According to a recent report by NASSCOM, India added nearly 1600 technology start-ups in 2020 and it actually added 12 Unicorns with a valuation exceeding $1 billion. This is the best performance in any single year and this is all the more creditable considering that it was a pandemic year. The main drivers for this trend were digital acceleration; SAAS based solutions and a major shift from offline to online. Also, the remote work model threw up many opportunities for start-ups. Some trends in 2020 included Healthtech growing 2.2X, Edtech growing 1.9X and Agritech seeing a strong growth of 2.9X in the year.
The first advance estimates for the fiscal year 2020-21 have been put out by the MOSPI and it is estimated that the GDP for FY21 will contract by 7.7%. Of course, this is subject to change based on the speed and momentum of the recovery. Agriculture is expected to be the bright spot in the year 2020-21 recording growth of 3.4% while electricity, gas, water and other utility services is expected to grow by 2.7%. The sharpest fall is expected in trade, hotels and transport at -21.4% but that was expected as they were the worst hit by the pandemic. Construction is likely to fall by -12.6% while mining and quarrying is also expected to fall by -12.4% in the year. The key manufacturing sector is likely to contract by -9.4%. The year is also likely to see contraction in rupee per capital income of nearly 8.7% YOY.
PSU aluminium major, NALCO, will invest Rs.30,000 crore by 2027 which will include an ambitious expansion cum diversification project. Nalco will also be setting up a world-class aluminium park in the state of Odisha in collaboration with the state government. This will result in the capacity of the smelter plant expanding from 0.46 million tonnes per annum to 1 MTPA. The company will undertake a brown-field expansion project for its aluminium smelter plant. NALCO, is a low-debt company and accounts for 32% of India’s bauxite production, 33% of alumina and 12% of the total aluminium production annually.
According to a report in Reuters, India’s fiscal deficit for the fiscal year 2020-21 is likely to touch 7% of GDP. This was broadly expected after the government had to resort to multiple rounds of stimulus and there was also a sharp contraction in revenue collections from direct and indirect taxes. Even the annual disinvestment revenues have been less than 20% of the estimated amount. Experts estimate that the short fall in revenues from taxes and disinvestments for the year could be as high as Rs.700,000 crore. The final fiscal deficit number will be announced when the FM presents the Union Budget on 01-Feb.
Larsen & Toubro appears to basking under a spate of orders from the oil sector as an Rs.5000 crore order from ONGC comes close on the heels of the HPCL order. The contract is for a new living quarter or NQL platform with 120-men capacity. The order also includes a bridge with intermediate support as well as a total revamp of the process/ facilities at ONGC’s Bombay High oil platform. The contract was awarded to L&T through international bidding. L&T has fabrication facilities at Hazira in the West Coast and Kattupalli in the East Coast, ensuring maximum local content in line with Atma Nirbhar Bharat.
TCS will kick off the results season for Q3 on 08 January. The numbers are expected to be extremely encouraging on the back of greater cloud adoption and on the back of large digital deals. In dollar terms, the revenues of TCS are expected to grow between 3% and 4.5% while the net profit growth on a YOY basis could grow anywhere between 3% and 8% according to analyst estimates. However, the higher manpower costs would mean that operating profit margins of TCS would take a slight hit. However, most analysts believe that TCS would have benefited from cost control measures although it is hard to measure at this point in time. However, from an investment perspective, it must be noted that the stock of TCS has already rallied 14% in the Dec-20 quarter. Georgia could be an overhang on TCS sentiments.