Thursday, 7th October 2021

To give a boost to telecom, the government announced a slew of reforms. It allowed 100% FDI in telecom sector through automatic route to promote ease of doing business in the industry. This allows Vodafone to easily raise funds from abroad. It also slashed performance and financial bank guarantee for the telcos by 80%, unlocking cash reserves. DOT also eased rules for clearing mobile tower installations via self-declarations. These moves, especially reduction of charges, will go a long way in boosting telecom Sector.

In response to RBI superseding the board of SREI Infrastructure and SREI Equipment Finance, the promoters have filed a writ petition against RBI in the Bombay High Court. They have called for a stay on the RBI proceedings. The matter is slated for hearing on 07th October. RBI had already appointed Rajneesh Sharma as the administrator for SREI group. Hemant Kanoria pointed that the group had adhered to all strictures imposed by the RBI and banks. The infrastructure sector stress had triggered problems at SREI. 

It looks like Subhash Chandra is taking the battle for control of Zee to the streets. He has warned that he would not allow Invesco to clandestinely take over the company. He reminded that Invesco had been brought in as an investor and not as a promoter. Chandra has made it clear that Invesco should make its best offer, like Sony Pictures, and let the shareholders decide. He also urged the Indian regulators to look behind the veil of Invesco and find out who was trying to launch a takeover bid for Zee Entertainment. 

Growth in domestic air passenger traffic in the month of Sep-21 was just about 2.9% over August at 69 lakh passengers. The YOY traffic growth was 74%, although it may not exactly be comparable due to the low COVID base. Airline departures were up 54% you but the departures were up by just about 6% on a sequential basis. On a yoy basis the price of aviation turbine fuel (ATF) was up 78% and that was one of the reasons why September saw tepid volumes. Most airlines are currently under solvency stress.

HDFC Bank reported 15% growth yoy in its loan book to Rs.11.98 trillion as of 30-Sep. On sequential basis, the loan book grew 4.4% over the first quarter, showing visible pick up post COVID 2.0. Among the lending units; HDFC Bank reported 27.5% growth in commercial loans and 7.5% in rural loans. Retail loans grew by 13% on a yoy basis. This included the direct assignment purchase of loans from HDFC. Wholesale loan book grew by just about 6% yoy. Deposits grew sharply by 14.4% yoy with CASA share at a healthy 47%. 

The stock of Divi has got a boost from the strong trial results for Molnupiravir as put out by US-based Merck. Molnupiravir treats covid patients and reduces risk for mild to moderate COVID afflictions. Divi’s is the authorized manufacturer of Molnupiravir API, better known as MSD outside of the US. The robust trial result will boost Divi’s earnings. This relationship will also help Merch enhance its CRAMS franchise, which is estimated to grow close to 10% in the coming years. Capacity expansions could drive growth.

Crude oil hit $83/bbl in the Brent market after OPEC refused to ramp up production despite concerns of tight global supply. However, some counter-impact is expected from a rise in inventories reported by the US. Even WTI crude has now scaled close to the $80/bbl levels. In India, the landed cost of Brent is up more than 50% in last one year adding to the inflationary pressures. Even natural gas prices have soared, forcing the Indian government to hike prices by 62% for H2. Official US inventory numbers are awaited. 

IRCTC hit a new high of Rs.4,512 after it was up 8% on 06th October. This was on the back of heavy volumes ahead of the 1:5 stock split. The stock has already rallied 20% in the last one week and 29-Oct is the record date for the stock split. The stock is up 50% in the last one month and it has gained over 1000% since listing less than 2 years back. A number of analysts are also viewing IRCTC as an undervalued digital play with a strong customer franchise and monopoly status. It could become part of the global MSCI index.

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