Shareholders and creditors of Reliance Industries approved the demerger of the financial services arm, Jio Financial, from the parent. With 99.99% votes in favour, it was a done deal. Under the swap deal, 1 share of the demerged entity with a value of Rs10 will be issued for each share of RIL. All the approvals for the listing of shares of Jio Financial are expected to be in place by September 2023. KV Kamath will be the non-executive chairman of Jio Financial Services to bring a very customer-centric DNA to the business.
Tata Power reported 54% growth in consolidated net profits for Q4FY23 at Rs778 crore. The company saw growth in top line across the 3 key verticals of generation, renewables, and T&D, although the operating profits of the renewables business was lower on a yoy basis. The company has also recommended a Rs2 dividend per share. Overall revenues for Q4FY23 were marginally higher at Rs12,454 crore. Renewables vertical of Tata Power handles EPC (engineering procurement construction) and rooftop verticals in India.
In what could be a boost for renewable energy in India, the government has taken a decision to stop building new coal-fired power plants. This will require some policy changes, but that is likely to happen soon. If that plan goes through, then China will be the only large economy to still be adding thermal based capacity. However, the policy will not impact the 28.2 GW of coal-based power capacity under execution currently. India has, till date, refused to commit on a deadline for phasing out of coal plants from India.
Hero Moto reported 37% higher net profit at Rs859 crore for Q4FY23, helped largely by higher vehicle sales in the domestic market. Top line revenue also grew 12% yoy to Rs8,307 crore. The profit growth was achieved through a mix of pricing, savings, and tweaking of product mix. The company is accelerating its EV rollout in 100 cities in the first phase. It will be opening new EV outlets and also leveraging the existing outlets of Hero Moto to sell EVs. Hero Moto plans to gain from increase in the EV transition in scooters.
BOFA Securities has suggested booking profits out of Indian equities as it expected the Nifty 50 index to be impacted by the US recession and tepid domestic corporate earnings. While the Nifty is already above the 18.200 levels, BOFA expects the Nifty close 2023 at around the 18,000 levels. They also commented that the markets were trying to build in too much optimism on a near-term earnings recovery. However, that is unlikely to happen amid tepid rural demand. In previous recessions, US markets fell up to 40%.
According to CAMS, a total of 1.57 crore new investors entered mutual funds between FY19 and FY23. This included and influx of 84.8 lakh fresh millennial investors. Thus, millennials cornered 54% of the new investor base in mutual funds. While millennials were a big driving factor, the number of MF investors also increased due to factors like simplified KYC, aggressive customer targeting, and smart advisory. One of the observations has been that SIPs were a key driving factor and investors showed a lot of stickiness.
HDFC confirmed it had received multiple bids for its proposed stake sale in HDFC Credila, the education loan subsidiary of the financial giant. Under the terms of the merger agreement with HDFC Bank, the parent has to reduce its stake in HDFC Credila to 10% within 2 years. There have been a lot of bidders interested in Credila, which is being valued at an enterprise valuation of $1 billion. HDFC is also making a representation to RBI on allowing Credila to continue signing up customers till it is able to find a buyer.
Just a few days after Go First had filed with NCLT for insolvency, the tribunal has reserved its order on the plea seeking interim moratorium on financial obligations. Interestingly, Go First (part of the Wadia group) had sought insolvency resolution, but wanted protection from creditors. However, the aircraft lessors have opposed the request since insolvency proceedings would need their approval. For now, Go First has blamed Pratt and Whitney engines for grounding half its fleet. Go First still sees a big scope for its revival.
