The Centre plans to sell 5% stake in IRCTC through an offer for sale (OFS) on the bourse. The company had been one of the few PSU multi-baggers post listing. The OFS will be open on 15th and 16th December. The price for the OFS has been set at Rs680, a 7.4% discount to last closing price. The sale will help the government mop up Rs2,720 crore, giving them support in reaching the Rs65,000 crore divestment target for FY23. 25% of the OFS is reserved for Mutual Funds and Insurance companies and the rest is for retail.
State Bank of India (SBI), will raise up to Rs10,000 crore through the issue of Additional Tier-1 (AT1) bonds until March 2024. These funds will be raised under Basel III guidelines. While the issue will be in tranches, the proposed funds would be raised before March 2022. With a capital adequacy of 13.51%, SBI would be looking to build capital buffers to support future growth. Higher yield AT1 bonds became controversial in year 2020 after Yes Bank, at the peak of the crisis, had opted to repudiate the liability under AT1 bonds.
WPI inflation for November fell sharply to a 21-month low of 5.85%. With this fall, the WPI inflation rate is down almost 1,100 basis points from the peak levels. The fall was led by a broad-based easing of food and also of manufactured products, even as tempered oil prices were supportive too. Manufactured WPI inflation fell to 3.59%, which had a significant impact due to the nearly 65% weight of manufacturing in the WPI index. CPI inflation has fallen less than 200 bps from the peak, but then it follows WPI with a lag.
Markets appear to be unimpressed by the Paytm buyback announcement. The stock was down 2% even as JP Morgan was of the view that the Rs850 crore buyback should support the stock price in the near term. The buyback price has been set at Rs810, which is 50% higher than the current market price. However, the buyback price is less than 50% of the IPO price of Rs2,150. A total of 1.05 crore shares are proposed to be bought back by the company, but the funds used will be the premium collected in the IPO.
A man known to prefer promoters staying away from business, appears to have changed his opinion. N R Narayana Murthy of Infosys admitted that he was wrong in keeping the family members of the founders of Infosys out of leadership positions. Rohan Murthy had a short stint at Infosys, but he had moved out along with his father in 2014. Murthy is now of the view that by keeping the children of founders away from the company, he had possibly deprived the company of legitimate talent with lot of skin in the game.
Poonawalla Fincorp, formerly Magma Finance, has decided to sell its housing finance unit to private equity outfit, TPG Global. The consideration would be $473 million or Rs3,900 crore. Its focus will now be tech based growth. Several bidders, including ChrysCapital had evinced interest. The company plans to sell its entire housing finance portfolio (Poonawala Housing Finance) at Rs152.84 per share. Meanwhile, the NBFC has aggressive plans to grow its assets under management (AUM) by 35-40% over next three years.
Mahindra and Mahindra plans to invest $1.21 billion, or Rs10,000 crore, to set up an electric vehicle (EV) manufacturing plant near Pune. The investment would be spread over the next 8 years. At the new facility, M&M will manufacture Born Electric Vehicles (BEVs) range that includes the EV variant of its popular XUV 700. This will enable M&M to take on Tata Motors, which dominates India’s EV market. TPG has a stake in Tata EV unit, which is valued at $9 billion. Mahindra had also got similar valuations for its EV business.
India is getting Russian Ural crude at deeper discounts following a European ban on Russian oil imports. India purchased oil well below the US imposed price cap of $60 per barrel. Russia refused to abide by the cap if it had to cut production. In some cases, Russia was even selling below cost to avoid negative effects of an oil glut. India is better suited to receive Ural crude and also to refine it. Russian ships and insurance cover are still recognized by India. Russia has now overtaken Iraq to become India’s largest oil supplier.