Stock Market Investment Shot,7th November 2022

The deal is almost final and Reliance Industries is all set to acquire Metro AG cash and carry business in India. The deal is estimated to be worth Rs4,060 crore. Reliance gets the 31 wholesale distribution centres (WDC) of Metro plus the land bank and other assets. This will enable Reliance Retail to expand in the B2B segment, where it sees a lot of potential. The B2B business of Metro directly caters to Kirana stores, hotels, restaurants, caterers, corporates and SMEs. Wal-Mart is a leader in the cash and carry business in India.

Tata Steel CEO, TV Narendran, admitted that the company had spent less than half of its capex target for FY23 till date. It had planned a total capex of Rs12,000 crore for FY23 with Rs8,500 crore set aside for the India operations and Rs3,500 crore for the Europe operations. While its India operations have been hit by recession fears, demand in the UK and Europe are also hit by fears of economic contraction due to ultra-tight monetary policies. In the September quarter, Tata Steel reported 85% fall in net profits on yoy basis.

Jio Networks will deposit Rs3,720 crore into an escrow account to complete the acquisition of Reliance Infratel of the ADAG group. This bid is for the tower and fibre assets of RCOM, which is under liquidation. The delay in the deal happening was due to inter-creditor disputes. The total fibre assets of Infratel are to the tune of 178,000 route KM and 43,540 mobile towers pan-India. These funds will be distributed to the creditors only after the inter-creditor disputes are resolved. There has been litigation on for some time.

State Bank of India became India’s most profitable company for Q2FY23 reporting a net profit of Rs14,572 crore. It walked past Reliance Industries which had reported Rs13,656 crore as net profits in the quarter. RIL took a Rs4,039 crore hit in the quarter due to the windfall tax impact. SBI saw notional gains of Rs2.85 trillion in its treasury operations. During the quarter, SBI witnessed loan growth of over 20% while the net interest income (NII) was up 13% at Rs35,183 crore. SBI also improved its asset quality by 138 bps in Q2.

BankBazaar.com expects to be profitable in this fiscal year and will also file for an IPO by the end of next year. BankBazaar is a loan syndicating platform which provides incisive content based advice. It has also issued co-branded credit cards with Yes Bank and RBL Bank. For Q2FY23, BankBazaar.com had reported 85% higher revenues at Rs170 crore. BankBazaar Adil Shetty expects the growth trend to also continue in Q3 and Q4 of this fiscal year driven by co-branded credit card segment. IPO is targeted for the year 2024.

For the week ended 04th November, 7 out of the top-10 most valuable companies added Rs133,708 crore in market valuation amidst positive trend for equity indices. Reliance was the big gainer in the week. In terms of market cap accretion in the week, Reliance Industries added Rs44,957 crore, HDFC Bank Rs22,139 crore, SBI Rs20,527 crore, TCS Rs19,521 crore, HDFC Ltd Rs16,156 crore and ITC Rs9,861 crore. Among value losers were ICICI Bank giving up Rs1,518 crore in value and Hindustan Unilever Rs1,187 crore value.

Varde Partners, the US based alternate investor, will invest $1 billion to grow its India portfolio. Varde specializes in buying out stressed assets and is looking at 6-8 transactions over the next 1 year. Varde is largely sector agnostic and had recently pumped in funds into beleaguered companies like Reliance Power and Reliance Infrastructure. Varde has already deployed over $3 billion in such stressed assets across India in the last 4 years across 20 transactions. India dominates Varde game plan for Asia Pacific with 40% share.

Foreign portfolio investors made a strong comeback in November infusing Rs15,280 crore into Indian equities after the Fed indicated it may go soft on further hikes. However, FPI flows are likely to remain volatile due to the plethora of global headwinds. This shows glimpses of August when FPIs had infused a massive Rs51,200 crore into Indian equities. However, it must be noted that FPIs have pulled out Rs2,410 crore from debt in November. FPI flows were positive across South Korea, Thailand and the Philippines

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