Asian Paints rallied 7% and scaled the Rs.3 trillion market cap after reporting stellar results for the Jun-21 quarter. Net profits were up 162% yoy at Rs.574 crore on the back of strong operating performance and greater focus on home solutions. Revenues were up 91% at Rs.5,585 crore, although you can attribute that to a favourably low base in Jun-20. Decorative paint volumes more than doubled on revenge spending and so did the revenues from industrial paints and home improvement. Input cost spikes were passed on.
Nuvoco Vistas Corporation, part of Karsanbhai Patel’s Nirma Group, got SEBI approval for its Rs.5,000 crore IPO. It may be recollected that Nirma had voluntarily delisted in 2012. The last new cement company to list was Burnpur Cement in 2007, so this will be a big even for cement sector. The IPO will consist of Rs.1,500 crore of fresh issue and Rs.3,500 crore of OFS. The fresh issue proceeds will be used to repay debt worth Rs.1,350 crore. Nuvoco is the fifth largest cement player in India by capacity with 3 verticals.
Bajaj Finance reported 4.2% growth in net profits at Rs.1,002 crore but, as expected, the asset quality did come under stress resulting in elevated provisions. Interest income for Jun-21 quarter was up 8% at Rs.4,489 crore but loan loss provisions were also higher by 3.8% at Rs.1,750 crore. Due to COVID 2.0 stress, Bajaj Finance took accelerated write-offs worth Rs.113 crore. Gross NPAs increased by 156 basis points to 2.96% while net NPAs were up 96 bps at 1.46%. In Q1, Bajaj Finance crossed the 5 crore customer mark.
ADB downgraded India’s economic growth forecast for FY22 to 10% from its previous forecast of 11% on account of the likely lag effect of COVID 2.0. ADB has also raised its inflation forecast for the entire Asian region by 10 bps to 2.40% due to a steep spike in oil and other commodity prices. However, the inflation forecast for South Asia, including India, has been raised by 30 bps to 5.8%. However, ADB has upgraded the GDP growth forecast for FY23 from 7% to 7.5%, as the effect of total vaccination is likely to show up.
With the roaring success of the ICICI Pru Flexicap Fund NFO, there seems to be a string of AMCs queueing up to launch Flexicap NFOs. It looks like the newly created flexi cap category is suddenly attracting interest due to the recent outperformance by mid-cap and small cap indices. The ICICI Pru Flexicap NFO collected a record Rs.10,200 crore, the highest ever in any Indian NFO. Nippon and ITI MF are lined up for Flexicap NFO launches. As of 30-Jun, flexi cap had AUM of Rs.1.76 trillion, next only to the large cap category.
If all goes well, then we could soon see pension funds investing in IPOs. To begin with, the pension funds will only be allowed to invest in the IPOs of the NSE 200 companies or those available in the F&O segment with market cap in excess of Rs.5,000 crore. Pension funds can invest in new issues, follow-on offers and also in OFS. It is also proposed to allow people to withdraw their pensions via systematic withdrawal plans or SWPs. It is also proposed that the PFRDA would begin to regulate superannuation funds also.
The Zomato IPO appears to have had a rub-off effect on Swiggy valuations too. Based on its latest fundraising of $1.25 billion, Swiggy has an indicative valuation of $5.5 billion. Apart from Softbank, Accel Partners and Wellington also participated in the current round. Zomato had recently got a valuation of $8 billion in its IPO. However, Swiggy needs a war chest to counter competition from Zomato, Amazon, Dunzo and Ola Foods. Food services is estimated to be a $65 billion market in India and growing at 9%.
Indian Oil Company or IOCL will India’s first “green hydrogen” plant at its Mathura refinery. The idea of this move is to prepare for a future catering to demand for oil and cleaner forms of energy. Over next 10 years, IOC has a clear plan to continue the core focus on refining but also make bigger inroads into petchem, hydrogen and electric mobility. Green hydrogen is the ultimate clean hydrogen resource as it even uses renewable energy to create hydrogen fuel. Mathura is close to the TTZ (Taj Trapezium Zone).