It is now almost official that the government is likely to defer the LIC IPO to FY23, notwithstanding the impact it would have on the disinvestment targets and government fiscal deficit target for FY22. The war in Russia has just put the IPO beyond the reach of DIPAM for this year. The steep volatility in the market and aggressive FPI flows are also not conducive. FPIs sold equities worth Rs.2 trillion since the start of October 2021. With little room for failure, the LIC IPO is obviously a risk that is best not taken in this year.
It is now becoming increasingly clear that petrol prices could see a quantum jump on 07-March after the last round of assembly elections are over. Experts are pegging the rise in petrol and diesel between Rs.15 and Rs.22 per litre. That is not surprising considering that Brent crude has rallied 71% in just the last 3 months since the start of December 2021. March 07th is the last day of voting and the results of the polls will be announced on 10th March. It is likely to be combined with a possible excise cut to soften impact.
TCS has announced the dates for its Rs.18,000-crore share buyback offer. The offer window will open on 09th March and close on 23rd March. In the reserved category of small shareholders, the buyback ratio will be 1 for 7. However, in the general category, the ratio would be 1 for 108. This is the fourth buyback announced by TCS in the last 5 years. Typically, Tata Sons has been the biggest beneficiary of all previous buybacks, being the dominant shareholder. As of Sep-21, TCS had cash and equivalents of Rs.51,950 crore.
Punjab National Bank has clarified that it is awaiting the advisory from the Finance Ministry and the RBI on SWIFT-related transactions with Russian entities. This is in light of several countries like the US, Canada and certain European nations blocking certain Russian banks from using SWIFT. The Belgium based SWIFT system is a protocol for global bank transactions. SBI stopped processing transactions of Russian entities sanctioned by the West. While Indo-Russia bilateral trade is $9.5 billion, Russia is a major arms supplier.
As scores of Future Retail stores are being rebranded into Reliance Retail stores, it looks like Mukesh Ambani has taken Round 1 of the battle of wits with Amazon. Most of the stores were already on lease from RRVL and as Future Retail defaulted on its lease payments, the ownership of stores automatically passed to Reliance. Reliance has already taken over 200 Big Bazaar stores citing non-payment of dues and plans to take another 250 of Future retail outlets. This largely spoils Amazon’s chances of a stake in FRL.
Debt marketplace, CredAvenue, is India’s latest Unicorn, referring to start-up with billion dollar valuation. CredAvenue recently raised $137 million in a round led by Insight Partners at a valuation of $1.3 billion. CredAvenue, based out of Chennai, is a Fintech which connects enterprises with lenders and investors. It is also backed by Sequoia Capital and Lightspeed. CredAvenue crossed $12 billion in gross transactions on its marketplace, Currently, the platform and has over 2,300 enterprise customers and over 750 lenders.
India is a beneficiary of the ongoing war in the bread basket of Europe, Ukraine. Indian wheat exports are set to cross 7 million tonnes this year amidst a rally in global prices. India is 2nd biggest producer of wheat and the crisis in Ukraine has increased demand for Indian wheat. India already exported 6.6 million tonnes of wheat by Feb-22 with one more month to go. The wheat benchmark prices are up 40% this week on fears of supply disruptions due to sanctions. Russia and Ukraine account for 30% of global wheat exports.
Hindustan Unilever shares have fallen over 30% from recent peaks, but now the problems are looking a lot more deep-rooted. It is at a 2-year low. Even at the height of the pandemic, HUL remained a defensive bet, so what has changed during the Ukrainian war. It is about loss of pricing power. HUL saw OPM stress in Q3 and Q4 could only get worse. The reason is a sharp spike in most inputs relevant to HUL like crude oil, corn, palm oil, soya bean etc. It is a Catch-22 for HUL as it either loses profits or it loses loyal customers.