Stock Market Investment Shot, 28th February 2023

Stock Market Investment Shot, 28th February 2023

Stock Market Investment Shot, 28th February 2023

According to data released by RBI, credit growth at Indian banks doubled to 16.8% in Q3FY23. In December 2021 quarter, credit growth had expanded by just 8.4%. Credit growth was flat to lower on a sequential basis. There was double digit growth in urban credit and also in semi-urban and rural credit. While PSU banks saw credit growth of 15.7%, the credit growth of private banks was more impressive at 19.1%. However, aggregate deposits of banks increased by just 10.3% in the quarter as C/D ratio rose to 75.9%.

Ruia owned Essar Group announced fresh investments of $3.6 billion to set up Essar Energy Transition (EET), as part of its Indo-UK green energy transition projects. This will include an investment of $1.2 billion in green ammonia manufacturing in India, which will be commissioned by FY27. Another $2.4 billion will be invested in UK to develop a range of low-carbon energy transition projects. Ammonia will be made in India and then shipped to the UK, Europe and globally to meet the expanding demand for green hydrogen.

NSE announced it would be including Zee Entertainment (ZEEL) back into the (F&O) segment, just a few days after it was officially removed from F&O. NSE move came after the NCLT Appellate Tribunal (NCLAT) put a stay on the NCLT order admitting insolvency proceeding against Zee. Since Zee will now move out of the IBC framework, the bank will not be required, as per NSE. Zee Entertainment had recently made headlines due to its exclusion from the NSE F&O division pending the IndusInd Bank insolvency petition.

For Q3FY23 ended December 2022, Indian companies reported a 237 bps narrowing of operating margins to 16.3%, amidst inflation and rising energy costs. However, ICRA pointed out that the OPM had improved by 180 bps on a sequential basis. However, the ICRA report has warned that geopolitical tensions and recessionary concerns could pose short term headwinds for quarterly numbers. Revenue growth for the quarter was at 17.2%. Interest coverage ratio moderated further in Q3FY23 from 5.1X to 4.3X sequentially.

Proxy advisory firm, SES, is of the view that a third-party audit of Adani group would allay fears, though the debt concerns may be overstated. According to SES, the real concern for the Adani group is not so much the debt levels, as it is the loss of reputation and shareholder confidence. Since the Hindenburg Research note was released on 24th January 2023, the Adani group has lost over $130 billion in market cap from its peak levels. SES feels that group companies are resilient enough to handle the debt issue.

The IPO of Divgi TorqTransfer opens for subscription on 01st March 2023, but it will be Nandan Nilekani laughing all the way to the bank. His family office, NRJN Family Trust, will offload 1.44 million shares of Divgi, with an upper price band of Rs590 per share. On his investment of Rs18 crore, Nandan Nilekani will make a profit of Rs67 crore, yielding 370% return on investment. The Nandan Nilekani family trust owns 8.7% stake in Divgi TorqTransfer. Inga Ventures and Equirus Capital are the lead managers to the IPO.

In  just 7 trading days, the market cap of BSE fell below Rs260 trillion. This is the lowest market cap in last 8 months and is now holding at just $3.15 trillion. While the Adani saga has been one of the factors, the hawkish streak shown by the RBI and Fed has also contributed. On Monday, it is not just the Nifty falling below 17,400 levels but there was aggressive selling in small and mid-cap stocks. Even the Tata group saw heavy unwinding. Sensex has fallen 2,031 points in last 7 days, wiping out nearly Rs10.4 trillion in wealth.

Air India’s recent order for aircraft from Boeing and Airbus for 470 aircraft is worth $70 billion. The purchase will be funded with internal cash flows, equity and sale & leaseback model. These aircraft will enter the Air India fleet from end of 2023 onwards. It will significantly boost the capacity of Air India and enable them to expand market share. Air India will buy 220 planes from Boeing and 250 from Airbus in what would be the biggest order by a single carrier. It also has an option to add another 370 planes later.

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