There is clarity emerging on LIC IPO. Government filed a revised DRHP with SEBI and the nod is expected on Monday. LIC plans to sell only 3.5% of its stake in LIC for a consideration of Rs.21,000 crore. That values LIC at around Rs.600,000 crore, nearly half of the original valuation planned. LIC will sell 22 crore shares and the insurer has been now valued at just about 1.1X actuarial valuation done by Milliman Advisors. The IPO will be about 14.7% bigger than the Paytm IPO with issue details to be announced on 27th April.
In a tough last week, 8 out of the top-10 firms by market cap saw value erosion to the tune of Rs.221,556 crore. Not surprisingly, Infosys and HDFC Bank took deep cuts. Infosys saw market cap fall by Rs.68,549 crore after tepid quarterly results. Other losers included HDFC Bank Rs.60,537crore, Bharti Rs.30,128 crore, SBI Rs.15,261 crore, Bajaj Finance Rs.13,265 crore, ICICI Bank Rs.10,377 crore and HUL Rs.5,345 crore. Among big gainers, Reliance gained Rs.139,358 crore and Adani Green Energy added Rs.3,699 crore.
Two major IPOs will raise close to Rs.2,996 crore in the coming week. Campus Activewear, opening on the 26th April, will be a total offer for sale of shares by promoters and early investors to the tune of Rs.1,400 crore. Campus is one of the leading athletic and leisure footwear companies in India. The other IPO of Rainbow Children Medicare is a Rs.1,596 crore IPO comprising of a fresh issue component and an offer for sale component too. The IPO of Hyderabad based Rainbow Children Medicare opens on 27th April.
With secured creditors rejecting the Reliance / Future deal, RRVL has decided to opt out of the deal. That is likely to virtually leave the lenders and the shareholders in the Future group in the lurch. While lenders are taking Future group to the bankruptcy court, they are unlikely to recover anything worthwhile out of it. The Biyani family has been depleting its stake in all the Future group companies. While it may be easy for Future group to blame Amazon for this fiasco, the problems at the group had started long before that.
There is hardly any surprise that India’s crude oil import bill doubled to $119 billion in FY22 as against $62.2 billion in FY21. The main reason was the sharp surge in crude prices amidst supply crunch and later the Russia Ukraine war. In the month of Mar-22 alone, India spent close to $13.7 billion when crude prices were at a 14-year high. Import volumes in FY22 stood at 212.20 million tonnes compared to 196.5 million tonnes in FY21. Volume growth has been just 8%, so most of the import bill accretion is from price hikes.
ICICI Bank reported 58% growth in net profits for the fourth quarter at Rs.7,719 crore on the back of improved NIMs and lower provisioning. Net interest income (NII) grew 21% in Mar-22 Q4 at Rs.12,605 crore. Deposit growth was 14% while loan growth was 17% and CASA deposits accounted for 45%. NIMs for the quarter improved to 4% for the quarter. Provisions for doubtful assets fell by 63% in the fourth quarter to Rs.1,069 crore. Gross NPAs dipped below 4% while capital adequacy ratio is at 19.16% in Q4.
For the month to 22-April, FIIs withdrew Rs.12,300 crore from Indian equity market after the Fed chair, Jerome Powell, made extremely hawkish statements at the IMF Spring Meet 2022. He hinted at 50 bps rate hike in May, commencement of bond unwinding and another 2 more rate hikes of 50 bps in 2022 taking interest rates to 3% by Dec-22. This comes on top of 1.48 trillion pulled out by FPIs in H2 FY22. FPIs were net buyers in the first week of April to the tune of Rs.7,707 crore but that was just a flash in the pan.
UBS is the latest to downgrade FY23 GDP forecast for India by 70 bps from 7.7% to 7%. UBS has specifically cautioned that India’s rural economy will remain a big drag. Some of the headwinds highlighted by UBS include high energy prices, weak global growth and the war in Ukraine. UBS has pointed to India’s high vulnerability to commodity prices as a major risk factor. They expect high global commodity prices to be passed on to the real economy, impact company margins and household consumption power in a big way.