Oil prices edged up above $78/bbl even as investors awaited the outcome of US diplomatic efforts to diffuse the crisis in Gaza. The US is trying to work out a truce between the Hamas and Israel to make the Red Sea trade route safe once again. The US wants to prevent Israel attacks on Rafah, which houses half the Palestinian population. Mediators from Qatar and Egypt had delivered the ceasefire offer to Hamas, but the militants want more guarantees. However, tepid oil demand has kept a lid on oil prices for now.
Moody’s Investors Service downgraded UPL Ltd senior unsecured rating from Baa3 to Ba1. It has held its negative outlook for the agrochemical industry. In addition, Moody’s also downgraded the Eurobonds issued by UPL Ltd to Ba3 from Ba2. The corporate family rating (CFR) of Baa3 has been withdrawn and is replaced with Ba1. The rating action came after weak operating results of UPL for Q3FY24. What made things worse for UPL was that it had entered the current industry down cycle with substantial leverage.
In the September 2023 quarter, retail loan growth originations moderated as lenders tightened the flow of money into segments like credit cards and personal loans. There was a rise in delinquencies in these areas as per the Credit Market Indicator (CMI) report put out by CIBIL. Growth in origination of personal loans fell to 28% in September 2023 quarter, compared to 72% a year ago. The fall was true for credit cards and housing loans too. Even, share of new-to-credit consumers in originations fell by 3 bps to 14%.
As PSU banks become more profitable, it could translate into $2 billion in extra dividends for the centre in FY25. In the last 10 years, the government has taken several steps to strengthen state-owned banks via merging weak banks with stronger ones, recapitalization of banks and strict bankruptcy laws. This does not include the dividends that the government gets from the RBI as capital transfer each year. Indian PSU banks combined, have already reported net profits of Rs98,000 crore in the first 9 months of fiscal FY24.
Ultratech Cements, India’s cement behemoth, plans to sharply cut debt amidst improving cash flows. The government focus on infrastructure and an urban housing boom boosted demand for cement. Net debt of Ultratech stands at Rs5,541 crore as of December 2023, while capex for the year is estimated at Rs9,000 crore. In Q4, Ultratech sees capacity utilization at 85%, compared to 77% in Q3. The company plans to reach a zero net debt position by March 2025. Net debt is the total debt, minus the cash and liquid assets.
Britannia Industries reported 40% lower net profits at Rs556 crore for Q3FY24. This slightly lower than the street estimates of Rs566 crore. Even sequentially, the net profit was lower. The triggers for lower profits came from a high base, competitive price cuts, and low single-digit volume growth. Top line revenues for the quarter were marginally by 1.43% at Rs4,256 crore. The price cuts had to be undertaken in Q3FY24, as some of the competitors had taken a decision to pass on the lower input costs to the end customers.
Tata Group became the first Indian company to scale the Rs30 trillion ($360 billion) market cap mark. TCS still leads the way with more than 50% of the market cap of the Tata Group, with Titan and Tata Motors jointly accounting for another 20% of the group market cap. The big drivers of this rally were TCS, Tata Motors, Tata Power, and Indian Hotels. The Tata group has 24 listed companies on the bourses. Tata group companies that lost value in 2024 were Tata Elxsi, Tata Chemicals, Tata Technologies, and Tejas Networks.
Petronet LNG and Qatar Energy have inked a long-term LNG Sale and Purchase Agreement (SPA) for supply of nearly 7.5 million metric tons per annum (MMTPA) of LNG to India, between 2028 and 2048. The deal entails imports of LNG worth $78 billion by Petronet LNG. The existing SPA between Petronet and Qatar Energy was signed in 1999 and is due to expire in 2028. The lower renewal price implies savings of $6 billion over the life of the contract. It provides energy security and ensures stable supply of clean energy.
