REC, PFC and IRDA fell more than 10% on Monday after the RBI draft guidelines suggested that all such lenders must maintain 5% provisions for loans given to under construction projects. Even CLSA has stated that such a provision could be a big deterrent for such project finance companies as it could vastly change the economics for these companies. However, the positive side is that it could reduce even what little competition there is from banks. The tier-1 capital of these non-bank financers can be hit by 200-300 bps.
The household savings in India fell to a 5-year low in the year FY23, according to a report by the MOSPI. This is largely due to a spike in the spike in short term credit during this period. It is a sign of consumption that is getting increasingly leveraged, not a very positive signal. Between FY19 and FY21, the savings ratio as a percentage of GDP sued to be around 7-8%, but in FY23 it fell to just 5.3%. In comparison with the FY22, the FY23 gross savings have grown by about 13% while the household liabilities surged by 73% yoy.
Indian exports of refined petroleum products fell by 11% to just 1.21 million barrels per day (bpd) in the month of April 2024. This can be attributed to robust domestic demand and tepid margins on exports of these petro products. The exports to Asia fell by 25% while the exports to Europe fell by 3.4% in the month of April 2024. Indian exports of diesel fell by 13% in April while the gasoline exports fell by 17% in the same period. The other reason is that supplies from the US and OPEC were ample, reducing India demand.
SEBI is looking into allegations that ICICI Bank employees tried to influence shareholders of ICICI Securities to vote in favour of the ICICI Bank merger proposal. The merger has already been approved by the board in the ratio of 67:100, but some of the key shareholders of ICICI Securities like Quantum Mutual Fund are unhappy with the swap ratio. Their view is that the swap ratio is inordinately biased in favour of ICICI Bank to the detriment of the shareholders of I-Sec. More than 500 shareholders are now up against this merger.
Lupin reports 52% spike in net profits in the fourth quarter at Rs359 crore. Even the revenues from core operations were up 12% at Rs4,961 crore. EBITDA in the quarter was up 66% yoy at Rs1,026 crore while the EBITDA margins also improved by 270 bps to 15.2%. The US sales of Lupin stayed robust with portfolio of inhalation products, while the India formulations business was also delivering the goods. However, the India formulation sales were lower on a sequential basis. Lupin launched 7 brands in Q4 across therapies.
FPI shareholding in NSE companies touched its lowest point in the last 11 years, according to data put out by NSE. As of March 2024, the share of FPIs in NSE listed companies fell by 51 basis points to 17.1%. During the same period, even as FPI share has fallen by 353 bps in the last 3 years, the share of DIIs has gone up by 257 basis points to 16.05%. The gap narrowed substantially between foreign investors and domestic investors in a big way since 2020. In 2015, the gap between FPIs and DIIs was 10%; now it is just 1.63%.
SEBI has ruled out any extension of market trading hours due to lack of consensus between the NSE and the BSE on this subject. There had been persistent demands for extension of trading hours in equities and F&O, on the same lines as commodity markets to allow investors to hedge for global risk. However, the technology needs and operational preparedness are yet to be ironed out. In fact, the NSE had filed a plea with SEBI to keep the derivatives (F&O) market open for an additional 3 hours daily from 6 pm to 9 pm.
According to a CRISIL report, Indian airlines can have 50% market share in global passenger traffic by FY28. That share stands at 43% today, and could spike further to 50% by FY28 as more airlines expand their international suite. This includes all traffic that originates, passes through, or terminates in any Indian city. This shift will improve the credit profile of airline companies as global routes are more profitable than domestic routes. Between 2021 and 2024, India’s international passenger traffic grew 7-fold to 70 million.