BQuick On April 18: Top 10 Stories In Under 10 Minutes
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This is a roundup of the day’s top stories in brief.
1. Reliance’s Underwhelming Numbers
Reliance Industries Ltd.’s profit fell for the first time in four years on lower gross refining and petrochemicals margin.
- The standalone profit fell 4.2 percent sequentially to Rs 8,556 crore in the quarter-ended March, the first decline in 17 quarters.
- Revenue fell 16.5 percent over the previous quarter to Rs 83,597 crore.
- Gross refining margin—the amount a refiner earns by refining one barrel of crude oil— fell to $8.2 per barrel from $8.8 in the previous quarter.
Petrochemicals revenue also dipped for the first time in eight quarters.
Reliance Jio Infocomm Ltd.’s quarterly profit remained flat after its average revenue per user fell more than expected as the telecom operator continues to offer the cheapest tariffs to widen customer base.
- Net profit rose 1.1 percent over the previous quarter to Rs 840 crore.
- Revenue rose 7 percent to Rs 11,106 crore.
- Average revenue per user fell to Rs 126 per month.
Jio has now acquired over 30 crore customers, fast closing in on Airtel.
2. Jet To Go The Debt Recovery Tribunal Way?
Lenders to Jet Airways Ltd. will likely stay away from insolvency proceedings if no buyer emerges for the airline before the deadline ends on May 10, said two people directly familiar with the matter.
- Instead, lenders may approach the debt recovery tribunal in an attempt to recover at least part of the Rs 10,000 crore debt.
- State Bank of India and Punjab National Bank are the largest lenders to the airline with an exposure of about Rs 2,000 crore each.
- Discussions about a possible plan-B have begun after Jet Airways decided to temporarily suspend domestic and international flight operations starting Thursday.
All hopes now rest on the bidding process that it set to close on May 10.
3. GVK’s Debt Reduction Plan
GVK Power and Infrastructure Ltd.'s airport subsidiaries will raise capital by issuing new shares worth 49 percent stake to Abu Dhabi Investment Authority and National Investment and Infrastructure Fund.
- The two subsidiaries—GVK Airports Developers Ltd. and GVK Airport Holdings Ltd. have signed a term sheet and exclusivity agreement with the two new investors.
- The transaction is subject to due diligence by the two investors.
Our future focus will be on delivering Navi Mumbai International Airport, successfully monetising Mumbai airport’s real estate and building a strong airports business at GVK.GVK Reddy, Chairman, GVK
The stake sale will help reduce debt of up to Rs 5,750 crore.
4. MPC Minutes: Hawks Vs Doves
India’s six-member Monetary Policy Committee differed on the downside risks to the country’s growth prospects, leading to a split vote for a second consecutive rate cut at its April meeting.
- Four committee members, including Reserve Bank of India Governor Shaktikanta Das, felt that there are increasing signs of weakness in growth and investment, prompting a vote in favor of a rate cut.
- The remaining two members, including RBI Deputy Governor Viral Acharya, felt that interest rates were at an appropriate level given the growth-inflation dynamics, and didn’t require further tinkering.
- While Das called for “vigil” on the government’s finances, he did not see that as enough cause to keep rates unchanged.
- In contrast, Acharya, deputy governor in-charge of monetary policy, wrote that the level of interest rates is “just right” for achieving the 4 percent inflation target over the medium term.
Here’s a look at what each MPC member thought about the rate cut.
5. Sensex, Nifty Fall From Record Highs
Indian equity benchmarks ended lower after hitting new lifetime highs in today’s trade.
- The S&P BSE Sensex ended 0.34 percent lower at 39,140.
- The NSE Nifty 50 fell 0.29 percent to 11,752.
- The broader market index represented by the NSE Nifty 500 Index ended 0.44 percent lower.
- All sectoral gauges compiled by the NSE ended lower.
Follow the day’s trading action here.
U.S. stocks were mostly lower ahead of the holiday weekend as weakness in health-care shares again dragged on major indexes.
- The S&P 500 Index slipped below 2,900 as continued concern over medical policy weighed on shares of insurers and hospitals.
- Equities rose earlier as data showed retail sales jumped by the most since September 2017 and unemployment claims fell.
- The yields on 10-year Treasuries and European bonds slipped, but pared some of the move after the U.S. data.
- The euro stayed lower following disappointing German and euro-area factory numbers.
- Brent crude rose 0.4 percent to $71.88 a barrel.
Get your daily fix of global markets here.
6. S Naren's Three Principles
The top fund manager at India’s second-largest mutual fund considers investment in debt better than buying stocks of some consumer companies.
- When consumer stocks were trading at 35 times their earnings, S Naren, executive director and chief investment officer at ICICI Prudential Asset Management Company, considered them expensive. But the valuations rose to 50-60 times.
- Interest-rate arbitrage helped consumer stocks in 2008 and the valuations are so expensive now that there could be a time correction, Naren said on BQ Edge, BloombergQuint’s on-ground initiative.
Naren’s three key principles for choosing an undervalued class encapsulate this approach.
7. M&M, Ford Tie Up To Make Mid-Sized SUV
Mahindra & Mahindra Ltd. and Ford India Pvt. Ltd. agreed to jointly develop a mid-sized sports utility vehicle.
- Ford will incur development costs of Rs 680 crore on the new C-SUV under a 10-year agreement, M&M said in an exchange filing.
- The vehicle will have a Mahindra platform and powertrain.
- Ford can utilise Mahindra’s extensive dealership network, while the maker of XUV 500 would benefit from product quality expertise and brand name of the U.S. auto major, said Ankit Merchant, auto analyst at SMC Institutional Equities.
Is this an attempt by M&M to regain its lost crown in SUV manufacturing?
8. Domestic Pharma Growth Slows
The sales of domestic pharmaceutical companies in March grew at the slowest pace in four months because of falling demand for drugs used to treat seasonal ailments like flu and cough as the winter season came to an end.
- Sales growth of domestic pharma firms slowed to 6.4 percent year-on-year in March compared to 8.9 percent in February 2019.
- The sales fell as companies rationalised their portfolio to improve profitability, Alankar Garude, pharma analyst at Macquarie, said.
- The chronic segment grew at 13 percent, cushioning the overall growth in March.
- Therapies like anti-diabetic, dermatology, vitamins and cardiology showed double-digit growth, therapies like gastro and anti-infectives lagged, according to IQVIA data shared by brokerages.
The industry grew at 10.5 percent for the financial year 2018-19.
9. State Of Play: Advantage Modi-Nitish Courtesy Lenient Lalu?
What might prove to be Lalu and Tejashwi Yadav’s undoing may be the decision to give too many seats to weak partners, writes Amitabh Tiwari.
- This is the lowest number of seats which RJD is contesting since its formation.
- Upendra Kushwaha and Jitan Ram Manjhi are not undisputed leaders of their communities.
- Sharad Yadav is more of a liability than an asset.
As a result, does the NDA have an easy ride in as many as 10 seats?
10. India’s TikTok Addiction
Anagha K, flanked by her parents, dances to a song from the blockbuster 1993 Tamil movie The Gentleman. With 1.8 million likes, the 15-second video is among the most-watched on TikTok.
- She only represents the fun side of cheap-data fuelled internet explosion in the country where more than half the 1.3-billion population is less than 25 years in age.
- Tiktok has run into trouble as users also upload obscene clips or dangerous stunt videos that have killed at least two people.
- The app, operated by the world’s most-valuable startup Bytedance, deleted six million videos but still faces a ban.
- TikTok, which said it has 120 million active users in India, has been removed from Apple and Google app stores.
The alarm caused by TikTok, which also drives engagement on other apps, is unprecedented. That’s because its popularity is growing like wildfire.