Shree Cements has decided to opt out of the race to buy Sanghi Cements, based out of Ahmedabad. This decision was taken after the due diligence. Shree Cements has aggressive plans to expand cement capacity to 80 MTPA by the year 2030, through mix of organic and inorganic expansion. Its current capacity stands at 48 MTPA. Sanghi Cements has a capacity of 6.1 MTPA and has an enterprise valuation of Rs6,000 crore. Sanghi Industries debt was recently lowered to default category with negative outlook by India Ratings.
Tatas are now plugging into the UK automotive sector with the $5.2 billion electric car gigafactory. The plant will have an initial output of 40 GWH. This will mark the first gigafactory for EV batteries by the Tatas outside India. The new plant will be built by Agratas Energy Storage Solutions, a wholly owned subsidiary of Tata Sons. Rishi Sunak had lobbied aggressively with the Tata group to get this project to UK after Spain also showed interest in hosting Tatas. UK government is likely to provide millions in the form of subsidies.
Tata Communications reported a 29.8% fall in net profits to Rs382 crore for Q1FY24. Revenues were up by 10,7% at Rs4,711 crore. The data centre business showed growth of 17% at Rs3,912 crore. The EBITDA from the data business alone stood at Rs929 crore, slightly lower yoy due to inorganic costs. Revenue growth was very strong in the data business and in the digital portfolio for TCOM. It also announced the Switch deal and the Kaleyra acquisition. Growth in coming quarters will come from enterprise customers.
The Enforcement Directorate has filed a fresh money laundering case against Naresh Goyal, the founder and former chairman of Jet Airways. Earlier this year, the Bombay High Court had quashed the ED money laundering case against Goyal but allowed the ED to investigate if fresh cases arose. The latest case is based on a Rs538 crore money laundering complaint against Jet Airways filed by Canara Bank. Goyal has denied any wrongdoing and has underlined that the failure of Jet Airways was purely a business level risk.
Reliance demerger goes effective on July 20, 2023. Reliance stock will not be available for trading for 45 minutes to give effect to the demerger of Jio Financial Services. The demerger will happen in the ratio of 1:1 with shareholders of RIL getting 1 share of Jio Financial for each share of RIL held by them to offset the loss of the business division. The stock of Reliance has rallied by 12% in the current month itself as most of the analysts and investors see unlocking of value from the demerger and also sets of the process.
NHPC Ltd is now eyeing an IPO for its renewable energy arm. NHPC is predominantly a hydropower unit and will add solar to its portfolio, which would be later hived off into a separate company for the IPO. NHPC Renewable Energy Ltd (NREL) will sell its stake via private placement over the next 2 or 3 years. The trend was set by NTPC which hived off its renewables business into a separate arm. That not only ensures better and more realistic valuations but also makes the project funding for such projects a lot smoother.
Brent Crude prices spiked above $80/bbl on a combination of lower Russian crude exports and quicker drawdown of US oil inventories. The spike in oil also came from the hope that the Fed would stop raising rates after the July rate hike. That was seen as a growth booster and pushed up the crude prices. China is also rolling out policies to boost consumption and growth. US inventories fell by 708,000 barrels last week, showing rapid drawdown. Slowing retail sales in the US also raises hopes of Fed rethink on hawkishness.
FMCG companies have lined up a war chest of Rs17,200 cr for capex this year. This includes big names like Hindustan Unilever, Nestle, Britannia, Tata Consumer Products and P&G. The FMCG market is likely to grow at 7-9% in FY24 with a recovery in rural markets also expected. Most FMCG companies have had a tough 3 years battling the pandemic firms and then a slowdown in rural demand. However, urban demand has remained robust. Most of the capex is going into new manufacturing facilities and in R&D facilities.
