Stock Market Investment Shot, 10th April 2023

Stock Market Investment Shot, 10th April 2023

Stock Market Investment Shot, 10th April 2023

It has been a tough quarter for start-up funding. In fact, start-up funding in India fell by 75% yoy for the quarter ended March 2023. At $2.8 billion across 301 deals in March 2023 quarter, it was far below $11.9 billion across 816 deals in the year ago period. Start-up funding is also down 27% sequentially. The real fall was in late stage deals, which fell 79% to just $1.8 billion as venture capital gets edgy about near-to-market start-ups. Lenskart and PhonePe led the funding while no unicorns were created in the quarter.

The CBI filed a charge sheet against Chanda Kochhar, former ICICI Bank MD, as well as her husband Deepak Kochhar and Videocon Group Chairman Venugopal Dhoot. This pertains to the ongoing ICICI-Videocon loan fraud case. In 2009, the Sanctioning Committee of ICICI Bank had sanctioned the Rs300 crore loan to Videocon in contravention of rules and policies. This was immediately followed by a consideration paid to Deepak Kochhar. The Videocon loan eventually turned bad. Chanda was replaced by Sandeep Bakhshi.

Larry Summers, former treasury secretary and a leading economic commentator, has red-flagged the possibility of recession in the US. This was after a slew of weak growth indicators in the last week. In its March meet, the Fed had hiked rates by 25 bps, although it is not clear what will be the Fed stance in the May meeting. According to Summers, the constriction in credit is now showing up on growth. While that was intended to rein in inflation, the fear is that it may end up pushing the US economy into a recession.

A slew of city gas distributors (CGDs) has been cutting gas prices aggressively. IGL cut PNG prices by Rs5 SCM and CNG prices by Rs4.92 to Rs5.97 per KG. The revised retail prices become effective from Sunday and should help to put a check on inflation. Mahanagar Gas also cut prices in Mumbai by Rs5 per SCM for PNG and by Rs8 per KG for CNG. This was after the government amended the gas pricing formula by linking it to crude prices and binding in a range. In Gujarat, Torrent Gas also slashed CNG price by Rs8.25 per KG.

There appears to be signs of improving relations between the Tatas and the Mistry families. The Shapoorji Pallonji Group, which holds about 18% in Tata Sons, plans to raise funds by pledging Tata Sons shares to repay part of its debt. The group will raise about $1.7 billion; and this time Tatas are unlikely to object to the pledge. SP group has debt of Rs20,000 crore. In the last couple of years, SP group had pledged 9% out of its 18.37% holdings in Tata Sons. Incidentally, in 2020, the Tatas had objected to the pledging of shares.

Government is likely to divest 50.8% of its stake in NMDC Steel for Rs11,000 crore in H1FY24. NMDC Steel was demerged from NMDC. This will mark the second strategic steel sector disinvestment after Neelachal Ispat was sold to the Tatas. The government has already received multiple EOIs for the proposed stake sale. NMDC had invested Rs22,000 crore to build the new steel plant so the actual valuation would be much higher than the CMP of Rs32 per share. Steel companies are looking to meet the surge in demand.

For the March 2023 quarter, Tata Motors recorded an 8% increase in global wholesale vehicle sales. This is despite tepid demand for passenger cars globally due to rising loan rates. On a yoy basis, Tata Motors reported 7.9% higher vehicle sales at 3,61,361 units in the March 2023 quarter. This includes JLR sales. The persistent shortages of cars combined with higher loan rates and stiff gasoline rates have made cars unaffordable to most. Jaguar Land Rover (JLR) currently contributes one-third of Tata Motors global sales.

ONGC has bought 115.20 lakh shares of Mangalore SEZ Limited from IL&FS. The deal value is Rs40.32 crore and the acquisition will be completed in a year. This will increase ONGC’s equity stake in MSEZ from 26% to 49%. Mangalore SEZ Ltd is a special purpose vehicle (SPV). For the December 2022 quarter, ONGC had reported 26% yoy growth in net profits at Rs11,045 crore. However, the profits were lower by 13.9% on a sequential basis due to the impact of windfall tax. ONGC production of crude and gas has also fallen.

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