BQuick On Nov. 13: Top 10 News Stories In Under 10 Minutes
This is a roundup of the top stories of the day.
1. Binny Bansal Quits Flipkart
Flipkart Group Chief Executive Officer Binny Bansal quit following an investigation into alleged “serious personal misconduct” even as he denied the allegation.
- “His decision follows an independent investigation done on behalf of Flipkart and Walmart into an allegation of serious personal misconduct,” Walmart Inc. said in a press statement.
- The statement added that Bansal "strongly denies: the allegation. Yet, Flipkart said it had the responsibility to ensure a through investigation.
- Walmart said while the investigation “did not find evidence to corroborate the complainant’s assertions against Bansal, it did reveal other lapses in judgement, particularly a lack of transparency, related to how Binny responded to the situation. Because of this, we have accepted his decision to resign.”
2. Earnings: Tata Steel, Sun Pharma
Tata Steel Ltd.’s profit for the September-ended quarter surpassed estimates owing to the inclusion of Bhushan Steel and its financials into its books from the July-September period.
- Net profit for the quarter stood at Rs 3,604.2 crore compared with last year’s Rs 976 crore. The results of the quarter are not comparable on a yearly basis owing to the inclusion of Bhushan Steel’s financials.
- The company also reported an exceptional gain of Rs 163.7 crore versus a Rs 44.65 crore loss in the year-ago period.
- Exceptional gain worth Rs 130 crore was attributed to liabilities that needn't be written back.
- Gains also stem from the sale of subsidiaries in joint venture in relation to its European operations
- The company’s volume rose 15 percent year-on-year to 7.42 million tonnes in the quarter.
Sun Pharmaceutical Industries Ltd. reported an unexpected loss for the quarter ended September due to a one-off anti-trust litigation provision.
- The company posted a net loss of Rs 219 crore against the Rs 912 crore profit reported in the year-ago period.
- The drugmaker posted a one-time loss of Rs 1,217 crore for the estimated settlement amount payable to all the remaining plaintiffs in an antitrust litigation related to sleep disorder drug Modafinil in the U.S.
- Revenue in the July-September period rose 4 percent to Rs 6,938 crore year-on-year—lower than the Rs 7,600 crore estimated by analysts.
3. New SEBI Guidelines For Ratings Agencies
In an effort to enhance disclosures made by credit rating agencies and ensure that investors are better informed, the Securities and Exchange Board of India has issued guidelines covering parent company support, liquidity parameters, material events and the historical performance of credit rating agencies.
In a circular, SEBI said a credit rating agency’s press release on a rating action must now also include details on group support and consolidation.
- List name of parent/government entities if rating factors in their support towards debt servicing and explain rationale.
- List all subsidiaries or groups consolidated to arrive at a rating and detail proportion and rational for consolidation.
4. Indian Markets Close Higher After Volatile Session
Indian equity benchmarks rallied in the afternoon after a topsy-turvy session, erasing most of yesterday’s loss.
- The S&P BSE Sensex Index ended 331 points or 0.95 percent higher at 35,144.
- The NSE Nifty 50 Index rose 100 points or 0.96 percent higher at 10,582.
- Seven out of the 11 sectoral gauges compiled by NSE advanced, led by the NSE Nifty Private Bank index's 1.2 percent gain.
- On the flipside, the NSE Nifty Pharma index was the top sectoral loser, down 1.4 percent.
U.S. stocks recouped some of the previous session’s losses on hopes for progress in the American-Chinese trade dispute, even as Asian shares dropped overall.
- The S&P 500 Index opened higher Tuesday, led by technology shares.
- The market mood was buoyed after a report that China’s Vice Premier Liu He will visit the U.S. to pave the way for a meeting between the leaders of the two biggest economies later this month.
- The Bloomberg Dollar Spot Index dipped 0.1 percent.
- West Texas Intermediate crude fell 2.3 percent to $59.57 a barrel.
5. Tata Eyeing Jet Airways Stake?
Tata Group is conducting due diligence on Jet Airways India Ltd., as the conglomerate looks to expand its footprint in the country’s growing air travel sector by potentially buying a stake in the cash-strapped carrier, according to people familiar with the matter.
- The talks are still in their early stages and there’s no certainty they would result in a transaction, the people said, asking not to be identified discussing the private negotiations.
- A representative for Tata declined to comment, while a spokeswoman for Jet Airways said the information is “totally speculative.”
- A successful deal would lead to Tata’s third investment in the nation’s chronically cash-strapped aviation sector following the group’s two local joint ventures with Singapore Airlines Ltd. and AirAsia Bhd.
6. On Sale: Zee Entertainment Stake
Zee Entertainment Enterprises Ltd.’s promoters plan to sell half of their holding in India’s largest broadcaster.
- Essel Group appointed Goldman Sachs Securities (India) Ltd. as investment banker and U.S. and Europe-based LionTree as an international strategic adviser for the stake sale.
- The promoters, led by founder and Chairman Subhash Chandra, hold around 41.62 percent stake in Zee Entertainment.
- At the current market price, the sale will fetch Rs 8,756 crore.
7. Apollo Tyre’s Rebuff
Apollo Tyres Ltd. cut Chairman Onkar Kanwar and his son and Vice-Chairman Neeraj Kanwar’s pay after shareholders rejected Neeraj’s reappointment as managing director in a rare rebuff for a promoter in India.
- The Nominations and Remuneration Committee of the board of Apollo Tyres proposed a pay cut to lower their overall compensation by 30 percent in the financial year 2018-19 against the previous arrangement, the company said in a statement.
- The committee recommended a cap of 7.5 percent of the profit before tax for promoter pay, saying that it could be reduced over a period of time.
- The Kanwars have agreed to the pay cut.
Also read: Ashok Leyland’s Vinod Dasari To Step Down
8. HUL: Price Vs Grammage
The Directorate General of Anti-Profiteering said that Hindustan Unilever Ltd. profiteered to the extent of Rs 495 crore by not passing on the benefit of a reduced Goods and Services Tax rate to consumers, an official aware of the development told BloombergQuint.
- That’s more than three times the Rs 160 crore India’s largest consumer goods maker voluntarily deposited in a consumer welfare fund as the profiteered amount.
- The investigating agency’s calculation is significantly higher because the fast-moving consumer goods maker passed on part of the benefit to consumers by giving additional grammage for the same price, the official said.
- The directorate, citing the law, said in its findings that a cut in tax rate should be passed on as a “commensurate reduction in price”.
- The law doesn’t specify other offers that a company can provide instead of price reduction.
9. Eric Doesn’t Lie
In an interview to ANI, Dassault Aviation’s Chief Executive Officer Eric Trappier rubbished Congress President Rahul Gandhi’s allegations that he had lied about the details of the Dassault-Reliance joint venture for offset contracts in the Rafale Jet deal.
- “I don’t lie. The truth I declared before and the statements I made are true. I don't have a reputation for lying. In my position as CEO, you don't lie,” Trappier said responding to Rahul Gandhi's charge that Dassault was covering up for possible cronyism.
- Trappier said that Dassault has a long history of working in India and that they are not aligned to any political party.
- He added that Dassault was earlier in discussions with several other companies for offset tie-ups like Tata and other family groups.
10. End Of Quantitative Easing Heralds Return Of Alpha
Investing in stocks over the past ten years was a lot like the Indian team batting on a flat track—every batsman was playing like Virat Kohli, writes Saurabh Mukherjea.
- Thanks to QE, we have seen crazy valuations being associated with businesses which simply could not rationally justify them.
- Now, fund managers who have the industry and the intellect to identify and assess company-specific factors will once again significantly outperform the broader market.
- Stock-specific factors seem likely to stage a comeback in terms of their importance in driving share price returns.