CRISIL expects a sharp drop in the profitability of cement companies for FY23. According to CRISIL, profits of cement companies could fall 15% in FY23 to around Rs900-925 per tonne. Despite robust demand, the rise in realizations will not be sufficient to offset the higher input costs. This is despite most commodities tapering in the last couple of months. The non-housing segment is likely to drive cement demand. On costs, the average petcoke prices are still higher than last year. Power, fuel and freight will
also increase.
Indian equity market investors saw wealth depletion of Rs13.3 trillion in the last 4 days, when the Sensex fell over 2,575 points. The trigger came from the Fed rate hike on Wednesday night and even FPIs have been net sellers since then. While short covering is not ruled out, the consensus is to sell on every rise in the market. Metals and autos have taken it on the chin while defensives like pharma, IT and FMCG have held on. The RBI is almost poised to hike rates by 50 bps when it concludes the MPC meeting on Friday.
Tata Sons will halve the number of listed companies in the group from 29 to 15 in the coming months as part of the simplification of the group structure. The ideas is to create companies of scale that can give a competitive fight in local and global markets. There are also over 60 unlisted entities and hundreds of its subsidiaries across an array of sectors. The merger of 7 group companies into Tata Steel may just be the first step and more could follow. Similar consolidation will be done for autos, IT, FMCG and power
sector.
India’s defence exports have grown by 334% in the last 5 years with exports now reaching 75 countries for its various defence products. As part of the Make-in-India initiative, the Indian defence forces have been farming a lot of orders to the domestic manufacturers and that has given a big boost to not only the PSU defence players but also the private sector defence franchises. Ironically, for the last 75 years, India had been one of the largest importers of defence products in the world, which has now started to
change.
An interesting survey of global professionals by AON PLC showed that in H1-2022, India saw an attrition rate of 20.3%. This is part of the great resignation that is happening across the board. The survey also
highlighted that salaries were slated to rise by 10.4% in FY23, on top of a 10.6% rise in FY22. Ecommerce, IT, Financial services and ITES were the sectors that saw the highest attrition in India. Despite the sharp rise in salaries across the board, the attrition has continued to rise in India, like across most of the world.
S&P Global Ratings has projected a 7.3% GDP growth for India in FY23, which is in line with the lowered projections of most of the other agencies and the RBI too. Growth is likely to be hit by high oil prices, weak global demand for exports and multi-year high inflation. S&P also projects India’s full year CPI inflation at 6.8% for FY23. That is a 50 bps downgrade from the 7.8% that S&P had estimated in June. For FY24 and FY25, S&P expects GDP growth rate at 6.5% and 6.7% respectively. INR is expected at 78/$ by March 2023.
Mahindra Logistics, a third-party logistics solution provider from the Mahindra group, will buy the logistics unicorn (Rivigo). Now, Rivigo is a Gurugram based B2B express network operating pan-India and is fully cash-strapped and looking for a rescuer. The acquisition will augment the B2B express business of the Mahindra Logistics business. They expect a lot of positive tailwinds for the express logistics business in line with higher digital adoption. Rivigo, not only gets the cash infusion, but also a stronger balance sheet.
The Bombay Stock Exchange (BSE) got final approval from SEBI for introducing the Electronic Gold Receipt (EGR) segment on its platform. It had already received in-principle approval in February this year. Under the EGR scheme, gold will be traded in the form of EGRs and create a transparent domestic spot price discovery mechanism. Currently, India has trading in gold derivatives and gold ETFs only. BSE is confident, that the EGR platform would offer greater assurance in the quality of gold and efficient price discovery.