairman and managing director of the company till 2029 – a period during which he has opted to draw nil salary.

Ambani, 66, will cross the company law-mandated 70 years age for the chief executive of the company and requires a special resolution by the shareholders for him to be appointed beyond that age bar.

In a special resolution, Reliance sought the nod of shareholders to appoint Ambani as the head of the company till April 2029.

Ambani has been on the board of Reliance since 1977 and was elevated as chairman of the company after the death of his father and group patriarch Dhiburhai Ambani in July 2002.

In the special resolution posted to shareholders, Reliance said its Board of Directors on July 21, 2023 approved “re-appointed Mukesh D. Ambani as Managing Director, for a period of 5 years from the expiry of his present term, i.e. with effect from April 19, 2024.” Ambani, it said, had capped his annual remuneration at Rs 15 crore from financial year 2008-09 (April 2008 to March 2009) to FY20; and since FY21, he opted to forego his salary, due to COVID-19 pandemic, until the company and all its businesses were fully back to their earnings potential.

Accordingly, he has not been paid any salary and profit-based commission for three years in a row beginning FY21.

At the request of Ambani, “the Board has recommended that no salary or profit-based commission be paid to him for the proposed term from April 19, 2024 till April 18, 2029,” the resolution said.

“He shall, however, be entitled to reimbursement of expenses incurred for travelling, boarding and lodging including for spouse and attendant(s) during business trips and provision of car(s) for use on company’s business and communication expenses at residence shall be reimbursed at actuals and not considered as perquisites,” the special resolution said.

“The company shall arrange to provide security to Ambani and his family members and the expenses borne by the company for the same shall not be considered as perquisites.” Reliance said Ambani will attain the age of 70 years on April 19, 2027. “The company has grown multifold under his leadership and it would be in the interest of the company that he continues to lead the company even after he attains the age of 70 years. Accordingly, approval of the members (shareholders) is sought for passing the resolution proposed (to give him another 5-year term) as a Special Resolution.” Ambani, it said, satisfies all the conditions set out in company law and has not disqualified from being appointed as director.

“In terms of Article 86(1) of the Articles of Association of the company, Shri Mukesh D. Ambani is not liable to retire by rotation. Regulation 17(1D) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 provides that in such cases, the continuation of the director shall be subject to the approval by the shareholders in a general meeting once in every five years,” it said, adding he is being sought to be reappointed till April 18, 2029.

Ambani has for a third year in a row drawn no salary from his flagship firm in the last fiscal as he voluntarily gave up remuneration in light of the pandemic hitting the business and economy.

In its latest annual report, Reliance said Ambani’s remuneration for the financial year 2022-23 was “nil”.

Also Read: Reliance Industries to hold annual general meeting on August 28

In June 2020, he voluntarily decided to forego his salary for the year 2020-21, in light of the COVID-19 outbreak in India, which exacted a huge toll on the societal, economic and industrial health of the nation.

He continued to forgo his salary in 2021-22 as well and now in 2022-23.

In these three years, Ambani did not avail of any allowances, perquisites, retiral benefits, commission or stock options from Reliance for his role as the Chairman and Managing Director.

Prior to that, the Chairman and Managing Director had his salary capped at Rs 15 crore since 2008-09 in order to set a personal example of moderation in managerial compensation levels.

The Rs 15-crore salary in 2019-20 was the same as in the previous 11 years.

Ambani has kept salary, perquisites, allowances and commission together at Rs 15 crore since 2008-09, forgoing over Rs 24 crore per annum.

The remuneration of his cousins Nikhil and Hital Meswani rose to Rs 25 crore each, including Rs 17.28 crore commission (unchanged from previous fiscal year).

Executive Directors P M S Prasad and Pawan Kumar Kapil saw their remuneration rise.

While Prasad drew Rs 13.50 crore in 2022-23 including performance linked incentives for 2021-22 which was paid in 2022-23. In 2021-22, he drew Rs 11.89 crore.

Kapil got Rs 4.40 crore, up from Rs 4.22 crore in 2021-22. He completed his 5-year term on May 15, 2023 and has since ceased to be a director of the company.

Ambani’s wife Nita, a non-executive director on the company’s board, earned Rs 6 lakh as a sitting fee (up from Rs 5 lakh in 2021-22) and another Rs 2 crore commission for 2022-23 (unchanged from previous fiscal). She had in 2020-21 got Rs 8 lakh sitting fee and another Rs 1.65 crore commission.

Besides Nita Ambani, other non-executive directors include Dipak C Jain, Raghunath A Mashelkar, Adil Zainulbhai, Raminder Singh Gujral, Shumeet Banerji, former SBI chairperson Arundhati Bhattacharya, former CVC K V Chowdary and Saudi sovereign wealth fund nominee Yasir Othman H Al Rumayyan.

While all independent directors got a Rs 2 crore commission and sitting fee.

K V Kamath who was appointed on Reliance board in January 2023 was paid a sitting fee of Rs 3 lakh and a commission of Rs 39 lakh.

Also Read: Reliance Jio achieved 5G rollout obligations in all circles, ready for testing: Company tells govt

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

Tech This Week: Launch of Redmi 12 5G, HP Dragonfly G4, Reliance JioBook, and More

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

Listen to the Article (6 Minutes)

The tech world witnessed some major launches this week. From Xiaomi unveiling its smartwatch Redmi Watch 3 and Redmi 12 5G phone to Reliance launching its JioBook Laptop, tech enthusiasts witnessed some exciting phones, smartwatches, and laptops. Let’s look at some of the major launches this week.

Xiaomi launches the Redmi 12 5G

Xiaomi India has unveiled the new Redmi 12 5G in the entry-level phone category. The Redmi 12 is said to be a successor to the Redmi 11 series and is launching with some upgrades as well. The phone comes with a 6.79-inch FHD+ LCD display with a refresh rate of 90 Hz and a resolution of 1080 x 2460 pixels. It has a 50 MP dual rear camera and an 8 MP front camera for clicking selfies. The smartphone starts at an affordable price of Rs 10,999.

Oppo launches the A78 in India

Oppo has recently launched the 4G version of the A78 series in India. The smartphone has a 6.43-inch FHD+ AMOLED display with a 90Hz refresh rate, up to 600 nits peak brightness. In terms of photography, it comes with a triple rear camera setup, which has a 50-megapixel primary shooter and a 2-megapixel portrait shooter. For the front camera, the device has an 8-megapixel camera. Oppo A78 4G with 8GB RAM and 128GB is priced at Rs 17,499.

Xiaomi introduces Watch 3 Active

Xiaomi has introduced its budget-friendly smartwatch, the Redmi Watch 3 Active, in India. Some of the key features of the smartwatch include 12 days of battery life, 100 fitness modes and Bluetooth Calling. The smartwatch comes with a heart rate monitor, a stress calculator, and a blood oxygen tracker. The watch is also compatible with phones that have Android 6.0 or iOS 12 and above. The Watch 3 is priced at Rs 2,999.

Reliance JioBook 4G Laptop launched

Reliance has launched its second generation JioBook laptop in India after launching its first version in October last year. The newly launched laptop has a 11.6-inch compact anti-glare HD display, 4 GB of LPDDR4 RAM, and 64GB of storage, which can be increased to 256GB with an SD card. It is touted as one of the most affordable laptops in the market at a price of Rs 16,499.

HP Dragonfly G4 launched

HP has introduced its new laptop in the market, ‘Dragonfly G4’. The next-gen laptop has a 13.5-inch WUXGA+ display with a brightness of 400 nits. The laptop can also be customised to have a touch-enabled OLED panel, and a higher peak brightness. They have made the laptop more portable and lightweight, and have also focused on its durability. The HP Dragonfly G4 has been made for professionals and is priced at Rs 2,20,000.

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

Reliance Jio earnings preview | Q1 numbers set to rise driven by subscriber growth and higher average revenue per user

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

Listen to the Article (6 Minutes)

Reliance Jio Infocomm, the telecom arm of Reliance Industries, is set to announce its financial results for the first quarter of the fiscal year 2024 on July 21. As per a CNBC-TV18 poll of analysts, Jio is expected to observe a moderate increase in revenue for the period from April to June 2023.

Currently, Reliance Jio holds the position of India’s largest private telecom service provider, according to the most recent data released by the Telecom Regulatory Authority of India (TRAI). Notably, in the month of April, Jio witnessed a significant addition of 3.04 million mobile users. On the other hand, Airtel reported 76,328 additions due to recent tariff adjustments.

Meanwhile, Vi continued to face challenges, losing nearly three million customers, resulting in its mobile user base dwindling to 233.75 million by the end of April.

The CNBC-TV18 poll, meanwhile, expects the telecom firm to post sequential revenue growth of 3.1 percent to Rs 24,124 crore. The telco’s profit during the period is expected to go up 1.8 percent sequentially to Rs 4,800 crore as against Rs 4716 crore in the last quarter. 

The earnings before interest, taxes, depreciation, and amortisation (EBITDA) is projected to come in marginally higher at 52.5 percent.

Analysts estimate that during the first quarter of FY24, Jio might have added 8 million subscribers, compared to 6.4 million in the previous quarter (Q4). Additionally, the average revenue per user (ARPU) for Jio in the quarter ending June 30, 2023, is projected to be Rs 181, indicating a 1.3 percent growth from the previous quarter’s Rs 178. The company’s fibre-to-the-home (FTTH) service is witnessing strong traction.

Investors and analysts will also be closely observing the timing of any potential tariff hikes and Jio’s expectations and intentions regarding the launch of Jio Bharat.

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

If large caps are not leading the current rally in markets, then who is? Read here

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

Listen to the Article (6 Minutes)

Large cap stocks typically lead the mid and small cap stocks in a bull market, but the current rally depicts a different picture. ‘Liquidity’ seems to be most-cited argument among investors about the rally in smaller names, which largely reflects bullish sentiment among domestic institutional and retail investors.

The muted performance of several large cap stocks in the past 3 months has been a drag on the overall market performance. Nifty is up 9 percent, but most top Nifty 50 stocks clocked meagre returns.

Banking giants- HDFC Bank and ICICI bank clocked 0 percent and 6 percent returns respectively, while two largest Indian IT services firms have delivered 1 percent and negative 6 percent returns respectively in the past 3 months. Heavy weights- Reliance and HUL have clocked 18 percent and 5 percent returns respectively in the same period. Hence, their contribution to index growth has been limited.

Note: Data for past 3 months; Source: Kotak Institutional Equities

In June 2023, small cap funds remained investors’ favourite with inflows of Rs 5,472 crore. According to Mukesh Kochar, National Head-Wealth at AUM Capital Market, the primary reason for strong inflows in small-cap funds could be the valuation gap between small-cap companies and large-cap companies.

“This always happens when markets become a little expensive but the fund flow chases stocks. In such type of market, fund managers try to find out values or pockets of opportunities on a comparable basis that are available at the lower end of the radar. These stocks are with a low base and can grow at a higher pace compared to large companies in terms of percentage growth and are undiscovered stories. Hence, higher risk and higher reward. The massive fund flow via mutual funds, PMS or direct equity investors has added more momentum to it,” Kochar said.

Valuations are expensive in India and is a natural headwind for the market, says Kotak Institutional Equities. Nifty 50 index is up 11 percent, Nifty 100 Midcap 100 Index is up 17 percent and Nifty Smallcap 100  index is up 19 percent in the past four months.

Are large caps a laggard in US too?

In contrary to Indian equities market, mega-cap stocks are the leaders in a slowing economy in the US. However, it needs to be seen if this mega stocks rally, primarily led by 6-8 technology-oriented stocks in US sustains.

The tech stocks have performed on expectations of them dominating the emerging AI space. Kotak Institutional Equities says the AI-driven rally is hard to sustain if high interest rates stay for an extended period of time. In an attempt to tame demand and inflation, there is a likelihood of an eventual slowdown in household consumption when the ongoing tight labor markets and excess household financial saving, supporting household spending fade.

Note: Data for past 3 months; Source: Kotak Institutional Equities

On July 11, Nifty closed the trading session with gains capped at less than 0.5 percent, led by the financials sector witnessing a fall in the last hour of trade.

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

What makes Reliance Industries shares the most attractive they’ve been in seven years

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

Listen to the Article (6 Minutes)

Analysts tracking oil-to-telecom conglomerate Reliance Industries are the most bullish they have ever been in the last seven years.

As many has 33 out of the 38 analysts that track the company have a buy recommendation on the stock.

Shares of India’s largest company by market capitalisation have risen as much as 400 percent over the last seven years, but have underperformed this year. Attractive valuations, along with potential value unlocking prospects is driving analyst optimism on the stock.

The average consensus price target on the street for Reliance Industries is Rs 2,834.33 per share, implying a potential upside of 15 percent from current levels.

So what is driving analyst optimism?

Reliance Industries had a very strong March quarter, where the company beat estimates on all parameters. It reported its highest-ever quarterly profit, led by strong performance from the O2C business.

The oil-to-chemical business saw operating profit rise by 17 percent during the quarter, which was the highest ever despite global uncertainties. Margin also expanded to 12.7 percent from 9.6 percent in December.

“The O2C business has an element of gas pricing which has not yet been completely factored in. The petchem business is probably is the one that has gone into a steady state on both revenue and margins but refining will continue to have its own share of ups and downs given global geopolitical situations,” Market Expert Prakash Diwan said.

“O2C is the core business, it is the oldest business and if that were to fire then it becomes a very strong base for the capital intensive nature of other businesses to be sustained,” he added.

Also Read: Here’s why Bernstein brought back Reliance Industries to its India portfolio within three months

Value Unlocking Prospects

Shareholders of Reliance Industries, along with the its secured and unsecured creditors have approved the resolution to demerge the company’s financial services arm – Reliance Strategic Ventures.

Nearly 100 percent of the votes cast were in favour of the resolution.

The Street’s View

Brokerage firm JPMorgan says Reliance’s “disciplined capital allocation” and maintaining its net debt-EBITDA below 1 times should assuage investor concerns about leverage. It is overweight on Reliance Industries with a price target of Rs 2,960.

CLSA also has a buy rating on Reliance Industries with a price target of Rs 2,970.

Jio generating healthy free cash flow with elevated 5G capex can open up the next leg of growth, says Jefferies. Citing favourable valuations, Jefferies maintained a buy rating with a price target of Rs 3,125.

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

RIL Q4 Result Highlights: RIL beats estimates, reports highest-ever quarterly profit

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

Listen to the Article (6 Minutes)

 RIL Q4 Result Highlights: Reliance Industries Ltd reported a net profit of Rs 19,299 crore for the January-March 2023 quarter against Rs 15,792 crore during the December quarter. This is the highest-ever quarterly net profit for the company. The O2C business reported the highest ever operating profit. Earlier, Reliance Jio reported March quarter numbers in line with estimates.

Catch minute-to-minute updates on Reliance Industries March quarter here:

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

Earnings preview: Oil and gas sector expecting a sleek quarter due to better realisations

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

Listen to the Article (6 Minutes)

The earnings numbers for the fourth quarter of the financial year gone by (FY23) for the oil and gas sector will be declared this week starting with Reliance on Friday. Sector watchers expect the quarter to be better than the previus one (Q3FY23)  riding on realisations.

Crude prices have declined sharply to trade just a tad above $80 per barrel.

On the other hand, Singapore’s gross refining margins (GRMs) have increased to levels of $8.2 per barrel versus $6.3 per barrel earlier, and this is something that will show in Reliance Industries Ltd’s (RIL) earnings, which will see an improvement led by the O2C or the oil to chemical segment and lower windfall tax as well.

Overall, this would lead to an EBITDA increase of 5 percent on a sequential basis and on a consolidated basis as well for the company.

For oil marketing companies (OMCs), lower crude and higher refining margins will be positive, but a bigger turnaround will come in from the marketing segment, and that is where improvement will be seen.

When both segments will lead to a 77 percent sequential surge in EBITDA and 3.3 times increase in profit after tax (PAT) according to ICICI Securities.

For upstream companies, even though crude prices have declined, realisations post taxes have been around $72-76 per barrel and gas realizations have been stable quarter on quarter (QoQ). So this will see a set of.

Overall high other income will aid earnings for oil producers this time around.

Also Read | Imports of edible oil rises as consumption increases

City gas distribution (CGD) companies will see a mixed bag whereas Mahanagar Gas Ltd (MG) will see the best performance. MGL took sharper price hikes versus Indraprastha Gas Ltd (IGL) and hence the EBITDA performance is expected to be better.

Gujarat Gas will see a weak performance this time round led by lower demand in the industrial segment.

Nirmal Bang estimates that Gujarat Gas will see 26 percent decline in EBITDA YoY, IGL will see a 12.5 percent increase, but the biggest rise will be 72 percent increase in MGL’s EBITDA.

Now for gas utilities, GAIL and GSPL will see a weak quarter due to supply shortages and also weak demand while Petronet LNG will see better numbers. That is because of the lower spot LNG price.

Also Read | Not just renewable energy, India should also explore oil and gas sector domestically: Vedanta Chairman

In terms of valuations, oil producers are still seeing compressed valuations. So around three times is the number for Oil and Natural Gas Corporation (ONGC), Reliance Industries is at 21.6 times.

Bharat Petroleum Corporation Ltd (BPCL) still continues to trade at a premium, MGL, which is expected to do well, is the cheapest in the city gas distribution space at around 12.8 times and the others are higher here.

For more details, watch the accompanying video

Catch all the latest updates from the stock market here

Disclosure: Network18, the parent company of CNBCTV18.com, is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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

Mcap of eight of top-10 valued firms climbs Rs 82,169 cr last week; HDFC twins sparkle

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

Listen to the Article (6 Minutes)

Eight of the top 10 valued firms added Rs 82,169.3 crore in market valuation last week, with HDFC twins emerging as the biggest winners amid an overall positive trend in equities.

Last week, equity markets were closed on Tuesday (April 4) for ‘Mahavir Jayanti’ and on Friday (April 7) on account of ‘Good Friday’.

The 30-share BSE Sensex climbed 841.45 points or 1.42 per cent in the holiday-shortened week.

Of the top 10 valued firms, eight including Reliance Industries, Tata Consultancy Services (TCS), HDFC Bank, Hindustan Unilever Ltd, HDFC and ITC witnessed gains in their market valuation.

From the top-10 pack, the valuation of HDFC Bank jumped Rs 31,553.45 crore to Rs 9,29,752.54 crore. HDFC’s market valuation surged Rs 18,877.55 crore to Rs 5,00,878.67 crore.

Bharti Airtel added Rs 9,533.48 crore taking its valuation to Rs 4,27,111.07 crore.

The market capitalisation (mcap) of Reliance Industries rallied Rs 6,731.76 crore to Rs 15,83,824.42 crore and that of TCS climbed Rs 5,817.89 crore to Rs 11,78,836.58 crore.

ITC’s mcap went up by Rs 4,722.65 crore to Rs 4,81,274.99 crore and that of State Bank of India gained Rs 3,792.96 crore to Rs 4,71,174.89 crore.

Hindustan Unilever added Rs 1,139.56 crore to take its market valuation to Rs 6,02,341.22 crore.

Also read: Hindustan Unilever hikes royalty fees payable to parent Unilever from February 1

However, the mcap of Infosys declined by Rs 2,323.2 crore to Rs 5,89,966.72 crore and that of ICICI Bank fell by Rs 1,780.62 crore to Rs 6,10,751.98 crore.

Reliance Industries continued to remain the most valued firm, followed by TCS, HDFC Bank, ICICI Bank, Hindustan Unilever, Infosys, HDFC, ITC, State Bank of India and Bharti Airtel.

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

Reliance in talks to increase batch of forex loans from $3 billion to to $4.5 billion

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

Listen to the Article (6 Minutes)

Billionaire Mukesh Ambani-owned Reliance Industries and its telecom arm Jio are reportedly mulling an increase in a  batch of foreign currency loans to $4.5 billion from $3 billion due to the large number of bids, according to a report from Bloomberg which cited people familiar with the matter. However, they declined to be named because they weren’t authorised to speak about it.

The move comes in response to a large number of bids received, and both companies have already raised $1.5 billion each, with plans to take out an additional $750 million.

Also Read: Reliance names V Srikanth as new CFO, Alok Agarwal to become senior advisor

The primary syndication involves around 55 lenders, including nearly two dozen Taiwanese banks as well as global giants such as Bank of America, HSBC, MUFG, Citi, SMBC, Mizuho, and Credit Agricole.

However, Bloomberg noted that spokesperson for Reliance has not yet responded to requests for comment. It is worth noting that the $3 billion loan is expected to help ease capex and Adani risk, according to credit analysts.

Also Read: Reliance, Tata Power and JSW Energy among 11 companies to get solar cell manufacturing approval

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

JPMorgan wary of telecom stocks as it doesn’t expect further tariff hikes till the next general elections

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

Listen to the Article (6 Minutes)

The competition in the telecom industry has intensified in recent years, with multiple players vying for market share. This competition has led to a pricing war, with telecom companies offering lower tariffs to retain and attract customers. However, this has resulted in shrinking margins for telecom companies, which makes it difficult for them to invest in new technologies and infrastructure.

Another factor that is hindering the growth of the telecom sector is the delay in tariff hikes. Ankur Rudra, ED-Technology and Telecom Research at JPMorgan stated that he does not expect any tariff hikes until the general election, which is likely to take place in the coming year.

“We do not expect any tariff increases in the near term. Till there are elections, we wouldn’t expect any tariff increases,” he said.

This delay can further impact the financials of telecom companies, as they continue to face rising costs without any increase in revenue.

Despite the challenges, Rudra believes that a tariff hike is inevitable and could potentially happen by the end of 2024.

“The earliest possible tariff increase is probably at the end of 2024. We have historically seen tariff increases taking place at the end of calendar years, so most likely it will happen at the end of 2024 given there are elections in the coming period,” he said.

Also Read | Vodafone Idea stares at bleak future, possibility of “shutting shop” due to heightened competition, says brokerage

He emphasized that telecom companies need to focus on innovation and improving their services to attract customers and increase revenue.

According to him, the telecom sector is currently facing several hurdles that make it a cautious investment for the time being.

“We are quite cautious on the telecom space in India across the board. The main reason being an increase in capex which probably will not see any return anytime soon,” he said.

Also Read | Jio launches unlimited Cricket Plans for Indian Premiere League

Rudra believes that one of the primary reasons for this caution is the rising capital expenditure in the 5G infrastructure. The deployment of 5G technology requires significant investments, and telecom companies are expected to spend billions of dollars on building the necessary infrastructure. This increase in capex is a significant challenge for telecom companies, as it can put a strain on their financials.

For more details, watch the accompanying video

Catch all the latest updates from the stock market here

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