It looks like the central government is going to exceed its target for asset monetization substantially in the next fiscal year FY25. Having cut its teeth and built up pipelines, the government is expected to well exceed its FY25 budgeted target of Rs1.67 trillion from asset monetization. A lot of thrust is expected on railway monetization, since most of the monetization action has been in roads and mining sector till now. In FY23, the asset monetization had exceeded its targets, but in FY24, it is expected to fall short of target.
Markets have welcomed the decision by NCLT to approve the Rs9,650 crore bid by the Hinduja Group for Reliance Capital. The Reliance Capital sale had been fraught with a number of roadblocks. Reliance Capital has been struggling under a mountain of debt. It may be recollected that in November 2021, the RBI had superseded the board of the Reliance Capital on account of governance issues and payment defaults. The company has outstanding debt of Rs40,000 crore. Initially, 4 applicants had bid for the resolution plan.
AMCs are seeing an impressive rise in the assets under management (AUM), with average equity assets under management (AEAUM) up an impressive 45% yoy. Among the big growth candidates were Tata MF, which saw 57% growth in AUM while Nippon Life AMC grew 46%. The aggregate average AUM for these mutual funds surged by 30%. Mirae dominates in terms of equity share of AUM with nearly 84% of their AUM in equity funds. SBI MF is the largest fund house by AUM by a margin; 64% higher than Pru ICICI MF.
DCM Shriram announced plans to enter into the entry of its chemicals business into Advanced Materials space. It will do so by investing into Epoxy and value added products. DCM Shriram will be investing Rs1,000 crore over the next few years to set up greenfield epoxy manufacturing. Its Epichlorohydrin (ECH) plant in Jhagadia in Gujarat will be commissioned in Q1-FY25. Nearly, 80% of ECH produced globally is used in the manufacture of Epoxy. For DCM Shriram, this is more of a natural forward business integration.
The rights issue of Byju’s continues to controversial as it was an open battle between Byju Raveendran and its investors at the NCLT. The investors want the rights issue to be dropped, while Byju’s wants to go ahead. Since the NCLT has not raised any objection, Byju’s can technically go ahead with the rights issue. The rights issue is expected to close on February 28, 2024. Four of its key investors; Prosus, General Atlantic, Sofina and Peak XV had sought a stay on the rights, priced at a 99% discount to the last valuation.
Jefferies has upgraded TCS and expects the stock to outperform its large IT peers in India. Jefferies is of the view that TCS can surprise on the upside on CC growth and operating margins. The expect this positive surprise in TCS to be driven by revival in BFSI segment; revival in cloud migration projects; and sustained demand for managed services. The stock is upgraded from Neutral to Buy with 14.5% stock price upside from current levels. Margins of TCS are likely to be aided to some extent by the depreciation in the rupee.
The board of Vodafone Idea approved plans to raise up to Rs45,000 crore in equity and debt. The company will use the funds to expand its 4G coverage, roll out a 5G network, and increase capacity. Vodafone Idea also plans to rope in an outside investor. The exact structure of equity versus debt and whether the funds will be raised via public issue or private placement, is yet to be worked out. Currently, Aditya Birla Group holds 18.1% in Vodafone Idea, government of India holds 33% and Vodafone PLC of UK owns 32.3% stake. Foreign money is pouring into Indian debt markets in a big way as FPIs prepare for the deluge of passive flows expected into Indian debt, once the Indian bond indices are included in the highly popular JP Morgan debt indices. It is expected to trigger passive FPI flows of $35 billion into Indian debt. In February 2024, the FPIs have net bought $2 billion of Indian debt after infusing $2.5 billion in January 2024. However, FPIs have sold $3.5 billion in equities in 2024, clearly showing the equity money being reallocated to debt.
