The government of India plans to divest 3.5% stake in Hindustan Aeronautics Ltd (HAL) via offer for sale (OFS) in the current fiscal. The stake sale will help the government raise Rs2,867 crore. However, current disinvestment performance is still about Rs19,000 crore of the revised target of Rs50,000 crore. The Indian government owns 75% in HAL and the 3.5% stake sale will comprise of 1.75% base offer and 1.75% as a Greenshoe option. The OFS is set for coming Wednesday at Rs2,450 per share; 6.67% discount to the CMP.
With Credit Suisse sold to UBS for SFR3 billion, the AT1 bond holders are far from happy. The entire $17.3 billion worth of AT1 bonds issued by Credit Suisse group have bene written down to zero. While some of the investors are mulling legal action, what has been done is perfectly legitimate. It is estimated that the big owners of these AT1 bonds of Credit Suisse include marquee names like PIMCO, Blackrock, Lazard Freres, and GAM, among others. Also, senior executives of Credit Suisse were partly paid in AT1 bonds.
IFC will invest Rs600 crore in the last-mile mobility (LMM) subsidiary of Mahindra & Mahindra. This will be IFC’s first investment in an EV manufacturer in India and the first in EV 3-wheelers globally. Valuation has been pegged at Rs6,020 crore via CCPS. India has committed to reduce its emissions profile by 45% by 2030, with 80% EV penetration for 2-wheelers and 3-wheelers, 70% for CVs and 30% for private cars. IFC, a member of the World Bank Group and currently invests and also closely works in over 100 countries.
Sula Vineyards, which recently saw its IPO, surged 9% to Rs371 per share on the BSE. CLSA initiated BUY coverage on Sula with a target price of Rs475 per share, implying 40% upside on the stock. Sula is India’s largest wine producer with 52% market share as of FY22 and produces 56 different labels of wine. It also has over 13,000 retail touchpoints. The IPO was priced at Rs357 per share. Globally consumer preferences are shifting to lower cost beverages like beer and wine and EBITDA margin at 29% is a major edge for Sula.
Indian Oil Company (IOC) plans to invest Rs61,077 crore in building a petchem complex at Paradip, Odisha. This is part of IOC’s transition plan to de-risk from its core refining and retailing business. It will mark the largest-ever investment by IOCL at a single location. IOC is planning to enhance its petchem intensity from the current 5% to 12%. At the same time, IOCL is also transitioning from fossil fuels to renewable energy sources as part of its future plan. The project includes world-scale cracker unit with downstream units.
Zomato rallied on Wednesday after HSBC Global Research pegged a target price of Rs87 for the stock, implying an upside target of 64%. HSBC expects Zomato to reclaim its market share in the fourth quarter. The valuation of Zomato has been done using the DCF model with WACC of 10.5%. The Blinkit estimates have also been added to the valuation of Zomato. The note added that Zomato may still have to strive harder for 10% GOV growth on a consistent basis. Zomato is gradually gaining market share from Swiggy.
SBI stock has been consolidated since it corrected from its recent high of Rs629.55 in December 2022. A recent note by Motilal Oswal has highlighted that this correction offers a good price point for long-term investors to enter the stock. SBI has benefited from loan growth, margin expansion and lower provisions; as deposit rates have lagged loan rate hikes. Asset quality of SBI has also improved drastically in the last couple of quarters. MOSL has a BUY rating on SBI with target of Rs725, implying upsides of nearly 40%.
The Competition Commission of India (CCI) approved LIC Mutual Fund’s acquisition of IDBI Mutual Fund. The combination entails LIC AMC managing the schemes of IDBI Mutual Fund (IDBI MF). LIC will also get the right of trusteeship of the IDBI AMC. Once the transaction is completed, schemes of IDBI MF will form part of LIC MF with LIC AMC becoming the combined asset manager. Apart from lump sum consideration, IDBI AMC will be given a small non-controlling stake in LIC AMC. Large merger deals need CCI approval.