Stock Market Investment Shot, 31st May 2023

Adani Ports & SEZ reported robust growth in revenues for the March 2023 quarter at Rs6,179 crore but the net profits were flat at Rs1,141 crore. The company has done better than guidance in its top line and on its EBITDA front. The company reported 18% CAGR growth in revenues and EBITDA over the last five years. It is on track to achieve cargo volumes of 500 MMT by year 2025. It has set a benchmark average turnaround time (TAT) at just 0.7 days, setting a new benchmark of global standards for ports in India.

Coal India Ltd proposes to raise additional revenues of Rs2,703 crore from the 8% thermal price hike. The price hike will be effective from 31st May. This incremental revenue applies to the remaining 10 months of FY24, which means the full year impact could be higher. This is the first time Coal India is hiking prices after January 2018. Subsequently, due to the COVID and rampant inflation, price hikes had been ruled out. This price hike comes at a time when India is facing record electricity demand at 20 GW in mid-May.

There are more questions being asked over the valuation of Byju’s with Blackrock now cutting its value peg of Byju’s by 62% to $8.4 billion. Earlier in December 2022, Blackrock had nearly halved the valuations of Byju’s from $22 billion to $11.5 billion while making its investment provisions for diminution. Most of the Edtech companies have seen a value hit, although Byju’s did manage to raise funds in its latest round at a valuation of above $22 billion. Hence, such diminution may not exactly impact indicative valuations.

The French rail major, Alstom, has emerged as the lowest bidder for the 100 aluminium Vande Bharat trains. Alstom had quoted Rs151 crore per train-set with the next best quoting coming from Stadler-Medha at Rs170 crore. The total order is valued at nearly Rs30,000 crore. In the first round of technical bids, only these two companies made the cut. Out of total outlay of Rs30,000 crore, the top bidder will be paid Rs13,000 crore on delivery of trains and balance Rs17,000 crore for maintenance over 35 years.

The IPO of Noida based IKIO Lighting will kick of on 06th June 2023. It will entail the fresh issue of Rs350 crore and an additional offer for sale (OFS) of 9 million shares by the promoters of the company. The bids will close on 08th June and the anchor placement will happen a day ahead of the start of the IPO. Out of the proceeds off the fresh issue portion, Rs50 crore will be used for debt repayment, and Rs212 crore to be used for its subsidiary, IKIO Solutions. The company is a leading manufacturer of LED lighting solutions.

In an interesting move ONDC, the agnostic government ecommerce platform, has capped the incentives at Rs100 per order. It will also put floor on order value to be eligible for such incentives. It is one thing to get volumes based on such discounts but they are hard to sustain and the ONDC does not want to repeat the mistakes committed by the ecommerce players in India. Also, the buyer will only be eligible for 5 transaction in a month and a buyer app can incentivize a maximum of 20 transactions per seller per day.

The RBI annual report released on 30th May 2023, has underlined that challenges to government debt may continue in FY24. This is despite the fiscal deficit being budgeted at just about 5.9% of GDP for FY24. For FY24, the gross market borrowings are pegged at Rs15.43 trillion against Rs14.21 trillion in FY23. The challenge would be to raise these volume of funds without impacting the yields on bonds. Benchmark 10 year bond yields have fallen to below 7% after the RBI paused on rates in April and is likely to hold in June.

The parent of Vedanta Ltd will pledge 4.4% stake to rival Glencore to raise $250 million. This would put several restrictions on the shares, which have already been signed as part of the agreement. The parent, Vedanta Resources, has been aggressively trying to cut down its debt and for that it needs to raise funds. The holding company was counting on selling stake in the Vedanta zinc mines to Hindustan Zinc Ltd, but the proposal has been struck down by the Indian government, which still holds 29% stake in the company.

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