The robust tax performance of the Indian economy continues with gross central tax collections for FY23 till 08th October up 23.8% yoy at Rs8.98 trillion. Net tax collections (net of refunds) for the period stood at Rs7.45 trillion; or 52% of the Budget estimate of Rs14.20 trillion for FY23. Tax collection growth is now almost inevitable after the strong inflation numbers. Apart from strong economic growth, improvement in reporting, use of technology and better compliance have helped to improve the tax collections in FY23.
For the week ended 07th October 2022, combined market cap of 7 out of 10 most valuable companies were up Rs101,044 crore; led by heavyweights Reliance Industries and TCS. Amidst 1.33% spike in Sensex, Reliance saw market cap accretion of Rs37,582 crore, TCS added Rs22,082 crore, Infosys Rs16,263 crore, ICICI Bank Rs13,433 crore, HDFC Rs6,733 crore and HDFC Bank Rs4,623 crore. Among value losers, the stock of Hindustan Unilever lost Rs23,026 on margin worries in Q2 while Bharti Airtel fell by Rs3,533 crore.
A couple of days after SEBI ordered the winding up of Brickwork Ratings, the CRA has decided to explore legal options. Brickwork has been silent about exact details. SEBI has accused Brickwork Ratings of cases of repeated lapses on process and irregularities in discharging duties. Brickwork was directed to wind up its operations within 6 months and intimate clients. Meanwhile, Brickwork is barred from onboarding new clients or taking fresh mandates. Brickwork Rating would most likely approach SAT against the SEBI ruling.
It is not happy days for downstream oil marketing companies as IOCL, BPCL and HPCL are likely to report their second consecutive loss in Q2FY23. The combined loss for the September 2022 quarter is pegged at Rs21,270 crore, largely due to holding petrol and diesel prices below cost of production. This would be tad more than the combined loss of Rs18,480 crore posted by the 3 OMCs in the June 2022 quarter. The refining margins have also fallen sharply from the peak, so there is not enough to offset marketing losses.
It looks like FMCG companies may finally veer around to cutting prices. Hindustan Unilever and GCPL have cut prices of some soap brands by up to 15%. This is amidst a sharp fall in the price of palm oil and other raw materials. While price cuts by HUL range from 5% to 11%, the price cuts by Godrej Consumer range from 13% to 15%. This is expected to drive volumes in the second half of FY23, which would be a big boon if demand turns sluggish during high inflation. However, there is no cut in detergents and premium soaps.
DIPAM may sell 60.72% stake in IDBI Bank and has invited expressions of interest (EOI) for the same. LIC, the largest owner in IDBI bank with 49.24% stake, will sell 30.48%. The government, with 45.48% stake in IDBI Bank, will sell 30.24%. IDBI Bank currently has a market cap of Rs46,000 crore, so the placement size could be around Rs27,900 crore. Banks, foreign lenders, shadow banks, alternate investment funds and offshore funds are eligible to place the bids. However, industrial and corporate houses cannot bid for IDBI.
As per the latest indications from the Fed, they may rapidly hike rates to 4.5% and then hold it there, till inflation starts to taper lower. That effectively means; Fed may hike rates by another 75 bps in November. With the labour data strong, unemployment falling 20 bps to 3.5% and oil prices bouncing due to OPEC supply cuts, Fed has strong reasons for another 75 bps rate hike in November. Rates are currently at 3.00% to 3.25%, so the Fed may hike rates by 75 bps in November and 50 bps in December to touch 4.5% rates.
Despite proxy firm IIAS exhorting shareholders to vote against the warrant issue to Adani group, the resolution sailed through with 91.73% votes. With preferential allotment approved, Ambuja Cements can issue 4,774.78 lakh warrants convertible 1:1 at Rs418.87 per share aggregating to Rs20,000 crore. The warrants are convertible in 18 months. Adani group paid $6.5 billion to buy out the entire stake of Holcim in Ambuja and ACC. The private placement was necessitated after the tepid response to the open offer.