Stock Market Investment Shot, 24th August 2022

On Tuesday, Adani Media Ventures (AMVL) confirmed it had acquired 29.18% stake in NDTV by buying out RRPR holdings. AMVL has also made an open offer to NDTV shareholders for additional 26% stake. In 2009, Adani group extended a loan of Rs250 crore to the holding company of NDTV against warrants. It has exercised the option, while promoters claim they were not aware. A subsidiary of AMVL bought 99.9% in RRPR Holdings in lieu of warrants and that gives them 29.18% control of NDTV. AMVL also owns Quint.

Chennai Petroleum formed a joint venture with Indian Oil Corporation to build a 9 MMTPA refinery in Tamil Nadu with an investment outlay of Rs31,580 crore. The new refinery will be based in the Cauvery Basin at Nagapattinam. The existing 1MMTPA refinery will be fully scrapped. Chennai Petro will hold 25% stake in new refinery for an investment of Rs2,570 crore, while the balance stake will be held by IOCL with seed participation from investors including Axis Bank, HDFC Life, ICICI Bank, ICICI Pru Life and SBI Life.

SEBI amended rules governing portfolio managers. Under the new rules, portfolio managers will not be allowed to invest clients’ funds in unrated securities of related parties or associates. This will enhance prudential norms for investments by portfolio managers. The portfolio manager will ensure compliance with prudential limits on investments. Any investment in contravention of these rules will require prior consent. PMS managers have to provide a detailed disclosure document to clients on the investment

A recent report by Credit Sights, a unit of Fitch group, has let the cat among the pigeons. It considered the Adani group as being deeply overleveraged, more so considering its levels of profits and steep valuations. Most Adani group stocks corrected by 5-6% after the report was put out. Credit Sights
believes that in a worst-case scenario, the group may either spiral into a debt trap or a default. The Adani group companies are closely held and hence the limited float in the market has made the group stocks especially attractive.

Great Eastern Shipping (GE Shipping) touched a 14-year high on the BSE at Rs545 per share. In the current calendar year, the stock of GE Shipping surged 83%, outperforming the Nifty by a huge margin.
In Q1FY23, GE Shipping reported 141.8% growth in net profit at Rs457 crore, while operating revenues grew 78% yoy. The return of investments in oil and gas assets has resulted in a boost to demand for rigs and vessels. Even the benchmark Baltic Dry index is up 60% in 2022. Russian Ukraine conflict has spiked crude tanker freight.

Eicher Motors touched a new high of Rs3,479 on Thursday as the company regained the Rs1 trillion market cap after a long break. Post strong earnings, the stock has rallied 12% in the last one month. Investors are now betting on government spending in infrastructure and pent-up fleet replacement as the key triggers. It has limited incremental capital needed to be employed in new launches and that is a big advantage. The company, which makes Enfield Motor Cycles, has rallied in tandem with the pick-up
in auto stocks.

Even as India struggles to fight inflation, there is a new risk arising in terms of price. After wheat, even rice prices have rallied sharply on concerns over cereal shortages. There was a spike in the price of rice and wheat. Rice was always supposed to be a problem due to the 3% drop in wholesale outlook. Paddy sowing acreage in the current season has been 8% lower than last year. Paddy (Rice) sowing of which begins with onset of southwest monsoon in June, has been tepid. Kharif output accounts for 80% of India’s rice output.

As India prepares for the Q1FY23 GDP data to be announced on 31st August, 2022. Most economists are pencilling in Q1FY23 GDP growth at 13% to 15.7%. This is based on the assumption of a sharp demand uptick. Even the RBI had projected Q1FY23 GDP output at around 16.2%, while the economists expect a GDP of around 15.7% with further upside potential. In terms of sectoral mix, Aditi Nayyar of ICRA is of the view that the GDP growth in the June quarter would be triggered by the services sector growing at 18%.

Exit mobile version