BQuick On Jan. 17: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Reliance's Jio Advantage
Reliance Industries Ltd.’s profit rose for the sixteenth straight quarter even as relatively softer crude prices kept refining margin lower.
- Standalone profit rose 0.8 percent to Rs 8,928 crore.
- Net revenue rose 4.1 percent to Rs 1 lakh crore.
- Operating profit fell 2.6 percent to Rs 14,507 crore.
- Operating margin contracted 100 basis points to 14.5 percent.
- The gross refining margin declined to $8.8 per barrel from $9.5 earlier, falling for the fifth straight quarter.
Here’s more on Ambani’s ambitions for Reliance Industries.
Reliance Jio Infocomm Ltd.’s profit rose in the December-ended quarter aided by growing subscriber base.
- Net profit of the telecom operator rose 22 percent sequentially to Rs 831 crore.
- The company’s subscriber base breached the 280-million mark during the quarter.
- Ebitda margin rose to 39.03 percent.
ARPU, though, fell for the fifth straight quarter.
2. HUL Delivers Double Digit Volume Growth...Again
Hindustan Unilever Ltd.’s quarterly profit rose at its slowest pace in over a year, even as it delivered double digit volume growth for the fifth straight quarter.
- Net profit rose 9 percent year-on-year to Rs 1,444 crore.
- Bottom line was impacted as HUL paid taxes worth Rs 510 crore during the period compared with Rs 297 crore a year ago.
- Revenue rose 11.3 percent on a yearly basis to Rs 9,558 crore
Growth was led by HUL’s home-care segment.
3. Why Did Hubtown Sell, Buy And Sell The Same Company?
It’s not unusual for real estate companies to transact in land and property, but when a developer acquires an asset and sells it within 10 days, that raises eyebrows.
- Mumbai-based public listed developer Hubtown Ltd. (erstwhile Ackruti City Ltd.) acquired a 51 percent stake in a firm, E Commerce Magnum Solution Pvt. Ltd., for Rs 48.19 crore in cash on Sept. 17, 2018.
- According to filings with the Registrar of Companies, E Commerce Magnum had assets of Rs 90.28 crore, which included unfinished developments worth Rs 85.14 crore as on March 2017.
- But then 10 days after purchasing it, Hubtown sold the company to another Mumbai-based developer Radius Infra Holdings Pvt. Ltd. and others at a loss of Rs 23.19 crore, according to the company’s stock exchange filings.
- That suggests in 10 days E Commerce Magnum somehow lost half its value. Worst still, the transaction, which took place towards the end of second quarter, was not recorded in the profit and loss statement of the company in that quarter.
As BloombergQuint dug deeper, the story got more curious.
4. One Sector Will Rescue Q3: UBS
The street expects Nifty earnings growth of 9 percent year-on-year for this quarter. Financials are expected to be the big driver, excluding which earnings will decline by 5 percent year-on-year. In previous quarters, global commodities supported Nifty earnings growth, however this time around they are likely to be a drag, writes Gautam Chhaochharia of UBS Securities.
- Volatile crude/currency movements and liquidity issues will likely result in divergent sectoral trends this quarter.
- For an outlook beyond this quarter and politics, a broad-based earnings recovery is still unlikely, though growth will be back in double-digits.
- But that’s more due to a normalisation in financial firms’ earnings.
Here’s how UBS expects each sector to fare in Q3.
5. Indian Markets Rise For Third Day
Indian equity benchmarks rose for third day in a row but capped gains amid volatility as investors awaited earnings from two major companies, Reliance Industries Ltd. and Hindustan Unilever Ltd.
- The S&P BSE Sensex rose 0.15 percent or 53 points to 36,374.
- The NSE Nifty 50 Index climbed 0.14 percent or 15 points to 10,905.
- Eleven of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Realty Index’s 1.1 percent gain.
- On the flipside, S&P BSE Healthcare Index was top loser, down 1 percent.
Follow the day’s trading action here.
U.S. stocks fluctuated as a batch of disappointing earnings countered data showing strength in the U.S. economy.
- The S&P 500 traded just below its average price over the past 50 days, a level it hasn’t breached since early December.
- Healthcare and tech companies led gains, while Morgan Stanley declined following a weak quarterly report, pulling down banking shares.
- The Bloomberg Dollar Spot Index gained 0.1 percent to the highest in more than a week.
- The 10-year Treasury yield advanced for the fourth straight day to 2.73 percent after U.S. jobless claims fell to a five-week low and a gauge of factory production blew away analyst expectations.
- West Texas Intermediate crude fell 1.4 percent to $51.57 a barrel.
Get your daily dose of global markets here.
6. Etihad Vs Goyal!
After a meeting that lasted through most of the afternoon and evening on Wednesday, lenders to Jet Airways Ltd. are faced with two options — go with a plan put forth by promoter Naresh Goyal or back the minority investor Etihad Airways.
- Founder Chairman Goyal has proposed to inject Rs 700 crore in the cash-strapped airline, said two people familiar with the discussions held on Wednesday.
- By bringing in these funds, Goyal is seeking to retain control and his board position in the full-service carrier, these people said. Both spoke on condition of anonymity since talks are confidential.
- Etihad Airways, which bought 24 percent in Jet Airways in 2013, has a different plan. They are willing to inject between Rs 800-1,000 crore along with partners but want Goyal off the board, said the two people quoted above.
But neither option is a slam dunk yet.
7. Adani Closes In On A Power Plant
Adani Power Ltd. is close to acquiring the GMR Chhattisgarh power project under the Samadhan Scheme of State Bank of India, two bankers in the know told BloombergQuint on condition of anonymity.
- A majority of the lenders involved have given their approval to sell the asset, the bankers quoted above said.
- As per its February 2018 restructuring guidelines, the Reserve Bank of India requires all lenders to approve a restructuring or resolution scheme before it can be implemented.
- The lenders will take a 53 percent haircut to the Rs 8,000 crore worth of dues owed to them.
- The deal, if closed, will be a small step forward in the slow process for resolving Rs 1.7 lakh crore in stressed power assets.
The deal is being struct under a scheme SBI had created to deal with stressed power assets.
8. Edelweiss’ Rs 9,200-Crore Bad Loan Bet
Edelweiss Financial Services Ltd. raised as much as Rs 9,200 crore ($1.3 billion) from investors including insurance companies and pension funds as it seeks to profit from an unprecedented bad-loan clean up in the nation’s financial system.
- The company will use the funds, which makes it the largest India dedicated alternative-investment unit, to buy and turn around stressed assets with “viable business models and potential of generating cash flows,” an emailed statement from Edelweiss showed on Thursday.
- The Mumbai-based company already manages stressed loans of more than Rs 54,000 crore, according to the statement.
Here’s why it thinks stressed assets are an “evergreen opportunity”.
9. Illegal Miners To Face GST Scrutiny
The tax authorities have partnered with a monitoring committee that’s tasked with the sale of illegal iron ore seized in Karnataka to check indirect tax compliance in transaction of the commodity.
- The Central Board of Indirect Taxes and Customs plans to verify whether the export, purchase or sale of illegally mined minerals evaded payment of central excise, customs duty and service tax in the pre-goods and services tax regime, a senior government official told BloombergQuint on the condition of anonymity.
- The action relates to a case filed in the Supreme Court in 2009 to curb illegal iron ore mining in Karnataka.
- The central government isn’t a party to the case but is examining the matter since it involves revenue related to the Goods and Services Act, said the official who isn’t authorised to speak to the media.
Firms may also be penalised for illegal extraction.
10. Birbhum’s Paddy Growers Battle The Same Old Pain
West Bengal’s water-scarce Birbhum region is battling ghosts that have haunted India's agriculture for decades, if not more.
- More than 90 percent of the cropped area in Birbhum comprises small farms of up to 2 hectares, according to the local administration’s website. That’s the legacy of the most successful distribution of land in India in the 1970s in West Bengal.
- With aquifers depleting, nearly all depend on rains for irrigation—a cause for uncertainty in agriculture incomes across much of India as, according to the Economic Survey, two-thirds of farmland is watered by monsoon.
- It’s not just the small farmers that struggle. At the nearby Belati Panchayat, villagers with larger land holdings BloombergQuint spoke to also largely depend on rains. Only a few can afford the costs of using pumps to draw groundwater.
- Farmers said they still to see the benefit of the newly announced schemes. Awareness is low.
But lack of irrigation is only one of their many worries.