Stock Market Investment Shot, 4th April 2023

In a move that was widely anticipated, the US Federal Reserve hiked rats by another 25 bps taking the rates to the range of 5.00% to 5.25%. Rates have now been hiked 500 bps since March 2022. The CME Fedwatch is pegging this as the peak rate with a strong possibility of rate cuts commencing from second half of 2023. While banking crisis has been a consideration, the Fed is unhappy with the way inflation has held up in the last few months. Also, the strong labour data continues to reduce the efficacy of rate hikes.

Titan reported 50% higher net profits on a yoy basis at Rs734 crore for Q4FY23. Revenues were up 33% at Rs9,704 crore for the quarter. The board has also recommended a dividend of Rs10 per share, subject to shareholder approval. Earnings before interest and taxes (EBIT) surged 37% to Rs1,053 crore as jewellery business accounted for most of the growth in Q4FY23. The watchers and wearables segment also put up a good performance. While the jewellery business grew 24% yoy, watches and wearables grew 40% yoy.

Nexus Malls, the real estate investment trust (REIT) backed by Blackstone Inc, has finalized the terms of its Rs3,200 crore IPO. The IPO is priced in the range of Rs95 to Rs100. The IPO includes a fresh issue of units of Rs1,400 crore and an offer for sale by the existing holders of Rs1,800 crore. Currently, Nexus owns a total of 17 assets spread across 9.6 million SFT in 13 Indian cities. Its major presence is in Delhi, Mumbai, and Bengaluru. Revenues for FY22 were higher by 45% while losses of the REIT narrowed sharply in FY22.

In a historic first for India, the 25-member executive board of the World Bank ratified the appointment of Ajay Banga as the president of the World Bank for a term of 5 years. He is formerly the CEO of MasterCard. Banga has the task of revitalizing the organization to confront challenges like climate change and other global crises. Banga was nominated for the post by Joe Biden and normally the practice has been to allow the US to have the final say on the World Bank Chief while the EU has the final say on the chief of the IMF.

Havells India reported net profits of Rs358 crore for Q4FY23, absolutely flat on a yoy basis. The consumer electrical goods business saw a sharp fall in sales and also in operating profits for the year, which offset the growth of the other verticals. Revenues from operations were 9.8% higher at Rs4,859 crore in Q4FY23 while the EBITDA came in at Rs527 crore. Havells India recommended a final dividend of Rs4.50 per share, to be approved by shareholders at the AGM. B2B demand was steady while B2C saw growth pressures.

Analysts are starting to sound warning bells on the relentless growth of NII and NIMs of private banks, saying that it was not sustainable. Most private banks reported Large private banks have reported yoy growth of 20% to 46% in net profits for Q4FY23. In most cases, the surge in profits came as the spike in the deposit rates did not keep pace with the higher loan yields. This time lag was giving big profits but that benefit was likely to narrow in the coming months. Most private banks saw sharp expansion in NIMs.

According to a recent report by the Boston Consulting Group (BCG) revenues of Fintech companies were expected to grow 6-fold to $1.50 trillion by the year 2030. Incidentally, the BCG report also predicts that, by 2030, Asia-Pacific region would outpace the US to become the world’s largest Fintech market. The APAC region is expected to grow Fintechs at 27% CAGR. Some of the advantages for the rapid adoption of Fintech in countries in APAC include attractive demographics, native technology, and technical skills.

As Go First files for bankruptcy, the major supplier of aviation fuel (IOCL), hopes to recoup its dues of $62 million by cashing bank guarantees. IOCL is the sole supplier of jet fuel to Go First, and it has already put Go First on cash-and-carry basis. Go First had blamed the faulty Pratt & Whitney engines for the grounding of about half of its fleet. Bank guarantees have been issued by BOB and CBI. However, much of its recent fuel sales have been without BGs. Go First has total debts of Rs6,521 crore, with a third to aircraft lessors.

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