There appears to be action on the LIC IPO front after a finance ministry official confirmed that LIC could file DRHP with SEBI in Nov-21. It has already appointed 10 merchant bankers for the issue including 5 domestic and 5 international names. Post the filing of the DRHP, the road shows in India and abroad are expected to happen by January 2022. The issue of FPI investment is yet to be sorted since LIC is governed under a separate LIC Act. LIC IPO is key to the government divestment target of Rs.175,000 crore for FY22.
For the week ended 01-Oct, 8 out of the 10 most valuable companies on the Nifty suffered value erosion to the tune of Rs.180,534 crore. The markets were hit by a combination of Evergrande, US inflation and the possibility of RBI hiking reverse repo rates. Among big value losers; TCS lost Rs.52,527 crore, Infosys Rs.41,783 crore, HDFC Rs.22,643 crore, ICICI Bank Rs.21,096 crore, Bajaj Finance Rs.16,439 crore and HDFC Bank Rs.10,410 crore. Exceptions were RIL adding Rs.25,294 crore and SBI Rs.9,773 crore last week.
NTPC plans to take its 3 subsidiaries public to help meet Rs.15,000 crore power monetization target of the centre for FY22 and FY23. NTPC will monetize stakes in NTPC Vidyut Vyapar Nigam, North Eastern Electric Power and NTPC-Renewable Energy. NTPC will also exit its steel JV with SAIL. All these subsidiaries are likely to be listed next year. These subsidiaries are into newer and greener forms of energy and are hence likely to get better valuations. This will also enable NTPC to get better sum of total parts (SOTP) valuation.
Foreign portfolio investors were net buyers for the month of September; the second month in a row. They infused Rs.26,517 crore in Sep-21, which included Rs.13,154 crore into equities and Rs.13,363 crore into debt. The debt market investments have picked up after yield spreads between India and the US widened. Among other EMs, South Korea reported FPI inflows of $884 million, Thailand $338 million and Indonesia $305 million. October could see the impact of Evergrande, global power crisis and the US inflation fears.
The board of Zee Entertainment has refused to hold the EGM as demanded by Invesco Fund. Zee has also approached the court to strike down the 01-Oct order of the NCLT urging them to hold the EGM at the behest of Invesco Fund, which holds 18% in Zee Entertainment. The board of Zee has considered the demand for an EGM to be invalid and illegal. Invesco wanted an EGM to vote on the removal of Puneet Goenka and induction of 6 of its own nominees to the board of Zee. Goenka is the son of Subhash Chandra.
Oravel Stays, the owner of the OYO brand, has filed for a Rs.8,430 crore IPO with SEBI. OYO is seeking a valuation of approximately $12 billion for OYO. The issue will consist of a fresh issue of Rs.7,000 crore and an offer for sale of Rs.1,430 crore. Neither the promoter Ritesh Agarwal, nor the key early investors plan to dilute their stake in OYO via OFS. OYO will use the fresh funds to repay debt and also to bankroll its organic and inorganic expansion plans. Gross profit margins of the company improved over 3-fold in FY21.
There is a new crisis for India’s power sector and that is the crisis of coal availability. The sharp spike in global coal prices has led to Indian power producers reducing import dependence. However, local coal supply is just not equipped to handle this surge in demand. Out of the 135 coal fired power plants in India, 72 plants have less than 3 days stock of coal while another 30 power plants have coal stocks for just 10 days. While electricity demand has spiked, the unseasonal rains have badly impacted coal mining activity.
A week after SEBI permitted the trading of electronic gold receipts (EGRs) on a gold exchange, the BSE is ready with the technology to introduce EGRs on its platform. This is expected to help create uniform spot prices across India. Of course, BSE will still need the approval of SEBI before it can launch EGRs on its platform. EGRs are notified as securities under the SCRA. To begin with, BSE plans to launch EGRs having denominations of 100 grams and 1 KG. BSE will also empanel vault service providers (VSP) for the EGRs.