Corporate bond issuances are all set to hit Rs10.6 trillion in fiscal year FY25. That would be about 4% more than FY24, which recorded Rs10.2 trillion. This will take the overall outstanding corporate bonds to a level of Rs50.3 trillion. There has been a surge in domestic bond fund raising in the last couple of years. What is ironical is that during the same period, the incremental bank credit is likely to moderate, which shows that companies are preferring non-banking funding sources. Recent RBI risk weights may pressure further.
Blackstone, Temasek, and Bain Capital; three giant PE funds globally, are eyeing a big stake in Haldiram, the snack food company in India. While the scions of the Haldiram group are looking at selling up to 51% stake in the company, the valuation is still under debate since the owners are looking at a valuation of closer to $10 billion. Assuming the valuation works, it would be a PE deal in the vicinity of $4-5 billion, making it one of the largest PE deals in India. Currently, the PE funds are conducting due diligence process.
Average domestic air traffic saw a growth of 1.6% in April 2024 touching 4,42,783 as peak summer season demand led to a spike in air traffic in the month. Air India reported the best passenger load factor (PLF) of 90.81%, which is a proxy for capacity utilization. International traffic from India, however, was flat in the month of April. Indigo, which still has a market share of over 55%, had a passenger load factor of 87.12%, while Akasa, Vistara and Spice Jet reported PLF in the range of 88% to 89% for the month of April.
In one of the biggest FMCG write-offs, Godrej Consumer Products (GCPL) took Rs2,389 crore hit in March 2024 quarter. This hit was towards its African market strategy tweak. The entire Africa operations are undergoing a strategy shift and hence, the company is to incur losses, which has been proactively written off in this quarter. GCPL exited East African market and will now focus more on India and Indonesia, which are the two primary markets. Losses were towards impairment and slump sale of its African subsidiary.
The NSE volatility index (VIX) is up 72% from the lows of April. In short it has moved up from 10.3 levels to a high of 17.5 levels in just a week. Spikes in the VIX are indicative of higher protection being bought by traders, who are expecting markets to react either ways after the elections. There appears to be a level of panic that is building up among traders in recent weeks as the VIX has turned very volatile. In 2019, the VIX had stayed elevated for several months, but this time, it has spiked only after 3 rounds of elections.
The FMCG companies in India are moving rapidly on building up their rural volumes. For the first time in the last five quarters, the volume growth in rural India outpaced the volume growth in urban India during the March 2024 quarter. Many of the FMCG companies have launched special packs of smaller sizes for the rural markets and that appears to have hit off. The only concern is that such pack splitting is leading to an impact on the EBITDA margins, so for most of the FMCG companies, it will about a delicate balance.
Aadhar Housing Finance, which opens its IPO on May 08, 2024, completed its anchor allocation of Rs898 crore late on Tuesday. The company allocated 2.85 crore shares to anchor investors, which included a mix of mutual funds, insurance companies, foreign portfolio investors and AIFs. The anchor allocation was at the upper end of the price band of Rs315 per share and accounted for 28.91% of the overall IPO size. The anchor portion so allotted was reduced from QIB quota. The IPO is predominantly an offer for sale (OFS).
The board of JSW Energy has approved the Rs10,000 crore expansion plan, although the funds would be raised in tranches. JSW Energy plans to use the funds to buy out renewable energy companies that are up for sale. The company has set a target of reaching 20GW of renewable capacity by 2030. The debt equity ratio of JSW Energy stands at 1.3X, which is quite comfortable for a power generation company. It may be recollected that JSW Energy had already laid out plans to become a significant player in Indian RE space.
