According to CRISIL estimates, OPMs of Indian companies would drop by 100-120 bps due to a sharp surge in commodity prices. While price hikes would help the top line, the operating cost spikes would be too hot to handle. The drop was also likely to be about 70 bps on a sequential basis. Interestingly, the margin fall would be led by the software companies while consumer discretionary and pharma would also see margin contraction of more than 100 bps. It would not be feasible to pass on the entire input cost spike.
A day after Vodafone Idea agreed to give the government 35.8% equity in lieu of the interest on AGR charges payable, Tata Teleservices Maharashtra has also opted for conversion. It will give approximately 9.5% stake to the government against its interest dues. Both companies had already opted for moratorium on AGR charges. Currently, the promoters hold about 74.36% in Tata Tele. While the stock price was at Rs.291, the deal will happen at Rs.41, which is the 6 month average price. Bharti had refused conversion.
The stock of Policybazaar parent, PB Fintech, may have had a good listing, but it is also sharply down along with all the digital plays. It recent fell below its previous low of Rs.884 on heavy selling pressure. The stock of PB Fintech is already down 25% in the last one month. From its peak price of Rs.1,470, the stock has corrected nearly 41%, although the fall is still not as bad as CarTrade or Paytm. On Monday it had given out good numbers with its originated insurance premium up 67% at Rs.1,786 crore in the Dec-21 quarter.
The Madras High Court dismissed SpiceJet’s plea against the order for winding up operations due to non-payment of dues. This pertained to dues of $24 million to a Swiss MRO service provider, SR Technics. The winding up order came on a petition filed by Credit Suisse AG, to whom SR Technics had pledged these dues. SpiceJet lawyers have alleged that SR Technics did not have valid authorisations from DGCA. This could be a sentiment dampener at a time when Indian airlines reel under losses following the COVID-19.
In aviation, it is not just the airlines but even the airport companies are in a spot of bother. The stress is evident from the bonds of Indian airport operators dropping to their lowest in 3 months as a surge in COVID-19 cases has dented demand for air travel. Both the 6.45% 2029 note issued by DIAL and the 4.75% 2026 issue issued by GMR Hyderabad are at a 3-month low. The stress is visible with big names like Vistara and Indigo cutting capacity in sync with travel restrictions. The tighter quarantine norms are also hurting.
The stock of Paytm has almost halved from its IPO issue price of Rs.2,150, with the latest pressure coming from another price downgrade by Macquarie to Rs.900. Most domestic institutions continue to exit their anchor allocations due to internal pressure. However, top line numbers have been quite encouraging. Paytm reported doubling of gross merchandise value (GMV) at Rs.2.50 trillion for Q3. Investors are also worried that the payments business, accounting for 70%, will be at risk if the price caps are implemented.
UBS Group, which has traditionally been a wealth manager for the rich, may be slowly changing tack. It expects its next phase of growth led by the not-as-rich with cheaper digital advice. UBS apparently has access to half of all the billionaires in the world and manages nearly $3.2 trillion of invested assets. It is now going down the wealth curve to target people would can be targeted with digital advisory model. This model works to perfection in Europe, and this experiment in the US pits it against Fidelity and Schwab.
Rupeek Fintech, a gold lending start-up, has just raised $34 million to accelerate its efforts to help Indian households monetize its $1.50 trillion held as gold. The participating investors include Lightbox, GGV and Bertelsmann. Rupeek is not yet a Unicorn with valuations at around $634 million. Rupeek uses technology to assess gold offered as collateral and crunches data to issue loans with monthly rates ranging from 0.49% to 1.5%. The assessment is done at the doorstep before the actual process is done electronically.