In a rather surprising move, Go First, the airline owned by the Wadia family, filed for insolvency. The company blamed the faulty Pratt & Whitney engines which had grounded nearly half its aircraft fleet. For now, it has just suspended all flights till this weekend. Go First was flying around 200 flights daily, carrying up to 30,000 passengers a day. Most panic stricken travellers have started cancelling Go First tickets for future dates also. Already, IOCL has put Go First on cash-and-carry basis for fuel and cash crunch is deep.
Tata Steel reported an 83% fall in net profits at Rs1,705 crore for Q4FY23. Even revenues from operations were lower by 9% yoy at Rs62,962 crore. The company took a hit on account of lower realizations in the European business as well as higher input costs. The company has also declared a dividend of Rs3.60 per share. Its India capacity stands at 19.9 million tonnes, which will be doubled to 40 MTPA in the next few years. Delivery volumes were up 0.6% in India but was down -11% in Europe. Its capex plans are on track.
Domestic passenger vehicle (PV) wholesales were up 12.9% at 331,747 units in April 2023 with SUVs driving demand growth. Wholesales capture dispatches to dealers. Currently, stock with dealers stands at about 251,000 units, which is 23 days of inventory. The SUV segment saw its market share in value terms increase from 43% to 47% in April. However, many of the higher end cars are still taking a hit on account of chip shortage. The three PV majors; Maruti, Hyundai and Tata Motors reported double digit growth.
Ambuja Cements Ltd, now owned by the Adani group, has reported 1.6% higher standalone net profits at Rs502 crore for Q4FY23. The company tweaked cost structures and inventories to stay profitable in a tough year. However, input costs continued to be high as lower volumes were aided by better realizations in the quarter. Total revenues for Q4FY23 jumped by 8.39% yoy on standalone basis to Rs4,256 crore in the quarter. However, for FY23, the net profits were up 22.5% at Rs2,554 crore on operating efficiencies.
HDFC Ltd has appointed Jefferies Financial to handle the sale of its student loans unit, Credila Financial Services Ltd. HDFC is likely to seek a valuation of $1 billion for Credila. This is part of regulatory conditions before the merger is implemented. RBI has given HDFC 2 years to fully cut its stake in Credila to 10%. Credila has assets of Rs14,230 crore as of December 2023. It may be recollected that this restructuring is part of the merger plan of HDFC Ltd and HDFC Bank to create a banking behemoth in a $40 billion deal.
As First Republic Bank one more high profile bank tottering on the brink, JP Morgan is likely to lend a helping hand to the bank through a $10 billion financing. However, that does not prevent the depositors from fleeing the lender. However, the banking crisis, which began with the collapse of SVB Financial, raises some very pertinent questions about the quality of regulatory oversight of the banking industry. Till the global financial crisis, First Republic Bank was part of Merrill Lynch, but went public after BOFA takeover.
The proposal for Hindustan Zinc to buy certain zinc assets from Vedanta for $2.98 billion in cash has lapsed as HZL could not get shareholder approval within the stipulated time. The problems started after the government of India, the second largest shareholder in HZL after Vedanta group, blocked the deal. HZL had also declared a final dividend of Rs11,000 crore, which had tied up its cash reserves through which it was planning to bankroll the acquisition. Indian government holds 29.54% in HZL and Vedanta Ltd 64.9%.
Now, SEBI plans to deepen its investigation into the financial transactions of Adani group companies. It will look deeper into the complex dealings of the Adani group over the last 10 years. SEBI has filed a plea with Supreme Court to that effect. SEBI will also investigate if there were cases of concerted short selling in the Adani counters ahead of or immediately after the Hindenburg report. Supreme Court had asked the SEBI to investigate if there was breach of securities laws, or failure to disclose related-party transactions.
