Reliance Industries missed analyst estimates as it reported 1.8% lower net profits due to a surge in tax expenses. However, the net profit of Rs18,951 crore was 10% up on a QOQ basis. Revenues for Q4FY24 were up 11.1% yoy at Rs2.37 trillion and 5.1% up sequentially. For FY24, PAT was up 7% at Rs79,020 crore. The company recommended dividend of Rs10 per share. The company witnessed growth in EBITDA across the 3 principal businesses viz. oil to chemicals (O2C), retail, and digital. ARPUs also surged sharply in Q4.
Oil prices came under pressure on Monday as WTI crude fell to $82/bbl. With the US Congress likely to sanction Iranian oil, there could be a supply problem for global oil markets. The price of Brent also fell in tandem. Despite this fall, crude is still 14% higher since the start of 2024. For now, the focus will be on the Q1 GDP data and the PCE inflation data to be announced by the US BEA this week. The futures buying has been very robust as bullish positions are the highest since March 2021 as judged from call option volumes.
Mitsubishi UFJ Financial Group (MUFG) of Japan may sweeten its bid for HDB Financial, the arm of HDFC Bank. MUFG had offered $1.70 billion for a 20% stake in HDB Financial, but HDFC Bank wanted a better deal. Now, it looks likely that MUFG may sweeten the deal. HDB Financial was formed in 2007 to provide secured and unsecured loans through its 1,680 branches across India. As per the RBI guidelines for large NBFCs, HDB Financial has to list by September 2025. HDFC Bank was silent on the progress on this deal.
Semi-Conductor Laboratory (SCL) may be first off the block to manufacture semiconductors in India, thanks to a generous Rs10,000 crore funding support for modernization by the MEITY. Ironically, SCL was a pioneer and started manufacturing semiconductors in 1984, even before TSMC of Taiwan. Owing to a major accident at the plant, it never really took off. SCL has 2 fabrication lines; for 6 inch and 8 inch wafers, an ATMP unit, and a compound semiconductor unit. SCL will support startups for R&D and prototyping.
The Comprehensive Economic Partnership Agreement (CEPA) signed between India and UAE in 2022 has given a major boost to imports of silver. In the first quarter of 2024, more than 40% (1,542 tonnes) silver import into India came from UAE. That is because while the normal duty rate is 15%, the concessional rate of duty under CEPA is 8%. There has been a surge of silver imports into India with nearly 3,730 tonnes coming into India in the first 2 months of 2024, which is more than the imports of silver in calendar 2023.
Ashima Goyal, a member of the RBI Monetary Policy Committee (MPC) has opined that there is dichotomy in bank deposit rates. For instance, banks offer attractive rates for bulk corporate deposits, which are not all that sticky, but much lower on sticky retail deposits. If this dichotomy persists, the deposit growth may continue to lag the credit growth by a substantial margin. This has led to many retail depositors from the bank deposits, which is today impacting the C/D ratio. It could hit NIMs, but then banks have no choice.
The government is now going all out to contain food inflation and has taken a slew of steps in that regard. In the last few months, food inflation has been the real challenge for the RBI. However, with predictions of above-normal summer temperatures are likely to keep the prices of pulses, milk, and vegetables under stress. The government is setting up a robust procurement system, and encourage farmers to target more variety of pulses. Government is also building a buffer for onions and tur dal to keep prices under check.
According to a recent report, SEBI has found that Adani offshore funds were in violation of shareholder disclosure requirements and had breached investment limits. This was observed in 12 offshore funds that had invested in Adani group stocks. The regulator is also evaluating the linkage, if any, between the funds and the Adani group. Some of the funds have apparently written to SEBI about paying penalty without admission of guilt. This was one of the major allegations made by Hindenburg Research in its 2023 report.
