Rating agency, Fitch, cut its FY22 India growth forecast from 10% to 8.7%. They cited the long-term impact of COVID 2.0 as a key reason which would back-end growth. However, Fitch has upgraded the growth forecast for FY23 from 8.5% to 10%. Unlike Moody’s, which raised India’s outlook from negative to stable, Fitch has decided to hold on to India’s negative outlook. It has cited high fiscal deficit, rising debt levels and slower than expected GDP growth as key risks. Another major risk could be high inflation levels.
Piramal Enterprises announced the demerger of its pharma business from the financial services business. The idea is to simplify the corporate structure and derive better value by creating two specialized listed entities. Details of the composite scheme of arrangement are awaited. The pharma business will get consolidated under Piramal Pharma (PPL). Shareholders of PEL will get 4 shares of PPL for 1 share of PEL, while they will retain their holding in PEL. PPL is likely to emerge among the largest Indian pharma plays.
Zee had a temporary reprieve as the NCLAT gave Zee more time to file a reply to the demand for an EGM put forth by Invesco Fund and OFI Global China Fund. Invesco had called for an EGM to seek the removal of Punit Goenka from the post of MD and CEO and nominate 6 of its own directors. The NCLAT order has pointed that NCLT had committed an error by not giving enough time to Zee to file a reply under the principle of natural justice. NCLT had given just 36 hours to Zee to file the reply, while the norm is 90 days.
SEBI is unlikely to exempt the acquirer of BPCL from making mandatory open offers for Petronet LNG and IGL. BPCL holds 12.5% in Petronet and 22.5% in IGL. As promoter of Petronet and IGL, BPCL holds board positions. As per the current legal position, the acquirer will have to make open offers to the shareholders of Petronet and IGL to buy 26% shares. SEBI is unlikely to accede to the request in the larger interests minority shareholders. BPCL has unwilling to reduce its stake in Petronet and IGL as it would deplete value.
Tata Motors rallied 10% and scaled a fresh 3-year high on strong business outlook. Morgan Stanley has already upgraded the price target of Tata Motors to Rs.448 from Rs.298 earlier. In fact, the Morgan report expects the future value creation for Tata Motors to come from the India business rather than from Jaguar Land Rover. Tata Motors is likely to enjoy the highest operating and financial leverage gains in the PV and CV segments. Even the Tata Motors DVR surged 7% and has been one of the best performing stocks.
In an expected move, the Bombay High Court dismissed SREI Group’s plea against RBI action on SREI Infrastructure Finance and SREI Equipment Finance. Earlier, SREI group had sought a stay on the RBI insolvency proceedings against the two entities. After the court order, Hemant Kanoria underlined that the SREI group had done its best to abide by the conditions imposed by RBI and the banks. Last week, SREI had asked for a 1-year standstill for collection of dues. Subsequently, banks had asked RBI to intervene.
Ahead of its Rs.16,600 crore IPO, Paytm is talking to sovereign wealth funds and large investors to participate as anchor investors in Paytm. Some of the major sovereign funds that are evaluating the offer are Abu Dhabi Investment Authority and GIC of Singapore. Paytm may seek a valuation of $20-22 billion in the IPO. Paytm has filed the DRHP with SEBI and is awaiting approval. It has also been talking to marquee investors like Nomura of Japan and Blackrock. Paytm is backed by Berkshire Hathaway and the Ant Group.
Godrej Consumer Products Limited rolled out a range of baby care products in India and it will be riding on the demand for branded oils, soaps and shampoos for children. These products will be launched under the “Goodnessme” brand and will be targeted at 0-2 year olds. The range of baby products is positioned as organic, vegan and cruelty-free. Johnson & Johnson has been a dominant player in this space for a very long time. This launch will also be a digital-first launch. Organic baby products is clearly a unique niche.