In an interesting move, the Adani group exited the financial services business. It has sold its entire 90% stake in Adani Capital and Adani Housing to Bain Capital for Rs1,440 crore. The deal with PE firm, Bain Capital, values the financial vertical of the Adani group at Rs1,600 crore. The balance 10% stake is held by the CEO, Gaurav Gupta. Bain will invest an additional Rs983 crore to facilitate growth, apart from Rs409 crore of liquidity line via NCDs. The focus will be on microfinance to the rural and semi-urban customers.
In a move attributed to national security, India has rejected the proposal by Chinese automaker, BYD Ltd to set up a $1 billion factory in India. The factory to manufacture EV cars and batteries was to be set up in partnership with Hyderabad-based Megha Engineering and Infrastructure. Incidentally, the Department for Promotion of Industry and Internal Trade (DPIIT) and Commerce Ministry had sought views of various other departments on the proposal. It boiled down to security concerns over Chinese investments in India.
For the week to July 21, 2023 , a total of 5 out of top-10 most valuable companies in India by market cap, added Rs423,014 crore to their value. The big contribution came from HDFC Bank, which added Rs343,108 crore due to the integration of HDFC Ltd; becoming India’s second most valuable company. Other gainers included SBI adding Rs27,220 crore, ICICI Bank Rs24,576 crore, ITC Rs21,973 crore and Bajaj Finance Rs6,138 crore. Reliance Industries eroded Rs137,139 crore, due to the Jio Financial demerger adjustment.
The Adani group’s copper production factory at Mundra in Gujarat will start operations from March 2024, reducing import dependence of copper substantially. It will also aid energy transition. Copper is the key to deeper electrification, which is the key to electric vehicles (EVs), charging infrastructure, solar PV, and batteries. Kutch Copper Ltd, a subsidiary of AEL, is setting up a greenfield copper refinery project with copper production capacity of 1 MTPA. This will be done in 2 phases and will rectify the current shortfall.
FPI flows into equities continued to be robust for the third month in a row. After infusing $5.3 billion and $5.7 billion in the months of May and June 2023, FPIs have already infused another Rs43,800 crore or $5.4 billion in the first 3 weeks of July 2023. This can be largely attributed to the steady Q1 results announced and FPIs reallocating to the BFSI sector. Now, FPIs have already infused over $15 billion into Indian equities in calendar 2023 to date. FPIs have been aggressively buying into India on hopes of end of hawkishness.
For July and August 2023, the CPI inflation threatens to bounce back to above 6% as per estimates put out by Nomura. Inflation is likely to be driven by food basket in general and cereals, pulses, and vegetables in particular. The government has already banned the export of non-basmati rice and more such supply side curbs are expected. In May 2023, the CPI inflation had dipped to 4.25%, just 100 bps short of the RBI long-term target of 4.00%. However, June saw inflation spiking to 4.81% as the food inflation started to pinch.
Real estate company, DLF Ltd, posted 12.2% higher net profits at Rs527 crore for Q1FY24. However, the revenues from operations were lower by 1.3% at Rs1,423 crore. DLF reported surplus cash generation of Rs665 crore in Q1FY24. During the quarter, the new sales booking stood at Rs2,040 crore with most of the key deals happening in the Delhi / NCR region. The company has strongly deleveraged in the last few years, with net debt down to just 57 crore. Office portfolio was steady with growth coming from the retail.
Kotak Mahindra Bank beat expectations to post 67% growth in net profits for Q1FY24 at Rs3,452 crore on a standalone basis. The net interest income (NII) surged 33% to Rs6,234 crore while net interest margins (NIMs) expanded by another 65 bps from 4.92% to 5.57%. For the quarter, loans grew 19%, while deposits grew 22% yoy. In the quarter, even the other banks like HDFC Bank, ICICI Bank and IndusInd Bank posted stellar results. Gross NPAs were flat sequentially at 1.77%, while the net NPAs rose sequentially to 0.40%.
