Stock Market Investment Shot, 3rd July 2023

Indian companies saw their debt levels rising to Rs36.63 trillion in FY23, largely driven by capex. Vodafone Idea had the biggest interest cost of Rs23,354 crore for FY23 followed by Reliance Industries at Rs19,571 crore and Bharti Airtel at Rs19,300 crore. This marks a 12.6% spike over the previous year. India capex is expected to grow by 14% to Rs6 trillion by FY24 as corporates frenetically add capacity. While rising debt is a sign of worry, industrialists point to this as a sign of confidence that businesses are willing to add debt.

As per the latest Financial Stability Report put out by the RBI, the share of housing loans in the overall loan portfolio of banks has increased from 8.6% in March 2012 to 14.2% in March 2023. Housing units are already seeing their sales growing by 21% annually. These only refer to residential housing loans and not to commercial property lending. Loan defaults in this retail housing segment stayed below 2%. However, the last quarter has once again seen a spike in housing inventory and that is blamed on housing prices.

In a week when the Nifty gained 2.8%, the market cap of the 10 most valuable companies on the NSE gained Rs188,000 crore. For the week, HDFC Bank surged Rs32,600 crore, TCS Rs30,388 crore, Infosys Rs28,862 crore, HDFC Ltd Rs19,051 crore, SBI Rs16,154 crore, Bharti Airtel Rs12,353 crore, ITC Rs8,700 crore, Hindustan Unilever Rs8,517 crore and ICICI Bank Rs7,441 crore. The surge was led by FPIs infusing nearly $2 billion in the week with $1.8 billion coming on the last day. FPIs have turned risk on in India.

Bank of Baroda plans to divest up to 49% in its credit card arm. This will be done through a combination of primary and secondary offering of shares. Currently, the credit card business is housed under BOB Financial Services Ltd and the company is 100% owned by Bank of Baroda. The roping in of strategic investors is expected to be completed in this year. In FY23, BOB doubled the acquisition of new credit cards at 1.2 million compared to just 0.5 million in the previous year. Retail spends also doubled in FY23.

Effective July 2023, the $7.5 billion SGX Nifty trade will shift to the GIFT City in Gujarat. Whether the SGX volumes can be sustained, remains to be seen. While the SGX will continue to be involved, the trading will not happen on the SGX any longer but on the GIFT exchange. It has been the endeavour of the current government to get back such trades that had got exported to offshore destinations like Singapore, Dubai, and Mauritius. Apart from the existing traders, even local trades on the global Nifty can be executed.

HDFC Bank CEO, Sridhar Jagdishan, has confirmed that the bank planned to double its growth every 4 years post the merger. HDFC Bank, post the merger, becomes the fourth most valuable bank in the world, leaving the likes of HSBC and Wells Fargo behind in valuation terms. Nearly 4,000 employees of HDFC Ltd have joined on the rolls of HDFC Bank, effective from July 2023. According to Jagdishan, both mortgages and financial services were under-penetrated in India and hence offered huge potential for future growth.

NLC India (formerly Neyveli Lignite Corporation) plans Rs24,000 crore in solar investments by the year 2030. NLC had recently incorporated NCL India Renewables and also plans a solar step-down subsidiary. Its new age energy businesses will include battery manufacture too. NLC currently has about 1.4 GW of renewable capacity and plans to expand this to 6 GW by the year 2030. Out of the Rs24,000 crore of capex, NLC India will raise 80% through debt and 20% via equity. NLC is also looking at wind and green hydrogen.

Rajiv Jain of GQG Partners has been relentless in adding to his stake in Adani group companies. In the last 3 months, GQG has built a total exposure of Rs26,445 crore to the Adani group and added Rs2,626 crore of investments in Adani Transmission on the last day of June 2023. In fact, when the Adani group was facing one of its worst crisis after the Hindenburg report, it was GQG Investments that had come in to bail out Adani group with a multi-billion dollar investment. The future course of the group is being watched.

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