BQuick On Jan. 30: Top 10 Stories In Under 10 Minutes
This is a roundup of the top stories of the day.
1. Chanda Kochhar ‘Terminated’ For Violating ICICI Bank’s Code Of Conduct
An investigation led by retired Supreme Court judge BN Srikrishna into alleged quid pro quo in ICICI Bank Ltd.’s loans to Videocon Group found that former Managing Director and Chief Executive Officer Chanda Kochhar violated the lender’s code of conduct.
The findings prompted the bank to treat Kochhar’s resignation as a termination. The bank will revoke all her existing and future entitlements and claw back all bonuses paid to her from April 2009 until March 2018.
In a release on Wednesday, the bank said:
- Chanda Kochhar was in violation of the ICICI Bank ‘Code of Conduct’ and its framework for dealing with conflict of interest and fiduciary duties.
- The Enquiry Report also concluded that she failed to discharge her fiduciary duty to recuse herself to avoid any conflict of interest.
- The Bank’s processes were rendered ineffective by her approach to such disclosures and avoidance of conflict.
- The bank, however, noted that “there are no implications of the enquiry report on its published financial statements” for April 2009 to March 2018.
The bank said it does not intend to investigate the matter any further.
2. Earnings: ICICI Bank, Bajaj Auto, IOC, NTPC
ICICI Bank Ltd.'s net profit fell in the December-ended quarter as the bank made larger provisions.
- Net interest income rose 20.5 percent year-on-year to Rs 6,875.2 crore.
- Net profit fell 2.75 percent to Rs 1,604.9 crore.
- GNPA at 7.75 percent versus 8.54 percent, quarter-on-quarter.
- NNPA at 2.58 percent versus 3.65 percent.
Provisions grew 19 percent.
Bajaj Auto Ltd.’s profit rose for the fifth straight quarter surpassing estimates even as the margin contracted.
- Revenues up 16 percent year-on-year to Rs 7,409 crore.
- Net profit grew 16 percent to Rs 1,102 crore.
- Ebitda fell 7 percent to Rs 1,156 crore.
- Margin fell to 15.6 percent versus 19.5 percent.
The company sold over 10 lakh units between October and December.
Indian Oil Corporation Ltd. reported a surprise profit in the third quarter despite lower gross refining margin and sharp fall in crude oil prices.
- Net profit stood at Rs 717 crore in the October-December period, a 78 percent fall sequentially.
- Revenue rose 6 percent to Rs 1,39,967 crore.
- Ebitda fell 47 percent to Rs 3,609 crore.
- Ebitda margins dropped to 2.6 percent from 5.1 percent
Gross refining margin, or the earnings per barrel of oil, fell to $1.15 per barrel.
NTPC Ltd.’s quarterly net profit remained flat.
- The bottom line rose 1 percent year-on-year to Rs 2,385.4 crore in the quarter ended December.
- Revenue rose 16 percent to Rs 24,120.4 crore.
- Earnings before interest, tax, depreciation and amortisation grew 24.7 percent to Rs 6,579.9 crore.
- Margin expanded 190 basis points to 27.3 percent during the period.
NTPC also announced a bonus issue and an interim dividend.
3. Nifty Flat, U.S. Stocks Rise
Indian equity benchmarks were little changed in a highly volatile session as gains in ICICI Bank Ltd., Axis Bank Ltd. and State Bank of India were offset by losses in HDFC twins, Reliance Industries Ltd. and Kotak Mahindra Bank Ltd.
- The S&P BSE Sensex was unchanged 35,591.25.
- NSE Nifty 50 Index was flat at 10,652.
- Eleven of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Metal Index’s 1.9 percent gain.
- On the flipside, S&P BSE Telecom Index was top loser down 1.3 percent.
Follow the day’s trading action here.
U.S. equities climbed after the latest batch of corporate earnings bolstered confidence in the economy as investors awaited the Federal Reserve rate decision and any developments on trade.
- The Nasdaq 100’s gains topped 1 percent as technology shares rallied after Apple Inc. posted results that topped analyst estimates, while a positive report from Boeing Co. helped boost industrial stocks.
- Iron ore surged after Brazil’s Vale SA, the world’s largest producer, outlined plans to cut output after a deadly dam breach.
- The Stoxx Europe 600 Index’s gains were led by U.K. stocks after lawmakers voted to renegotiate Brexit.
- Treasury yields ticked up and the dollar strengthened.
- West Texas Intermediate crude rose 1 percent to $53.86 a barrel.
Get your daily dose of global markets here.
4. Dr. Reddy’s Plan For U.S. Is At Risk
The uncertainty over the U.S. government shutdown may affect Dr. Reddy’s Laboratories Ltd.’s plans to gain first-mover advantage in the country’s market for generics of the opioid treatment drug Suboxone Film.
- India’s third-largest drugmaker by market value was betting on sales of copies of Indivior Plc.’s blockbuster drug to revive growth in the U.S.—its largest market.
- The opportunity now seems less attractive with other companies getting approval to sell the drug—brand sales for which is estimated at $900 million—and the shutdown delaying verdict on Indivior’s petition contesting the permit to Dr. Reddy’s.
- Analysts had estimated a sales opportunity of $100 million for Dr. Reddy’s assuming limited competition.
Here’s why Dr. Reddy’s profitability in the market was already in danger.
5. Airtel’s Africa Unit Gets $200 Million Boost
Bharti Airtel Ltd. will raise $200 million, or Rs 1,400 crore, from Qatar Investment Authority to pare debt at its Africa unit as it plans to list the business in the continent.
- This is the second fund infusion by India’s No. 2 telecom operator in its profitable Africa business which has a debt of close to $3.75 billion.
- Billionaire Sunil Mittal-controlled carrier recently infused close to $1.25 billion by selling stake to Warburg Pincus, Temasek, Singtel, SoftBank Group International and two others.
- Based on the equity value of the earlier infusion, QIA should own a little more than 4 percent stake in the African unit, according to BloombergQuint’s calculation.
- Bharti Airtel plans to list its African unit at a time it’s locked in a bruising tariff war in India, the world’s second-largest telecom market.
Here’s how Bharti Airtel’s Africa unit has performed.
6. Indian Oil To Raise Debt
Indian Oil Corporation Ltd. said it will raise $400-million (Rs 2,840 crore) debt, according to Bloomberg, days after it announced a dividend and its first-ever buyback.
- That comes even as India’s largest oil refiner has a total debt of more than Rs 60,000 crore as of December against a cash balance of close to Rs 10,000 crore.
- BloombergQuint’s calculations showed that the company’s decision to reward shareholders will increase its debt pile.
- But Indian Oil doesn’t see that as a concern.
Even today our borrowing is close to Rs 60,000 crore but considering our investment and capital expenditure plans, this borrowing is not very high.Sanjeev Singh, Chairman, IOC
In December, IOC announced its biggest-ever payout to shareholders in 17 years.
7. The Value Of Dalmia Bharat Stock After Group Rejig
Dalmia Bharat Ltd. rejigged the group structure to bring all its cement assets under one entity, and the combined firm is expected to re-list soon.
- Dalmia Bharat is expected to list between Jan. 28 and 31, Puneet Dalmia, group managing director, had told BloombergQuint in Davos, Switzerland on the sidelines of the World Economic Forum.
- The consolidated structure will add 100 basis points to Ebitda margin, he said.
- Dalmia Bharat’s share traded 2.1 times the OCL India’s stock in the last year before the delisting.
- Based on that, the market capitalisation of the combined entity should be Rs 22,763 crore, according to BloombergQuint’s calculations.
That means each share is worth Rs 1,185.
8. India Showed Signs Of Slowing In December
India’s economic activity showed signs of slowing in December, belying hopes of a quick turnaround suggested by the previous month’s data.
- A gauge measuring overall activity, or “animal spirits”, moved two notches lower in December from a month ago, underpinning a view that India’s growth has slowed and it might need a dose of fiscal and monetary stimulus to boost demand.
- The indicator, compiled by Bloomberg, reflects a pullback in new orders and business activity, as well as easing inflationary pressures.
- While overall demand remained subdued, expectations of a financial package for farmers in the government’s Feb. 1 interim budget is stoking hopes for a revival in rural consumption.
Here’s a breakdown of the dashboard.
9. Modi And Your Money
Nearly five years after Narendra Modi promised “Achche Din”, his government prepares to present its last budget. While it’s an interim budget, there’s speculation that the government will use the opportunity to appease the salaried taxpayer ahead of the general election.
- The number of such taxpayers stood at 2.3 crore in 2016-17, according to data released by the Central Board of Direct Taxes.
- While several measures have been announced in the past four budgets for these taxpayers, are they better off today than they were when Prime Minister Modi came to power?
Here’s how taxes changed in the last five years.
10. Yes, Universal Basic Income. No, Targeted Income Schemes.
The problem with confining the guaranteed income only to the poor is that in India finding the real poor has always been a tricky administrative issue, riddled with malfeasance, writes Pranab Bardhan, one of the earliest proponents of a universal basic income.
- Half of those who are below the official poverty line do not have the BPL card, while about one-third of the non-poor have the card.
- A programme that's only for farmers or the rural sector may be unfair to the millions of urban poor.
- The Telangana programme is for income support per acre, and hence highly regressive, as larger farmers get more.
A UBI can be funded without touching any of the current welfare programmes.