There is a quiet change in the India remittance story. It is still robust at $87 billion in 2021, but what has changed is the composition of the country of origin. Remittances from the Middle East fell from 50% in FY17 to 30% in FY21. It can be attributed to steady migration of skilled hands to the US, UK and Singapore. These 3 countries accounted for 36% of remittances in FY21. Interestingly, at 23%, the US surpassed the total remittances from UAE in FY21. Higher work permit fees and taxes dampened the interest in the GCC.
State Bank of India will raise Rs11,000 crore via additional Tier-I and Tier II bonds to meet regulatory needs and support business growth. The fund raising plan has been approved by the SBI Board. SBI will raise AT1 capital of up to Rs7,000 crore and Tier-II capital of Rs4,000 crore. Its capital adequacy is healthy at 13.83% with Tier-1 adequacy at 11.42%. Even other PSU banks like PNB, Union Bank and Canara Bank have lined up similar AT1 bond issues. In Dec-22, SBI had raised Rs3,974 crore via AT1
bonds at coupon rate of 7.55%.
The Mumbai Bench of NCLT admitted Bank of India’s petition under Section 7 of IBC to start proceedings against Future Retail. At the same time, it also dismissed the intervention application of Amazon, who had opposed the deal with Reliance Retail. The bench dismissed the Amazon petition for not being a stake holder in the process. Future Group owes its 26 lenders over Rs15,000 crore and it looks like these lenders will have to take large haircuts. With RRVL taking possession of stores, there may not be real
assets left.
Wipro reported -21% lower net profits for Q1FY23 quarter at Rs2,564 crore. On a sequential basis, profits were lower by 16%. However, revenues surged by 17.9% in the quarter at Rs21,258 crore with IT services growing at 13.3%. Wipro has given strong Q2 guidance of 3-5% revenue growth in constant currency terms. Wipro also reported robust order book positions with TCV growing at 30% and the ACV growing at 18% yoy. One key observation that emerged was that there was no slowdown in tech
spending visible.
A giant with a big AUM has reported a gigantic loss of $1.7 trillion in first half of 2022. Yes we are talking about the world’s largest fund manager, BlackRock. With more than $10 trillion as AUM; bad markets
and some wrong decisions caused an erosion of $1.7 trillion in H1. This was their worst first half performance in 50 years. Blackrock was formed with active fixed income management roots but today most of its inflows come into passive funds. In 2022, there has been massive underperformance of
active bond funds.
How much of forex reserve depletion will the RBI tolerate. RBI insiders have admitted to Reuters that the RBI was willing to commit up to $100 billion or one-sixth of its holdings to defend the rupee against the rapid strengthening of the dollar. Meanwhile, the RBI has seen its currency reserves deplete by over $60 billion, so it may be willing to go down by another $40 billion in trying to defend the Indian rupee.
Despite the fall in reserves to $580 billion, India’s reserves are the 5th largest in the world. That may happen soon.
The markets may have suddenly discovered the virtues of ITC but there is a story to it. Its FMCG business has shown substantial headroom to grow. It is expecting total addressable market potential of Rs500,000 crores by 2030. In FY22, the FMCG revenues (ex-cigarettes) were up 8.6% at Rs15,995 crore.
ITC actively competes with big FMCG names in India like Hindustan Unilever, Nestle, Britannia etc.
Meanwhile, ITC made several acquisitions in the last two years including investments in direct-to-consumer (D2C) brands.
With the partial rollback of the windfall tax, Nomura is confident that India would be able to restrict the fiscal slippage to about 40 bps over a and above 6.40%. It may still be high in absolute terms but spillage has been checked. Within 18 days of imposing the windfall gains tax, the government has reduced the windfall tax on diesel, ATF and oil extracted locally. In addition, government has also totally scrapped the tax on petrol exports. The overhang of the fiscal looseness of the COVID pandemic period, still continues.