For the month of July 2022, there has been some contradicting signals coming out at a macro level.
There was relatively elevated inflation, higher borrowing costs and fears of a global slowdown. High frequency indicators showed the demand for Indian goods and services softening. Even the RBI, despite hiking rates by 140 bps in the last 3 months has hinted at more rate hikes. PMI services also fell to a 4-month low in July 2022. Despite macro headwinds, passenger vehicle sales rose for a 2nd-straight month in July 2022.
For the second quarter ended June 2022, the US GDP contracted at a more moderate pace than initially expected, buttressing recession talks. Consumer spending blunted the slow pace of inventory addition
by businesses. A report from the US Commerce Department showed the US economy growing steadily on the income side. Annualized GDP for the second quarter shrank by -0.6% on the June quarter than the previously estimated -0.9%. This compares favourably with the -1.6% contraction in the US GDP in Q1.
After Fitch, even S&P Global Ratings has raised warning signals over the extent of leverage of the Adani group. S&P Global Ratings has cautioned that despite solid fundamentals, debt funded growth could put pressure on the group. Today, Adani group has an overall market cap of Rs19.3 trillion, making it the second largest business house in India after the Tatas in terms of market value. S&P highlighted that the real risk for the Adani group came from recent acquisitions like in the cement, copper and media space.
Just two days after Adani announced the acquisition of 18.29% stake in NDTV via VCPL, Prannoy and Radhika Roy have said that since SEBI had banned the promoters for 2 years till November 2022, transfer of shares would require SEBI approval. The NDTV promoters are under ban from accessing the securities market in any form. However, legal experts have underlined that this is just a procedural issue and not an issue for legal debate. However, that cannot be a valid reason for holding up the legal
transfer of shares.
HDFC Bank, in a clear Fintech tilt, will invest up to Rs70 crore in Go Digit Life Insurance to buy up to 9.94% equity stake in the company. HDFC Bank will use the alliance to further its digital footprint in the insurance selling business. Go Digit has the backing of the Canada based Fairfax group and also has the backing of Virat Kohli. It may be recollected that recently, Go Digit Life Insurance had also filed its DRHP with SEBI for its proposed Rs1,250 crore fresh issue plus an OFS by promoters. Go Digital is entirely
cloud operated.
IOCL will invest up to Rs2 trillion ($25 billion) to achieve carbon neutrality by 2046. Net zero carbon emissions has been the target of most of the large Indian companies and it has also been value accretive. IOCL will achieve 60% of the target through mitigation and the balance via offsets, which would include buying carbon credits. IOCL expects the overall emissions at its refineries and petchem units to start falling from 2030 onwards. IOCL plans to spend Rs57,700 crore on research into green products and fuel cells.
A day after some of the leading Indian IT companies reduced or froze variable pay of employees, these IT companies are now either freezing or cutting staff bonuses. This is amidst tightening budgets at the
US and European clients, as they brace for a recession. In a cash rich business, discretionary spending was never the issue, but now cuts are starting to happen. The rising attrition rates had created a huge
churn in IT companies. To save operating costs, IT companies are also cutting back on hiring of new graduates.
The Ministry of Company Affairs (MCA) has sought an explanation from Edtech super-icon, Byju’s, for not filing its audited financial accounts for the fiscal year ended March 2021. Byju’s is backed by Tiger Global. According to Byju’s, delay in filing is due to consolidating the financials of all the companies acquired by Byju’s during FY21. An unlisted company is required to file its annual accounts within 7 months of the financial year-end. In the case of Byju’s, the delay was more than 17 months. Byju’s is
valued at $22 billion.
