BQuick On Oct. 14: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. Adani Gas-Total Deal
Shares of Adani Gas Ltd. jumped the most in nearly a year after Total S.A. agreed to buy 37.4 percent stake in India’s city gas distributor as part of the French energy giant’s plan to expand its presence in one of the world’s fastest growing energy markets.
- Total will make an open offer to acquire 25.2 percent stake from public shareholders and the residual from Adani family, according to an exchange filing.
- The open offer price is set at Rs 149.63 apiece, an 8 percent premium to Friday’s closing price.
- Total and the Adani family will ultimately hold 37.4 percent each and public shareholders the remaining 25.2 percent.
- Yogesh Patil, analyst at Reliance Securities, expects an earnings per share of Rs 3.5 for the financial year ending March 2021. At an EPS of Rs 3.5, the deal is estimated to value Adani Gas at 43 times its price-to-earnings for FY21.
Here’s what this deal with mean for Total and Adani.
2. JSW Steel-Bhushan Power Deal Halted
The National Company Law Appellate Tribunal halted JSW Steel Ltd.’s $2.8 billion purchase of insolvent Bhushan Power & Steel Ltd., a move that hurts India’s effort to clean up the world’s worst bad-debt pile.
- The NCLAT ordered a freeze on payment by the Sajjan Jindal-led mill and took objection to the Enforcement Directorate, the anti-money laundering agency, taking over the assets of the bankrupt steel mill.
- The agency is investigating allegations of money laundering by former owners of Bhushan Power and Steel.
- “No one will come to invest,” Justice S.J. Mukhopadhaya, who headed the bench, said in court while hearing the plea by JSW seeking immunity from future liabilities on Bhushan Power deal. The bankruptcy law will be “redundant,” the judge warned.
The NCLAT also asked the investigating agency to release the Rs 4,025 crore of Bhushan’s assets.
3. CPI Jumps, But WPI Falls To 3-Year Low
Retail inflation rose to the highest since July 2018, led by higher vegetable prices.
- Consumer Price Index inflation stood at 3.99 percent for September compared to 3.21 percent in August, according to data released by the Ministry of Statistics and Program Implementation.
- A Bloomberg poll of 37 economists had estimated inflation at 3.8 percent for September 2019.
- At current levels, headline inflation is now back at the mid-point of the Monetary Policy Committee’s flexible inflation target of 4 (+/-2) percent.
The pick-up in retail inflation was led mostly by food prices.
Wholesale inflation in India continued to slide in September led by a fall in manufactured good prices and a decline in fuel inflation.
- Inflation as measured by the wholesale price index fell to 0.33 percent in September.
- This is the lowest since June 2016.
- A Bloomberg poll of 24 economists had forecast the wholesale inflation at 0.84 percent.
- Wholesale inflation has gradually been sliding lower since September 2018, when it rose to above 5 percent.
Here’s why the headline WPI may be declining despite a rise in food prices.
4. Nifty Volatile, U.S. Stocks Fluctuate
Indian equity benchmarks ended marginally higher after a volatile start as Tata Consultancy Services Ltd.’s gains were offset by Infosys Ltd.’s losses.
- The S&P BSE Sensex ended 0.23 percent or 87 points higher at 38,214.47 after advancing nearly 400 points earlier.
- The NSE Nifty 50 closed 0.32 percent at 11,341.
- The broader markets represented by the NSE Nifty 500 Index rose 0.34 percent.
- Nine out of 11 sectoral gauges compiled by NSE ended higher, led by the NSE Nifty Realty Index’s 1.64 percent gain.
Follow the day's trading action here.
Shares of Indian Railway Catering and Tourism Corporation Ltd. more than doubled on their first day of trade, the best debut for a local company in two years.
- The stock listed at Rs 644 apiece—a premium of 101 percent over its issue price of Rs 320 a share—on the BSE Ltd.
- Thereafter, the scrip closed over 13.12 percent higher to Rs 728.6.
Read more about the IRCTC’s stock market debut.
U.S. stocks fluctuated after China appeared to pour cold water on a partial trade deal touted by Donald Trump, saying it wanted to iron out details before signing it.
- The S&P 500 opened lower before pushing back toward positive territory.
- The Stoxx Europe 600 Index declined, after Bloomberg reported China wants further talks before sealing the “phase one” agreement announced Friday by the U.S. president.
- The pound extended its drop, after rocketing for the past two sessions, as European Union negotiators warned that Brexit plans from U.K. Prime Minister Boris Johnson are not yet good enough to be the basis for an agreement.
- West Texas Intermediate crude fell 2.9 percent to $53.13 a barrel, the largest fall in two weeks.
Get your daily fix of global markets here.
5. HUL’s Volume Growth Stagnates
Hindustan Unilever Ltd.’s quarterly profit met estimates even as volume growth failed to pick up amid a consumption slowdown in India.
- Net profit of India’s largest consumer goods maker rose 21.2 percent year-on-year to Rs 1,848 crore during the three-month period.
- Revenue rose 6.7 percent to Rs 9,852 crore—against the Rs 9,752-crore estimate.
- The company’s volume growth stood at 5 percent during the July-September quarter, unchanged from the preceding three months.
- Rural markets, that normally grow at 1-1.5 times of urban, saw growth slow to half of that in urban markets.
Operating profit and margin rose despite price cuts across some categories.
6. ‘ONGC Free To Sell HPCL Stake’
Oil Minister Dharmendra Pradhan said the state-owned firm was free to sell its stake in the oil refining and marketing company amid reports of Oil & Natural Gas Corporation Ltd.’s inability to derive any benefit out of its Hindustan Petroleum Corporation Ltd. acquisition.
- ONGC last year paid Rs 36,915 crore to buy government’s entire 51.11 percent stake in HPCL—its most expensive acquisition ever.
- Despite being the majority stakeholder in the company, ONGC has only got one member on the board and virtually no say in the management.
- HPCL didn’t even recognise ONGC as its promoter for almost one-and-half-years before a Securities and Exchange Board of India rap forced it to list its majority owner as a promoter.
These are market decisions. They are autonomous companies. They are free to take their own decision at appropriate time.Dharmendra Pradhan, Oil Minister
ONGC had hoped that the addition of a refining and marketing company would make it a vertically integrated oil and gas company.
7. PSU Banks On A Lending Spree In Loan Melas
State-owned banks have disbursed loans worth Rs 81,781 crore during Oct. 1-9 through loan melas, Finance Secretary Rajiv Kumar said.
- Out of Rs 81,781 crore, new term loans worth Rs 34,342 crore have been disbursed, Kumar told reporters after holding a review meeting of public sector banks.
- “There was sufficient demand which was seen at the ground level for housing, for personal loans, for small loans,” Kumar said.
The second credit outreach program or loan mela would be organised from Oct. 21-25.
8. PMC Bank: Withdrawal Limit Hiked
The Reserve Bank of India increased the withdrawal limit for depositors of scam-hit Punjab & Maharashtra Cooperative Bank to Rs 40,000 from Rs 25,000 per account over the next six months.
- This is the third time the regulator has increased the withdrawal limit since its clamped down on the bank on September 23, when the RBI had capped it at Rs 1,000 per customer, which led to lot of distress and criticism.
- With the latest relaxation, about 77 percent of the depositors of the bank will be able to withdraw their entire account balance, the RBI said in a notification.
9. Auto Dealers Stock Up For Festive Season
Inventory levels at dealerships rose in September led by two-wheelers as automakers stocked up anticipating higher sales during the ongoing festive season.
- The automobile industry’s net inventory rose 23 percent over the previous month to 2.27 lakh units.
- Inventory levels represent the difference between wholesale numbers released by Society for Indian Automobile Manufacturers and retail sales measured by vehicle registrations across the country and disclosed by the Ministry of Roads, Transport and Highways.
- The data may signal a brief respite for the crisis-ridden Indian automobile sector, which looks to overcome its worst slowdown in over 22 years.
- Auto sales have been declining since Diwali last year, with falling volumes forcing companies to lay off contract workers and dealerships to shut showrooms.
Yet, Rajan Wadhera, president of SIAM, said automakers will continue with production cuts in October. Here’s why.
10. Paytm Nears $2 Billion From Backers
Indian fintech giant Paytm is close to scoring $2 billion of new financing from investors including Jack Ma’s Ant Financial and Japan’s SoftBank Group Corp. to fend off an influx of new rivals, a person familiar with the matter told Bloomberg News.
- The funding will be split evenly between equity and debt and values the country’s top online financial services firm at $16 billion, the person said, asking not to be identified talking about a private deal.
- The talks are in their final stages but the terms could still change, the person added.
If a deal is finalized, Paytm could outstrip fellow high-profile Asian startups such as Grab and Gojek in valuation.