Adani Group plans to invest $50-70 billion in the renewable energy value chain. This will happen over the next 10 years, as announced by Gautam Adani in the side-lines of the UK Investment Summit. The Adani group is betting big on becoming the world’s largest producers of green hydrogen. All companies in the Adani group have already made this green commitment. Adani also added that over 70% of planned capex until 2030 will be in sustainable technologies. Adani plans the world’s largest renewable portfolio by 2030.
Hindustan Unilever announced stellar numbers for the Sep-21 quarter. However, while broad recovery has helped, it has also issued warnings of inflationary challenges. While income rose by 9%, the costs rose by 12%, showing a clear sign of producer inflation hitting costs. HUL expects these inflationary trends to persist for a longer period. The inflation warning led to the stock slipping 4% despite good results. During the quarter, certain specific cost heads like energy, raw materials and freight saw a sharp upward spike.
Just a week after Reliance Retail Ventures announced purchase of stake in the Manish Malhotra couture, it has announced a 52% stake in the Ritu Kumar line, another premium upmarket brand in India. The value of the transaction was not disclosed. Reliance also took over the complete 35% stake of Everstone as part of the deal. Ritu Kumar conducts its business under 4 fashion brand portfolios. This is part of the effort by Reliance Retail to build a complete Omnichannel platform to cover both proprietary and marque brands.
In a first of its kind, Axis Asset Management and Inversion Advisory Services will partner on their strengths to invest in underperforming companies. They will jointly raise Rs.3,500 crore under the AIF registration of Axis AMC, which will be the investment manager. Inversion will provide the support to buy companies with its team of functional and industry experts. The main aim of the fund is to buy controlling stakes in pre-stressed, stressed, distressed and underperforming assets. Turnaround investing is the next big story.
The $2.4 billion purchase of Air India may give Tata Sons the access to valuable flying rights and landing slots but will come with its own set of challenges. The integration alone could cost Tata Sons $1 billion and a plethora of problems will have to be first addressed. Financial troubles mounted for Air India since the mid-2000s and after merging with Indian Airlines in 2007, Air India has been consistently making losses each year. Air India had 19.3% of global air travel before the pandemic, which Tatas will look to leverage.
Moody’s upgraded the outlook on Indian banking system from “Negative” to “Stable” in the midst of the asset quality stabilizing and enhanced capital buffers. Moody’s has also pointed out that the improving operating environment should support asset quality. As a result the effective credit cost is expected to come down. Moody’s also added that while the quality of retail loans had deteriorated, the quality of corporate loans had improved. Capital adequacy sharply improved from 9.9% in FY19 to 11.1% in FY21.
India’s largest capital cycle company, Larsen & Toubro, is on a virtual roll. In fact, L&T, LTI and LTTS, all hit their respective highs on the back of positive corporate developments. Both LTI and LTTS reported strong quarterly numbers and that has favourably impacted stock prices. L&T, meanwhile, scaled a record high of Rs.1,854 as it emerged as the lowest bidder for the first three buildings of Common Central Secretariat under Central Vista redevelopment project at Rs.3,141 crore. L&T continues to have a robust order book.
In a surprising move, Nomura has downgraded Reliance Industries citing rich valuations. The stock has been in the midst of a dream run and this downgrade is likely to pause investors. This is all the more a surprise considering that results are expected on Friday. Interestingly, this is the first time in many years that Nomura has downgraded the RIL target. Nomura has not problems with the business, but just feels there is too much front in valuations. Since the end of July, Reliance stock has gained more than 30%.