While the final decision will be made at the LIC board meeting on Tuesday, it is almost confirmed that the IPO of LIC will open on 04th May and close on 09th May. As discussed in the last few days, LIC will sell a total of 3.5% stake in LIC to raise Rs.21,000 crore at a valuation of Rs.600,000 crore for LIC. It looks like the government has reconciled to halving of valuations and a lower money raising. However, the LIC IPO is likely to come with a green shoe option for the government. LIC is now valued at 1.1X actuarial value.
Brent Crude slumped by over 6% on Monday to fall back to the $100/bbl level. There are now growing worries about the rising cases of COVID in China resulting in prolonged lockdowns and destruction of oil demand globally. In addition, the markets are also wary that the aggressive hawkishness of the US Fed could also destroy a good deal of purchasing power and impact oil consumption in a big way. However, Shanghai has not shown any let-up in its zero-COVID policy. China plans to step up COVID restrictions now.
The sharp fall in the markets resulted in investor wealth depleting by Rs.6.47 trillion between Friday and Monday. Global cues have been extremely weak on both days. On Monday, big guns like Reliance, TCS, ITC and M&M took it on their chin on interest rate worries. There are worries that oil prices are falling but now they are indicative of weak demand. FPI selling has almost been relentless with the global investors selling more than Rs.23,000 crore in Indian equities in the second and third week of the month of April.
Adani Power became the 6th Adani group company to cross the Rs.1 trillion market cap mark. Adani Power is the largest thermal power producer in India with capacity of 12,450 MW. The stock of Adani Power is already up 170% since the start of 2022. The other Adani group companies already in the Rs.1 trillion club include Adani Green Energy (Rs.4.41 trillion), Adani Transmission (Rs.2.87 trillion), Adani Total Gas (Rs.2.66 trillion), Adani Enterprises (Rs.2.51 trillion) and APSEZ (Rs.1.82 trillion). Adani Wilmar is just listed.
With impressive results from ICICI Bank and rather tepid results from HDFC Bank for the fourth quarter, the valuation gap between ICICI Bank and HDFC Bank has narrowed further. During the fourth quarter, ICICI Bank saw lower provisioning and better asset quality; apart from healthy growth in credit, CASA and NII. While ICICI Bank NIM scaled to a high of 4%, the NIM of HDFC Bank fell to a multi-quarter low of 4%. The big overhang for HDFC Bank is integrating the merger with HDFC Ltd. ICICI Bank has lesser headwinds.
FMCG companies have been struggling with narrowing margins for last 2 quarters and Q4 is going to be as difficult as the last two. One reason many of the FMCG stocks came under pressure on Monday was that Indonesia had banned the export of palm oil. Indian FMCG companies rely heavily on Indonesia and Malaysia to supply palm oil, an important input for food products. In addition, rising prices of crude, spurt in packaging costs and higher cost of food products will keep up the pressure on FMCG operating margins.
The latest decision by Indonesia to ban export of palm oil is likely to come as a big shock for India. It is also one of the most used cooking oils in the world. Indonesia has clamped down on palm oil exports due to soaring domestic inflation. However, ban may not sustain for too long. This could result in a spike in food inflation in India. Sunflower oil exports have almost stopped after the Black Sea embargo. For India, the option is to look at Malaysia, Thailand and other African economies, but supply is under strain overall.
BHEL has secured an order for six 6,000 HP Electric Locomotives from NTPC Ltd. This helps BHEL to expand its offerings to the rolling stock business also. The BHEL electric locomotives are eco-friendly and are low on carbon emissions. BHEL will manufacture these locomotives at its Jhansi facility while the Bengaluru unit will supply the IGBT-based propulsion equipment. BHEL Bhopal plant will supply the traction motors for the locomotives. BHEL has supplied more than 450 electric locomotives to Indian Railways till date.