Stock Market Investment Shot, 5th April 2023

Stock Market Investment Shot, 5th April 2023

Stock Market Investment Shot, 5th April 2023

Adani Ports has completed the acquisition of Karaikal Port Private (KPPL) pursuant to NCLT approval. Adani Ports will pay an acquisition consideration of Rs1,485 crore under the CIRP process, which implies an EV/EBITDA multiple of 8x on FY23 EBITDA numbers. Adani Ports will additionally invest Rs850 crore to upgrade infrastructure and reduce logistics costs. KPPL has built-in cargo handling capacity of 21.5 million metric tonnes (MMT) and essentially handles cement, fertilisers, limestone, steel, and liquid crude cargo.

Byju’s, India’s Edtech major, raised $700 million at a flat valuation of $22 billion via a mix of equity and convertible notes. The indicative valuation is much higher than what global investors like Softbank have been indicating in their internal valuations. Apart from PE funds, sovereign wealth funds are also believed to have participated. The funding was crucial as it has a repayment of $1.2 billion term loan coming up in 2026. In November also Byju’s had raised funding from Qatar Investment Authority at similar valuations.

Jefferies assigned an indicative valuation range of Rs134 to Rs224 per share for the soon to be demerged Jio Financial Services from Reliance Industries. Listing of Jio Financial is expected in Sep-23. Jefferies has assigned a market cap range of Rs90,000 to Rs150,000 crore to Jio Financial based on P/BV valuations after factoring in holding company discount. Based on this new SOTP, Jefferies has raised the target price of Reliance to Rs3,100 per share, leaving 33% upside. The proposal will be put to vote on 02nd May 2023.

ONGC is stepping up investments to $7 billion in next 3-4 years to reverse a prolonged fall in oil and gas production. A total of 24 ONGC oil fields are undergoing recovery enhancement programs. In most cases, natural decline has set in due to ageing. ONGC will be investing heavily in the eastern KG Basin as well as implementing fifth phase of expansion of Mumbai High. ONGC oil output is slated to rise from 19.6 million tonnes in FY23 to 21.2 million tonnes in FY24. Natural gas output will also rise 14.1% to 23.5 BCM in FY24.

EdgeConneX, an Adani group JV, is in parleys with banks for a loan of $220 million. It will mark the group’s first offshore borrowing since the Hindenburg report. AdaniConneX will use the 5-year funds for capex. The stock and bond prices of Adani group saw a major slump after the Hindenburg report alleged stock manipulation and accounting fraud. Adani Enterprises had earlier shelved plans to raise Rs1,000 crore via sale of bonds. The top brass of Adani group has been meeting up with US investors to market these bonds.

The proposed demerger of the FMCG business of Haldiram Snacks and Haldiram Foods into a new entity (Haldiram Snacks Food) has been approved by the CCI. Post the demerger, Haldiram Snacks Food will be the new entity for the FMCG Business. Existing shareholders of Haldiram Snacks and Haldiram Foods will get 56% and 44% respectively of the newly demerged entity. This will be part of the family splitting its businesses among them. The flexible packaging business of C-Flex India will also be part of the share swap.

World Bank cut India’s FY24 GDP growth forecast by 30 bps from 6.6% to 6.3% on weak consumption and global headwinds. The World Bank expects higher borrowing costs and weak income levels to weigh on private consumption growth. GDP growth will be 70 bps lower than FY23 growth, but is almost at par with the RBI estimate of GDP growth. Private consumption growth is expected to slow 140 bps to 6.9% in FY24. However, exports of goods and services is slated to grow by 9.2% in FY24 with lower CPI inflation at 5.2%.

With the RBI MPC set to announce the first monetary policy of FY24 on 06th April, Assocham President Ajay Singh urged the RBI to pause on rate hikes considering the global banking crisis. India is still the fastest growing large economy but global headwinds and volatile oil prices could weight on the India growth story. RBI is expected to hike rates by another 25 bps to 6.75% in this policy statement. The Assocham president pointed that higher rates are already taking a toll on funding costs and interest coverage ratios.

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