Stock Market Investment Shot, 21st February 2023

Stock Market Investment Shot, 2nd March 2023

Stock Market Investment Shot, 2nd March 2023

Adani Ports, a bid to cut its debt, has repaid Rs1,500 crore loan to SBI Mutual Fund and is planning to pay out more to reduce its debt levels. The group stocks have been under a lot of pressure after Hindenburg Research raised questions about the capital structure and debt levels of the Adani group companies. In addition, it also plans to repay Rs1,000 crore of commercial paper. This repayment is being done out of the cash balance and regular cash flows of Adani Ports. The group debt was Rs226,000 crore as of Sep-22.

The much publicized semiconductor joint venture between Vedanta group and Foxconn of Taiwan has now finalised Dholera Special Investment Region (DSIR) in Gujarat to set up the semiconductor and display manufacturing unit. The JV will invest nearly Rs154,000 core into the plant. This is a major case of business moving out of Maharashtra and into Gujarat. The investment is expected to create close to 1 lakh job openings in Gujarat. As part of PLI scheme, this project will get huge subsidies and incentives on output.

According to a recent study, businesses that filed for liquidation after going bankrupt saw value erosion of 94% for creditor claims. This data has been released by the Insolvency and Bankruptcy Board of India (IBBI). Since 2016, there were total of 165 borrowers with claims of over Rs1,000 crore. The total claims of these borrowers were Rs694,000 crore, but the on-ground valuation of assets was just Rs40,000 crore. Most companies going for insolvency end up in liquidation. Out of 4,198 cases 45% ended in liquidation.

Ola Electric Mobility plans to build the world’s largest electric vehicle (EV) hub with investment of Rs7,610 crore. The idea is to localize the supply chain for clean transport. The hub will be located in Tamil Nadu and will be used for manufacturing electric two-wheelers, cars and battery cells. While localizing critical elements of batteries will make EVs more affordable, India hardly has the lithium-ion supplies to meet the domestic demand. Its lithium-ion cell developed in its battery innovation centre, invested $500 million.

Anil Agarwal may now have to go slow on his debt reduction plans after the government decided to block the sale of its stake in Hindustan Zinc to Vedanta group. Agarwal was planning to sell a unit of HZL, which has been objected to because of the government still holding a stake. Agarwal had plans to use proceeds from the sale to trim the debt of Vedanta Resources. Government is planning to take legal action of this plan is implemented. Hindustan Zinc in specific, and Vedanta in general, has been a cash cow for Agarwal.

SEBI has come out with a consultation paper on streamlining disclosure requirements for all listed entities on the Indian bourses. It has prescribed stiffer timelines for filling up of critical positions like CEO, CFO, CTO etc. To give enough time, newly-listed entities to disclose first financial results post-listing, in 15 days. Recently, SEBI has received representations regarding challenges faced by the newly-listed entities immediately. For now, the regulator has sought comments from public on the proposals made herein.

Dealmaking saw a sharp fall in January 2023 with just 145 transactions worth $2.7 billion being executed by Indian companies. There was an absence of big ticket deals due to the uncertainty in the markets. The deal value for January 2023 is sharply lower on a yoy basis and also on a sequential basis. India has shown record deals in calendar year 2022, so investors were hoping for an encore. PE investments recorded 119 deals worth $2.4 billion. Pharma, healthcare and biotech stood at the top in terms of deal value stakes.

India’s domestic air passenger traffic doubled to 1.25 crore in January 2023 against just 0.64 crore in the year-ago period. Of course, 2021 was also weak due to COVID fears. IndiGo market share fell for the 5th month in a row; but still impressive market share of 54.6%. Air India and Vistara had market shares of 9.2% and 8.8% respectively. The 3 Tata group airlines combined flew 32.30 lakh passengers in January  and had a combined market share of 26%. Vistara mergers into Air India and Air Asia into Air India Express.

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