Even as FPIs have been trimming their stake in private banks, the domestic mutual funds have been doing just the opposite. They have been trimming their stake in PSU banks and adding on private banks. The view seems to be that PSBs have already run their course. Also, MF managers see better opportunities in the private banking space. In March 2024 alone, mutual funds sold Rs2,500 crore of PSBs and invested Rs4,900 crore afresh in private banks. MFs are expecting the profit growth of PSBs to moderate this year.
Tata Consumer Products Ltd (TCPL), which owns marquee brands like Tetley Tea and Ching’s Secret, has reported a 19% fall in net profits for Q4FY24 at Rs217 crore. However, revenues were up 8.5% in Q4 at Rs3,927 crore on yoy basis. The street was expecting the net profit to grow 13.4% yoy at Rs329 crore but the actual profit numbers disappointed. EBITDA margins were up 190 bps at 16%. The company saw strong growth across the tea and coffee business. Ecommerce channel grew 35% and Modern Trade 9% in FY24.
India’s consumption of crude oil in FY24 was up 4.6% at 233.3 million metric tonne (MMT), while domestic oil production was almost flat at 29.4 MMT. However, the oil import bill dropped by 16% in FY24 to $132.4 billion, saving $25 billion in terms of oil costs. Import dependence of crude stood at 87.7% in FY24, tad higher than in the previous year. India may be short on oil production capacity, but has refining capacity to the tune of nearly 276 MMT. That makes India a perpetual net importer of oil; and this trend continues.
If you look at the experience of 2019, the VIX (volatility index) has surged during election time. This time around, the VIX not on remained subdued, but also fell sharply by nearly 20% on Monday April 23, 2024. In the past, the VIX has fallen more than 15% in a day only on 14 occasions and in 9 out of these 14 occasions, the markets have rallied sharply. The VIX is also called the fear index, and a sharp fall in the VIX index is a signal that the panic in the market is reducing. VIX is the implied risk calculated by option prices.
In Q4FY24, cement volumes picked up by 7-8%, which comes on top of 15% growth in the first half of FY24. This was triggered by a massive volume push. Fiscal FY24 ended with 11% growth in cement demand at 441 MT. Now markets are expecting volume growth of around 7% in cement for FY25, even on a high base. However, prices have not been too favourable for producers with cement prices falling by up to Rs45 per 50-KG bag. On an all-India basis, fall in cement prices in FY24 has been to the tune of 1.5-1.6%.
Government of India continues to oppose the move by Vedanta to demerge the business units of HZL. The government still has a significant 29% stake in HZL, which means no special resolution can go through without the approval of the GOI. The government has also rejected the revised 2-way split of the HZL business. GOI has objected to separation of zinc and silver businesses, since they are mined from the same place, and hence separation of the businesses units would create major challenges on the valuation front.
The government offer for production linked incentives (PLI) for manufacture of 10 GWH (gigawatt hours) Advanced Chemistry Cell Battery storage has seen strong interest from Reliance, JSW Neo, Amara Raja, Lucas TVS, and others. Others who evinced interest in setting up advanced electric power storage capacity under PLI are Anvi Power, Acme Cleantech and Waaree Energies. The first round of ACC PLI bidding had concluded in March 2022. Winners of previous round included Reliance, Ola Electric and Rajesh Exports.
In the RBI Bulletin for the month, the governor underlined the need to consolidate and preserve the gains on the disinflation front. The idea is to move the inflation in a decisive manner towards the 4% mark. In its April policy meeting, the RBI had again decided to keep the policy rates at 6.5% and did not get drawn into any discussion on rate cuts. The governor underlined that food price shocks continued to hit the Indian economy and Red Sea crisis was an added risk factor in these conditions, which could spur inflation.