Vedanta Resources, the UK based holding company of Anil Agarwal group, will sell about $1 billion worth of shares to GQG Partners via block deals. To refresh memories, GQG is the same fund that had bailed out the Adani group stocks, buying substantial stakes in these companies at lower levels post the Hindenburg fiasco. That had helped stabilize the stock prices. Vedanta Resources is saddled with debt of $6.4 billion, of which $4.5 billion is due in 2025; after recent attempts to take the company private, did not succeed.
India’s services trade surplus touched a record high of $44.9 billion in the December 2023 quarter. This is nearly 16% higher on yoy basis; displaying a lot of resilience amid strong global headwinds. This is also likely to be positive for the current account deficit (CAD) in FY24. In Q3FY24, the services exports grew 5.2% to $87.7 billion, while services imports fell 4.3% to $42.8 billion. India’s CAD had already moderated to 1% in Q2, from 2.9% in Q1 and the services surplus data means the Q3 CAD could be even below 1%.
In a market that increasingly shifting towards artificial intelligence and its applications, it is little surprise that the company that makes AI-compatible chips is the big value creator. Yes, we are talking of Nvidia. It has just overtaken Google to become third most valuable company in the world after Apple and Microsoft. At $1.82 trillion in market cap, NVIDIA leaves the likes of Google, Amazon, Facebook, and Tesla behind, which is not surprising considering that NVIDIA has really become the poster child of the global AI boom.
Tata Motors may have just triggered off a price war in the EV space by slashing prices of its two key electric vehicle (EV) models. According to Tata Motors, they were just passing on the benefits of lower battery prices to the end consumers to make it more affordable. TAMO obviously knows that as the leader it sets price rules in the EV market in India and a sharp price cut would be the best bet to ensure faster adoption. The price cuts apply to the Tiago, Nexon and Punch; but charging infrastructure remains an open question.
India’s WPI inflation tapered from 0.73% in December 2023 to 0.27% in January 2024. This is sharply lower than the Reuters poll estimate of 0.53% for the month and this is largely on account of the tapering of the food and food products prices due to a better than expected Rabi harvest this year. For FY24, 10-month cumulative WPI inflation stands at -0.94% due to the WPI inflation being in the negative for 7 months in a row between April 2023 and October 2023. This is in sync with a fall in CPI inflation this month to 5.1%.
How is the total mutual fund AUM of Rs52.74 trillion in India distributed geographically? The states of Maharashtra, New Delhi, Karnataka, Gujarat, and West Bengal account for a whopping 68% of the mutual fund industry AUM as of January 2024. The share of these top-5 states fell marginally by 100 bps over the last month, showing increasing penetration to small towns. MF assets in Maharashtra accounted for 41% of all-India assets, but that is due to corporate concentration. The top-10 states account for 87% of AUM.
Muthoot Finance reported 19% higher net profits for Q3FY24 at Rs1,104 crore. Revenues were up 26.9% yoy at Rs3,820 crore. Profits are higher than street estimates. Net interest income (NII) for Q3FY24 was at Rs1,872 crore. On consolidated basis, the loan book of Muthoot Finance crossed Rs80,000 crore during the quarter. While gold loans continue to be the bread and butter model of Muthoot, it is in the process of building its non-gold loan book; across microfinance, vehicle finance and affordable housing finance.
In the latest news in media sector, Reliance is in talks to acquire a 29.8% stake in DTH player (Tata Play) from Walt Disney. This is part of the game plan of Reliance group to up its ante in TV distribution. Tata Sons holds over 50% in Tata Play while Temasek holds the balance shares in Tata Play. This deal, if it works out, will be the first joint venture between the two most valuable business groups in India, as measured by market capitalization. Temasek has also been in talks with Reliance to sell its 20% stake for $1 billion.