Foreign portfolio investors (FPIs) invested Rs15,352 crore into Indian equities in the first half of July. In fact, FPIs have infused $6.80 billion into Indian equities in the five weeks since the Modi 3.0 government took oath of office. Hopes of a rate cut have helped EM flows, and the 30 bps fall in US inflation will also help along the way. June had already seen a turnaround with net inflows of Rs26,565 crore from FPIs, after a similar amount of selling in May. A lot will now depend on Fed rate action and full Union Budget.
With statutory pressures, the gold loan book of IIFL Finance shrank by Rs7,000 crore in the first quarter of FY25. That is a substantial fall in percentage terms as the loan book has come down to Rs16,000 crore from above Rs23,300 crore as of the close of March 2024. RBI had imposed restrictions on fresh sanctions and disbursements of gold loans by IIFL Finance over procedural and compliance issues. RBI had also laid out certain material supervisory concerns. Other verticals like home loans, LAP and micro loans did well.
In the first half of calendar 2024, mutual funds bought shares of HDFC Bank to the tune of Rs42,000 crore. The highest was Rs12,884 crore of buying in January 2024 and the lowest in this period was Rs1,886 crore in April. The surge in buying was on the back of the higher weightage of HDFC bank post the merger with HDFC Ltd. In fact, year 2023 had seen mutual fund buying of more than Rs70,000 crore in the HDFC Bank counter. Foreign investors have cut exposure to HDFC Bank in this period, which could raise MSCI weight.
Avenue Supermarts, the owner of the D-Mart retail brand, has reported 17.5% yoy growth in net profits in the Q1FY25 quarter at Rs773.82 crore. Even revenues from operations were up 18.6% in this period at Rs14,069 crore. EBITDA was up 18% in the quarter at Rs1,221 crore. D-Mart is built on the global Wal-Mart model which squeezes suppliers for discounts through bulk buying and then passes them on to the end customers. The big positive contributions came from general merchandise and apparel sales in Q1.
As India shifts towards organized FMCG brands, a rising number of product brands are crossing into the Rupee Billionaire club. During the quarter, 6 digital-first brands of Dabur crossed the Rs100 crore sales mark. Hindustan Unilever has 19 brands in the Rs1,000 crore club, which includes marquee brands like Boost, Sunsilk, Vaseline, Clinic Plus etc. ITC also has some real brands with Aashirvad valued at Rs8,000 crore and Sunfeast at Rs5,000 crore. ITC’s Bingo, Mangal Deep and Yippee are in the Rs1,000 crore club.
In FY24, Indian Inc saw a spike in the cash flows, but investments and capex continued to be tepid. The rise in corporate profits in the quarter was driven by other income too. In fact, the cash and bank balances of Indian companies were up 18% at a record level of Rs10 trillion for the universe of the 1,350 largest companies. If banks and financials were excluded, the net profits were up 32% yoy in FY24. Big cash flow generation in FY24 came from sectors like refineries, power T&D, software services, and telecom services.
Consumer inflation in India came in at a 4-month high of 5.08% even as the May inflation also got upped to 4.80%. This is in contrast to the US inflation which fell by 30 bps to 3.0% for June. Now both the inflation figures are about 100 bps away from their respective targets. The pressure on consumer inflation in India came from the food basket, which spiked from 8.69% to 9.36% as the price of vegetables spiked. While, this is expected to taper with normalization of monsoons, rate cuts may be off the RBI agenda for now.
In its entire 65 years of existence, Berkshire Hathaway may not have made too many glaring mistakes, but Paytm was possibly one of them. Recently, Berkshire made a total exit from Paytm, something it recently did with US airline stocks too. Now Japanese giant Softbank has made a total exit from Paytm, booking a loss of $150 million in the process. Softbank had invested close to $1.5 billion in 2017, and it recently booked a loss of around 10-12% on that investment. Paytm prices crashed after the regulatory strictures.