Thursday, 2nd June 2022

Auto sales for May 2022 were encouraging, although not exactly comparable with the year ago period. Most of the automobile manufacturers saw strong growth in wholesale dispatches. For May 2022, Maruti Suzuki sold 124,474 passenger vehicles (PVs) in the domestic market. There was minimal impact of the chip shortage. Maruti also confirmed that numbers were gradually getting close to the peak levels done in pre-COVID period. Maruti had nearly 54% of the pending bookings of the entire auto industry in India.

Hero Motocorp had opted to defer the launch its first electric two-wheeler due to the uncertainty in the macro situation and supply chain constraints. It was to launch its EV under the “Vida” brand in July 2022. For Hero Moto, the shortage of semiconductors is a major challenge. Instead it would launch its EV in the festival period in the last quarter of the year, when demand is normally buoyant. It also wants to tighten safety measures in the light of several mishaps reported by electric two-wheelers in last couple of months. 

SBFC Finance, floated by former HDFC Securities CEO Aseem Dhru, plans its IPO in this year. Incidentally, SBFC is backed by Clermont Group of Singapore and Arpwood Partners. SBFC Finance focuses on MSMEs, salaried and self-employed non-professionals in the lower and middle income groups. The IPO will be a mix of fresh issue and an offer for sale. ICICI Securities will lead manage the issue while Axis Capital and HDFC Bank will be advisors. In 2017, it had bought the Rs807 crore loan book of Karvy Financial Services.

Navi Finserv, floated by Sachin Bansal, closed its Rs300 crore NCD issue 8 days ahead of schedule. The Rs300 crore NCD issue also had a green issue of Rs300 crore. In terms of subscriptions, the QIBs had bid up to 5.08 times their quota, corporates had bid 0.52 times, HNIs just 0.22 times and retail investors had bid 0.71 times their available quota. Navi Finserv overall NCD issue got subscribed 1.40 times. It has now narrowed losses significantly in the latest quarter. Navi provides credit facilities to the low-income groups.

Air India, which is now owned by Tata Sons, launched a VRS for its employees, in a bid to prune its head count. It had 9,426 employees as of the last recorded date. VRS would be open to permanent employees above 55 years of age or those who completed 20 years of service. This requirement has been relaxed to 40 years in the case of cabin crew, clerical and unskilled workforce. VRS optees will also get an additional incentive above the ex-gratia amount. Air India has been recruiting key middle level and senior personnel.

The Indian FMCG market grew 6% in the March 2022 quarter on a yoy basis. While volumes were tepid, this was triggered by double-digit pricing growth. Volumes were actually down -4.1% due to all round fall in consumption, especially in rural markets, according to a Nielsen report. Rural markets saw 11.8% price hike compared to 8.8% in urban centres. The fall in volumes was -9.6% in the non-food category, but just -1.8% in the food category. There was 5.3% higher exit of small manufacturers amidst input cost pressures. 

Major Adani group stocks took a hit as investors adjusted holdings to reflect changes in the composition of the MSCI India index. The impact was felt by stocks like Adani Green Energy, Adani Total Gas, Adani Transmission and Adani Power. All of them fell by 5% each as the inclusion of fresh stocks in the MSCI India index led to reduction in weight of the Adani group stocks. Adani group stocks have also been in the limelight for their high valuations and pace of wealth creation. However, these adjustments are routine.

Bharat Dynamics (BDL) rallied 7% to Rs841 after securing Rs2,971 crore defence deal for supply of Astra Mark-I BVRAAM (air-to-air missile) from the Indian Air Force and Indian Navy. In last 3 months, the stock of BDL is up 87% while the Nifty is almost flat. BDL manufactures surface to air missile, anti-tank guided missile, torpedoes and allied defence equipment. It currently has an order book position of Rs10,170 crore and is also one of the key beneficiaries of greater defence in-sourcing plan of Indian government.

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