For the fiscal year FY23 till date, the Indian government has received total dividends from PSUs to the tune of Rs23,797 crore, including dividends of Rs5,001 crore from ONGC. In the last few years, the centre had urged the public sector undertakings to pay out dividends more liberally so as to help boost the revenues of the centre. Bulk of the dividends come from the oil companies and Coal India. CPSEs are required to at least pay annual dividend, which is higher of 30% of profit after tax and 5% of the net worth.
Even after the strategic sale of IDBI Bank, it will continue to operate as a private sector bank. The residual 15% stake of the government would also be classified as public shareholding, so that reduces the chance of government interference in decision making. The government and LIC are jointly planning to sell up to 60.72% stake in IDBI Bank. Currently, 94.72% stake in IDBI Bank is held by the central government and LIC. Interested bidders must submit the EOI by 16th December. Government will not have an IDBI board seat.
Jet Airways deal may be in trouble as the creditors and its new owners (Kalrock Jalan consortium) are now deadlocked over a resolution plan to lift Jet Airways out of bankruptcy. If there is no satisfactory solution, the creditors are likely to approach the aviation ministry for liquidation of the assets of Jet Airways. Now, bankers are sceptical about recovering any of their dues. It may be recollected that Jet had stopped flying in April 2019 after it ran out of cash with dues of Rs18,000 crore. Jet needs Rs1,000 crore capital infusion.
In a rather surprising move, CLSA upgraded its outlook on Paytm (One97 Communications) from Sell to Buy. CLSA has called the risk-reward favourable with $1 billion cash in the balance sheet. The stock had recently touched a new low, which is 80% below the IPO price after the 1 year lock-in period for pre-IPO investors led to a surge in selling. It has given a price target of Rs650 for CLSA, which is ironically still less than one-third the IPO price. However, investor confidence continues to be quite low on the Paytm stock.
Fitch Ratings has stated in a recent report that loan growth of Indian banks would accelerate to 13% in FY23, despite RBI raising interest rates. They expect a surge in economic activity to compensate for the higher rates. Loans grew at 11.5% yoy in the second quarter, despite the RBI consistently hiking repo rates to stave off inflation. In the last two quarters, there has been a turnaround in commercial and consumer credit in India. According to Fitch, higher deposit rates will be offset by lower credit costs, boosting NIMs.
Despite the open offer price being nearly 27% below the current market price, Adani Group has found a slew of investors willing to sell up to 53 lakh shares in NDTV. The open offer to minority shareholders by the Adani group is already on and most of the supply willingness has come from body corporates. The open offer for NDTV shareholders is open till 05th December. It may be recollected that the Adani group had earlier bought 29.18% stake in NDTV indirectly, through the purchase of VCPL, triggering open offer.
As Adani group looks to grow aggressively in the cement space inorganically, a number of South based cement companies are a worried lot. For instance, India Cements is a prime target for Adani group to expand its footprint in cement. Adani is already the second largest cement player in India with capacity of 70 MTPA, through the acquisition of ACC and Ambuja. To take Ultratech head on, Adani plans to double cement capacity in next 5 years. Fragmented and stressed southern cement players are obvious targets.
With the Nifty and Sensex at new highs, lofty targets are back in circulation. Morgan Stanley sees Sensex hitting 80,000 by December 2023; a good 30% above current levels. Of course, the caveat is that India also gets included in the global bond indices. Morgan Stanley is also betting on a sharp fall in commodity and fertilizer prices to help the Sensex. Even at a macro level, if we talk of Indian GDP rising to $5 trillion in the next 5-6 years, we are talking of another $2-3 trillion of stock market value creation in next few years.