Friday, 4th June 2021

LIC IPO may finally be on the anvil as the government plans to call for proposals from investment banks for its proposed IPO. The investment banker is likely to be finalized at the earliest. The LIC IPO is likely to hit the market around March next year, as there are a number of regulatory changes also required. It is expected that the listing could value LIC at $261 billion or higher, making it India’s most valuation company by market cap and about 30% bigger than Reliance. LIC has total assets of $440 billion as of March 2020. 

The sweetness in sugar stocks was back as the government further advanced its ethanol blending deadline by two years to 2023 instead of 2025. This is an attempt to reduce India’s dependence on oil imports. Most major sugar stocks like Balrampur Chini, Triveni Engineering, EID Parry, Dhampur and Dwarikesh Sugar were up by around 3%. Last year, government had set a target of 10% ethanol blending in petrol by 2022 and 20% by 2030. The 20% is now in 2023. Brazil is facing the worst sugar output in nearly a century. 

Reliance Industries extended its rally for the seventh day, gaining more than 13% in the last 7 sessions to scale a 7-month high. Its market cap once cap crossed the Rs.14 trillion mark, roughly equivalent to the $200 billion market cap hurdle. The stock started from below Rs.2000 and is now well above the Rs.2200 mark. The trigger came after Jefferies upgraded the O2C business of Reliance raising hopes that the stake sale to Aramco could happen soon. RIL touched a high of Rs.2,250 during the day, but corrected later on.

After a strong 67% growth in merchandise exports for May-21, the Commerce Secretary has reported tentative 6.44% growth in services exports in May to $17.85 billion. Service imports were almost flat at $10 billion and while the final figures are awaited, it looks like India may post an overall trade surplus for May. He noted that the PLI program of offering production linked incentives was surely working in some of the strategic sectors. If this growth in exports can be sustained, it spells good news for trade balance.

Britannia Industries announced that its board of directors had approved a proposal to raise Rs.699 crore through the issue of bonus debentures to eligible equity shareholders. This is not the first time as Britannia has issued bonus debentures to its shareholders even in the past. The company will allot one, unsecured, full-paid up NCD with a face value of Rs.29 each for ach equity share. The record date for the issue of bonus debentures will be 27 May 2021. The bonus debentures will be listed on the BSE as well as on NSE. 

India’s PMI-Services slumped into contraction mode first time in 8 months to a level of 46.4 compared to 54 in the month of April, largely on account of the impact of COVID 2.0. The intensification of the COVID-19 crisis has resulted in renewed declines in fresh orders and services output. As per the Markit PMI benchmarks, a print above 50 indicates expansion and a score below 50 denotes contraction. However, it is the MOM momentum that is more relevant. Composite PMI fell from 55.4 in Apr-21 to 48.1 in May-21.

Wipro became the third large IT company in India to breach the Rs.300,000 market cap level, after TCS and Infosys. At the current price of Rs.550, Wipro has a market cap of just above Rs.3 trillion. The Wipro stock has had a dream run since Thierry Dela Porte took over as CEO of the company. Wipro recently won its largest deal ever from Metro AG of Germany, taking its total deal wins to $7.1 billion. On an all-India basis, Wipro ranks 14th in market cap rankings. Wipro stock has rallied nearly 40% since January 2021.

A number of new stocks are expected to emerge as large cap stocks in the AMFI half-yearly review of Indian market rankings. A total of 7 stocks are likely to move from mid-cap to large-cap classification while 13 companies are likely to get upgraded from small-cap to mid-cap. Out of these 20 stocks in total, 5 belong to the digital domain. Interestingly, the cut-off is rolling and changes with the market levels. The upper limit for mid-cap classification has moved up from $1 billion in May-20 to $5 billion in May-21.

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