SEBI has approved the proposal of the government to convert dues of more than $1.92 billion owed by Vodafone Idea into equity. The rescue package for telecom announced last year included the provision to allow telcos to convert their AGR dues to the government into equity. Only Vodafone Idea had taken up this offer due to its stressed financials. Post conversion, the government will hold over 30% stake in Vodafone Idea; making it a major shareholder alongside Vodafone PLIC of UK and the Aditya Birla Group.
For the first time in 4 months of listing, Delhivery Ltd fell 13% to close at Rs486 levels on 20th October. This sharp fall came after Delhivery guided for moderate growth in shipment volumes through the rest of FY23. The stock has now corrected 31% from its peak price of Rs708. It is currently trading tad below its IPO issue price of Rs487. Delhivery is India’s largest logistics services player offering supply-chain solutions to more than 23,613 active customers encompassing e-commerce marketplaces, D2C e-tailers and SMEs.
In a rather surprising move, the Competition Commission of India (CCI) imposed penalties of Rs1,338 crore on Google for abusing its dominant position in the Android Mobile ecosystem. It has additionally issued a cease and desist order also. The CCI order has highlighted that Google forced OEMs of smart devices to pre-install its own apps or even offer incentives for the same. It also asked Google to allow other providers of apps to be also given access to sell on the Google Play Store. Android is the most popular OS globally.
Axis Bank reported 70% yoy growth in net profits and 29% growth QOQ for Q2FY23 at Rs5,330 crore. The yoy profit growth is much better than the consensus beat of 45%. Axis Bank saw sharp growth in net interest income (NII) plus a 57 bps expansion in net interest margins (NIMs) to 3.96% in Q2FY23. Provisions in the quarter were lower by 68% yoy at Rs549.78 crore, boosting profits. Gross NPAs of Axis Bank have fallen sharply from 3.53% to 2.50% yoy. Post Citi deal, Axis Bank issued 1.04 million credit cards in Q2FY23.
Two leading investing banking houses, Citigroup and Barclays, expect the RBI to reduce its intervention in the currency market and expect the rupee to weaken to Rs85/$ in the current fiscal year. The fall from Rs76/$ to Rs83/$ has already been quite rapid. With risk-off capital flows, the long dollar/rupee trade is a logical corollary. Citi and Barclays are of the view that with depleting forex reserves by $110 billion in 2022, the RBI may reduce the pace of intervention. That would accentuate weakness in the Indian rupee.
It has been one of the sharpest fall in steel prices over the last 6 months. Steel prices have fallen by 40% to Rs57,000/tonne. Export orders have been subdued on account of the 15% export levy imposed by the government to conserve steel for domestic use. Hot rolled coils (HRC) prices have fallen from Rs93,000 per tonne to Rs57,000/tonne amidst tepid global demand, high inflation and elevated energy costs. The zero-COVID policy adopted by China is also hurting steel demand; as it consumers over 50% of global steel.
Bajaj Finance reported 88% higher net profit at Rs2,781 crore for Q2FY23 at Rs2,596 crore. For the quarter, its net interest income (NII) was 31% higher at Rs7,001 crore even as its AUM grew 31% yoy to Rs218,366 crore. Gross NPAs and net NPAs as of September 2022 stood at 1.17% and 0.44% respectively. Bajaj Finance saw 7% growth in its new loans book to 6.76 million loan accounts. Its loan loss provisions for the quarter were sharply at Rs734 crore in the quarter compared to Rs1,300 crore in Q2FY22. Stock was flat.
According to economists, it is not just food grain prices that are up. Even the prices of vegetables, milk, pulses and edible oils are rising and these account for nearly a fourth of the food basket. Most of these have been hit due to unseasonal rains this year. While inflation is expected to taper down from 7.41% in September 2022, that would be more due to the base effect while prices still remain elevated in absolute terms. In a country like India, inflations acts like a tax on the poor as it hits their purchasing power badly.