Stock Market Investment Shot,18th October 2022

For FY22, India registered defence exports of Rs8,000 crore ($1 billion) but has set its sights on Rs35,000 crore of defence exports by FY25; a 4-fold growth in 3 years flat. That is more than the Rs30,000 crore of defence exports registered by the government since 2014 when the NDA government came to power. India has already gone from being a net defence importer to a net defence exporter. The positive reserved list for indigenous companies in defence stands at 410 items and the PLI scheme is the icing on the cake.

Invesco Developing Markets Fund, the largest shareholder in Zee Entertainment with 10.14% holding, plans to sell over half its stake in Zee. Through its OFI Global China Fund, Invesco will sell a total of 52.93 million shares representing 5.51% of Zee Entertainment in the price range of Rs250.00 to Rs263.70 per share. At the upper end of the band, Invesco will realize Rs1,395 crore from the stake sale. Kotak has been appointed sole broker for the block deal. Earlier in April-22, Invesco had sold 7.8% in Zee for Rs2,092 crore.

The disappointment from big cement names continued. After Shree Cements reported a sharp fall in net profits in Q2FY23, ACC reported net loss of Rs87.32 crore in September 2022 quarter. The reason was the doubling of power and fuel costs and a spike in freight and transport costs in the quarter. Its total revenues were up 6.42% for the quarter at Rs4,057 crore. Cement sales volumes went up from 6.57 MT to 6.85 MT yoy. It may be recollected that in mid-September, the Adani family had taken official control of ACC Ltd.

According a survey conducted jointly by the CII and EY, majority of MNCs in India expect Indian economy to perform well over next 3-5 years. This is likely to be triggered by domestic consumption, services sector, digital bandwidth and infrastructure. For over 71% of the MNCs, India remained a critical destination for their global expansion plans. Interestingly, more than 60% of the respondents believed that the business environment had palpably improved in last 3 years. Nearly all respondents appreciated India’s green edge.

Piramal Pharma Ltd will list on the stock exchange on 19th October. It may be recollected that just last month, the pharma business had been hived off into a separate company from Piramal Enterprises Ltd (PEL). It will have a face value of Rs10 per share. The idea of demerging Piramal Pharma from PEL was to simplify the corporate structure. NCLT had approved the demerger on 12th August. In consideration of the demerger, shareholders of PEL were allotted 4 shares of Piramal Pharma for every 1 share held in PEL.

With the upcoming merger of HDFC Ltd and HDFC Bank, bets are rising that HDFC would be removed from the Nifty-50 index. HDFC Bank had mentioned in its earnings release that the merger would be completed one quarter early in Q1FY24 itself. Shareholders meet on 25th November to approve the merger of HDFC Ltd into HDFC Bank. HDFC Ltd has 5.5% weight in Nifty and hence its exit would result in outflows of $1.5 billion. The weight of HDFC Bank will increase, but either Pidilite or Ambuja may be added to the Nifty-50.

In sugar cycle year 2022-23 (Oct-2022 to Sep-2023), India expects to produce 36.5 million tonnes of sugar. That would be 2% higher than the sugar output of 35.8 million tonnes in SCY 2021-22. It will be the net production after diverting 4.5 million tonnes of sugar for ethanol. India is targeting to reach 12% ethanol blending in SCY2022-23. In the current season, the government may allow 5 million tonnes sugar exports, which will be reviewed in March 2022. India had exported some 11 million tonnes of sugar in SCY 21-22.

There is finally some good news for new age digital companies. Byju’s raised $250 million via rights issue from existing investors at a valuation of $22 billion. Qatar Investment Authority was a participant in the latest round. Apart from QIA, Byju’s also has the backing of Own Ventures, Sequoia, Blackrock, Tencent, Naspers, Tiger Global, Canadian Pensions etc. Byju’s just laid off 2,500 staff and has promised to turn to profits by FY23. For FY21, Byju’s had announced record net loss of Rs4,588 and FY22 is yet to be put out.

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