Stock Market Investment Shot, 25th April 2023

The Mumbai based pharmaceutical major, IPCA Laboratories, approved the acquisition of 33.38% stake in Unichem Laboratories for a consideration of Rs1,034 crore at a price of Rs440/share. One of the promoter shareholders is the seller in this deal.  The acquisition is subject to the fulfilment of terms and conditions as enshrined in the share purchase agreement; apart from approvals from statutory bodies and CCI. Post the acquisition, IPCA will also make an open offer for 26% of balance holdings, as per extant SEBI norms.

IndusInd Bank reported 50% higher net profits for the March 2022 quarter at Rs2,043 crore. Net interest income (NII) grew by 17% yoy to Rs4,669 crore, while the net interest margins also expanded marginally to 4.28% in the quarter. Deposits grew by 15% to Rs3.36 trillion of which nearly 40% were accounted for by CASA deposits. Total loans outstanding as at the close of March showed a 21% expansion to Rs2.89 trillion. The key driver of the profit surge was also a sharp fall in provisions for doubtful debts in Q4FY23.

Anil Agarwal, chairman of Vedanta Resources, has confirmed that he had repaid all maturing loans and bonds due in April 2023. This led to gross reduction in debt to the tune of $1 billion. The company also announced that the parent of Vedanta group had targeted reduction of $4 billion of debt overall, of which $3 billion had already been achieved. leading to a gross debt reduction of $ 1 billion. The company said with this, the company has achieved $3 billion of the stated $4 billion debt reduction target by year 2025.

JSW, part of the Sajjan Jindal group, is reportedly in talks with MG Motors India to pick up a stake. MG Motors is backed by SAIC. It is also looking at buying the Indian arm of another Chinese company, BYD. JSW group recently revived plans to foray into the electric vehicle (EV) space. While BYD has a product portfolio that is purely focused on EVs, MG Motors has a wider product basket. MG may look at valuation of up to $500 million for a 20% stake, giving MG Motors an enterprise valuation of nearly $2.50 billion.

India has said that there is bar on India buying crude oil from Russia at above $60/bbl, despite the price caps imposed by the G7 nations. The pressure does not come from the imports per se, but from getting the necessary bank funding, which delays payments to the Russian suppliers. As of March 2023, Russia alone accounts for 34% of India’s total import bill, pushing countries like Iraq and Saudi Arabia to second and third spot in the oil import rankings. For payments above $60/bbl, alternate payment modes are used.

With even global experts predicting that the return of El Nino conditions in the Pacific could weaken, it looks like the IMD was once again on target on the weather forecast. Earlier, IMD had predicted a normal monsoon this year despite the El Nino effect while SKYMET had predicted a deficient monsoon. The rains are rated as normal if they fall between 96% and 104% of the long period average (LPA). The recent view is that there was no explained or statistical relationship between Indian summer rainfall and the El Nino.

Even as there are broad concerns over the impact of higher interest rates on affordable housing, the HFCs continue to be extremely bullish about the appetite from tier-II and tier-III cities. In the last few months, the real estate industry has strongly bounced back, particularly on account of the government’s focus on affordable housing and various policy initiatives. India is likely to add nearly 12 crore people to the world population by 2031 even as income levels rise. That is likely to generate an insatiable demand for housing.

There are some interesting quarterly results lined up for Tuesday, 25th April 2023. There is Bajaj Auto which is expected to report robust demand and strong margins. Nestle India is likely to delivery double digit growth in top line and bottom line in the quarter. HDFC AMC is expected to announce a marginal 3% rise in profits for the quarter. Finally, Tata Consumer Products, the FMCG arm of the Tata group, is all set to announce its quarterly results and is likely to maintain its profit growth run in excess of 25% in Q4 too.

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