Fitch Ratings revised its India GDP growth forecast to 7% for FY25, 50 bps above its previous estimate. It has also upped its FY24 forecast to 7.8%, so India will continue to be the fastest growing large economy for the third year in a row. According to Fitch, domestic demand will be the primary driver of growth in India, assisted by business and consumer confidence. However, Fitch remains cautious about inflation, and particularly about food inflation. For 2024, Fitch marginally reduced China forecast by 10 bps to 4.5%.
Fractal Analytics, the US-based provider of artificial intelligence and advanced analytics solutions, is planning to ride the revived Indian IPO market with an IPO of $500 million. The company, founded by a bunch of IIM graduates, would be valued at close to $3.5 billion at the upper end. Kotak Mahindra Capital and Morgan Stanley have been appointed advisors to the proposed issue. The IPO will be a combination of a fresh issue and an OFS; with early investors like Apax Partners and TPG set to offer shares in the OFS.
OMCs like IOCL, BPCL and HPCL announced a price cut of Rs2 per litre for petrol and diesel. The change comes just ahead of general elections and will be effective from March 15, 2024. The reduction in petrol and diesel prices is likely to boost spending and also keep inflation in check; especially with retail inflation consistently at over 5% in recent months. It may be recollected that fuel prices had been left unchanged since May 2022 despite the sharp vagaries in fuel prices. OMCs are still facing under-recoveries in diesel.
Ironically, on the day India cut its retail fuel prices, the price of Brent Crude scaled toa 5-month high. This was after the International Energy Agency (IEA) raised its outlook for oil demand for 2024. Brent crude price touched $85.26/bbl while the West Texas Intermediate (WTI) crude touched $81.13/bbl. In recent weeks, there have also been demand led concerns on crude due to UK and Japan slipping into recession with 2 consecutive quarters of negative GDP growth. IEA also cut 2024 supply forecast 102.9 million bpd.
Paytm got its third-party application provider licence from National Payments Corporation of India just ahead of the March 15 deadline to shut Paytm banking operations. This allows Paytm customers to use Paytm app for payments, even after the bank ceases operations by March 15 due to regulatory ban. As per NPCI; Axis Bank, HDFC Bank, SBI, and YES Bank will act as PSP (Payment System Provider) banks to Paytm. YES Bank will also be the merchant acquiring bank for existing and new UPI merchants for Paytm.
Tata Group and CG Power will create over 72,000 jobs with their upcoming semiconductor facilities, which have just been approved by the government of India. Tata group is coming up with its fabrication unit in Dholera, Gujarat, and assembly, testing, marking, and packaging (ATMP) unit at Morigaon, Assam. CG Power plant also is in Gujarat, but will only create about 5,000 jobs. The Tata semiconductor facility will cater to industries like high-performance computing, electric vehicles, defence, and consumer electronics.
Bharat Electronics Ltd (BEL) has entered into a Rs848 crore contract with Larsen & Toubro (L&T) for the supply of 14 cutting-edge Communication and Electronic Warfare (EW) sensors and systems. These are state-of-the-art systems, manufactured domestically by BEL. They will be installed on 3 Cadet Training Ships for the Indian Navy. There will also be a slew of MSMEs participating in this contract at various levels in India. Defence in-sourcing has been a major way by which Atma Nirbhar Bharat has been implemented.
Vedanta may face shareholder hurdles for its plan to demerge the business into separate entities along business verticals. The objections could come from its minority shareholders and creditors. As per the plan, Vedanta plans to demerge aluminium, oil and gas, and steel, into separate listed entities. HZL is facing challenges with its demerger plan as it will not get 75% vote in the absence of the government vote for the proposal. Investors feel that creating value via demerger goes against original consolidation idea.