The Union Cabinet approved an Rs.76,000 crore production linked incentive (PLI) scheme for semi-conductors on 15-Dec in light of the acute global shortage impacting the auto industry. The PLI incentives will be paid over the next 5 years. It will look to provide a globally competitive incentive package to companies manufacturing semiconductors and display manufacturing. The PLI scheme will support the
design, fabrication, packing and testing of microchips. Fabs are complex and also very capital intensive.
According to a report by BOFA Securities, India will return to normalcy with real GDP growth at 8.2% in FY23. BOFA expects the growth recovery to be driven by consumption. This is lower than the FY22 estimates of 9.3% due to the uncertainty around low vaccination rates and the Omicron variant. BOFA expects agriculture & forestry to grow 3.5% in FY23 while industry will grow at 7.1% and services at 7.9%. BOFA also expects RBI to hike repo rates by 100 bps in FY23 with the current account deficit at 2% of GDP.
SBI Mutual Fund is expected to be the next MF to list through an IPO with the parent selling 6% stake in the AMC business. This will include a fresh issue and an OFS component. The IPO size is estimated at Rs.7,000 crore assigning an overall valuation of Rs.70,000 crore for the MF business. Its JV partner, Amundi, will sell 4% stake in the IPO. Currently, SBI MF manages Rs.5.78 trillion, making it the largest fund house for equity funds and overall by a huge margin. It will be the fifth Indian AMC to list on the bourses.
The stock of Paytm cracked on 15-December as the 1-month anchor lock-in period came to an end. At one point, Paytm, was almost 13% down at Rs.1,297, but recovered to close around 7.5% lower for the day. However, the trading volumes spiked and Paytm was the most active share by value on the NSE. The total anchor outstanding shares stand at 3.83 crore shares but the stock price is nearly 35% below the issue price leaving anchor investors with little incentive to exit the stock. The IPO price of Paytm was Rs.2,150.
Syrma SGS Technology filed draft red herring prospectus (DRHP) with SEBI to raise Rs.1,200 crore via IPO. This will include a fresh issue of Rs.926 crore and an offer for sale of 33.69 lakh shares by the promoter. Syrma is into electronics manufacturing services (EMS) and caters to global OEMs. It broadly caters to the industrial appliances, automotive, healthcare and IT sectors. For FY22, Syrma reported net profits of Rs.28.61 crore on sales of Rs.445. DAM Capital, ICICI Securities and IIFL Securities will be lead managers.
On 15-December, the Indian Rupee weakened by 40 paise to a 20-month low of Rs.76.28/$. This was on the back of risk-off outflows by foreign portfolio investors. This level was last seen in Apr-20. The fear of the rapid spread of Omicron has also pressured the rupee. The consistent rise in the US dollar index has also contributed to weakness in the rupee. A critical data point will be the Fed Policy statement to be put out late on 15-December where there are hawkish expectations on taper and front-ending of rate hikes.
It has been reported that the government was unlikely to push the Cryptocurrency Bill in winter session of Parliament. It is likely that instead of putting the bill to vote, it may be referred to the parliamentary standing committee for consulting with stakeholders. One of the items in the agenda was also creation of digital currency by the RBI. The government has been worried about retail investors putting money in crypto plans and superstars acting as brand ambassadors. RBI has been worried about the systemic risk.
Recently listed Nykaa will be partnering with iconic French beauty leader, L-Oreal. Nykaa will bring L-Oreal’s AI-powered virtual try-on ModiFace to the Nykaa platform. L-Oreal had acquired ModiFace in 2018; where consumers simulate make-up and examine results before purchasing a product. This virtual try-on will be available on the Nykaa website and also on its digital app. It uses an advanced face tracker algorithm that detects lips, eyes, cheeks, hair and applies virtual cosmetics, to give a true-to-life effect.