Tech Mahindra has just announced the acquisition of a 100% stake in CTC for EUR 330 million. That is roughly equivalent to Rs.2,800 crore at the current exchange rates between the Euro and the INR. The Europe-based Com tec Co IT (CTC) acquisition by Tech Mahindra is its biggest acquisition since it bought Satyam way back in 2010. This deal is expected to expand the digital engineering and insurance technology franchise of Tech Mahindra. TECHM has been looking to make a significant mark among top IT companies.
Government of India has been rewarded this fiscal with dividends of Rs.6,600 crore from central public sector enterprises (CPSEs). Big pay-outs have come from GAIL, NMDC, NPCIL and Power Grid. In fact, the government got Rs.972 crore from Nuclear Power Corporation of India Limited (NPCIL) and Rs.2,506 crore from Power Grid. In addition, NMDC has already paid Rs.1,605 crore and GAIL has paid Rs.913 crore as dividends to the government . Dividend pay-outs by HAL, BEL, FAGMIL and NSIC were relatively smaller.
UltraTech Cement, the flagship cement company of the AV Birla group, reported 7.8% higher net profit for the Dec-21 quarter at Rs.1,708 crore. The profit boost came on the back of tax credits including writeback of earlier tax provisions and MAT credits. Interest cost also halved in the quarter after the company repaid loans worth Rs.3,459 crore during the quarter. Net sales for the quarter were up 5.8% at Rs.12,985 crore. Operating profits fell in the quarter due to a sharp 33% spike in power and fuel costs.
End of anchor lock-in may have been a problem in the past, but recent issues have not seen much of a dent even after the anchor holding period was over. For example, Metro Brands and CE Info Systems (MapmyIndia) rallied sharply even after the completion of the anchor lock-in period of 30-days. Both Metro brands and MapmyIndia closed at record high levels on 17th January, despite the completion of the anchor lock-in period. Metro Brands had reported strong results for Q3 with net profits up 53.3% yoy.
Oyo may have struggled during the pandemic but it is expected to soon hit the IPO market at a likely valuation of $9 billion. Oyo is backed by Softbank of Japan and the roadshows are expected to commence once the regulatory approvals are through. Oyo had scaled valuations of $10 billion in 2019 but the COVID pandemic has not been too kind to contact-intensive sectors like hotels, travel and tourism. That dented Oyo’s performance. The IPO may offer a 15% discount to woo investors. IPO will largely be via fresh issue.
As the Brent crude spiked to above $86/bbl on Monday, the benchmark 10-year bond yield rose sharply to 6.64%. Sharply higher crude prices would mean a wider trade deficit and necessitate additional borrowings. That has boosted bond yields sharply. This is the highest level that Brent crude has seen since 2018 and analysts are pencilling that if investment demand picks then Brent could get closer to $100/bbl, hardly a comforting scenario. Each spike of $10/bbl spikes the fiscal deficit of the government by 0.50%.
After a long silence, Hero Moto spiked by 5% on Monday after it announced that the company will invest Rs.420 crore in Ather Energy. Ather designs, manufactures and services electric automobiles and charging infrastructure. This is likely to be a big boost to the EV plans of Hero Moto as the valuations of Hero Moto have been lagging Bajaj Auto by a huge margin. Hero Motor already held 34.8% in Ather Energy before the current investment. Hero Moto stock has fallen by 16% in last 1 year, compared to 25% rally in Nifty.
TCS hit its life-time high price of Rs.4,038 on 17th January. Its Q3 results faced some pressure on operating margins but growth in top line and bottom line continued to be impressive. With this latest rally, the market cap of TCS has crossed Rs.15 trillion for the first time in its history. It may be recollected that TCS had also announced a Rs.18,000 crore buyback of shares. Reliance market cap is still about 15% higher than that of TCS. In Q3, TCS saw strong traction in cloud, connected enterprises and product innovation.
