BQuick On Oct. 23: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. BSNL-MTNL To Be Merged, Rabi MSP Hiked
India will spend about Rs 41,000 crore ($6 billion) on two unprofitable state-run telecommunication companies in a bid to help the firms take on competition. The government also approved a plan to combine Mahanagar Telephone Nigam Ltd., which provides services in Mumbai and New Delhi, with Bharat Sanchar Nigam Ltd., that services the rest of the nation.
The plan to revive BSNL, MTNL includes:
- Capital infusion of Rs 20,140 crore for purchase of 4G spectrum.
- Government will absorb Rs 3,670 crore worth of tax on purchases.
- Sell Rs 15,000 crore of sovereign-backed bonds to restructure debt and meet other expenses
The duo will monetise assets worth Rs 38,000 crore over four years.
The government also increased the minimum support prices for rabi crops that are sown just prior to the winter season.
- “The hikes will play a big role in improving farmer incomes,” Minister of Information and Broadcasting Prakash Javadekar said while announcing the Union Cabinet's decisions.
- MSP for wheat has been hiked by Rs 85 per quintal, while the price for lentils will go up by Rs 325 per quintal.
Here is the full list of crops for which MSP has been hiked.
2. L&T Beats Slowdown, JSW Gets Tax Benefit, HCL Tech Hikes Guidance
Larsen and Toubro Ltd.’s quarterly profit beat estimates as overseas orders helped India’s largest construction and engineering firm skirt the impact of a prolonged domestic slowdown and maintain its guidance for the rest of the fiscal.
- Net profit rose 13 percent over last year to Rs 2,528 crore.
- Revenue rose 15 percent to Rs 35,328 crore.
- Order inflow guidance for the full year was maintained 10-12 percent.
Here’s how international orders saved the day for L&T.
JSW Steel Ltd.’s quarterly profit beat estimates on the back of a one-time tax gain at a time when domestic steel demand grew at its slowest pace in three years.
- Net profit rose 17.7 percent year-on-year to Rs 2,536 crore.
- Profit was aided by a one-time gain of Rs 2,207 crore.
- Revenue down 18.5 percent to Rs 17,572 crore.
Find out why JSW Steel got a one-time tax benefit even as it chose not to move to new corporate tax rates.
HCL Technologies Ltd.’s quarterly net profit beat estimates and the software services provider raised revenue guidance for the ongoing financial year.
- Net profit rose 21.6 percent sequentially to Rs 2,711 crore.
- It raised the revenue growth guidance to 15-17 percent in constant currency for the financial year ending 2020 from 14-16 percent.
The company also announced a 1:1 bonus.
3. Top Two Motorcycle Makers Enjoy One-Off Benefits
Hero MotoCorp Ltd.’s second-quarter profit declined but stayed ahead of analysts estimates on lower tax expenses and raw material costs.
- The two-wheeler maker’s profit fell 10.3 percent over last year to Rs 875 crore.
- Revenue fell 16.7 percent to Rs 7,571 crore.
- The contraction came as sales fell 20.1 percent.
Hero Motocorp said that sales during the festive season have been steady due to new launches.
At a time India’s automobiles sector battles a slowdown, Bajaj Auto Ltd.’s second-quarter profit beat estimates on higher other income, lower tax expense and better-than expected operational performance.
- Net profit rose 21.7 percent year-on-year to Rs 1,402 crore.
- The bottom line was aided by a 27 percent jump in other income at Rs 393 crore.
- Tax expense nearly halved to Rs 206.5 crore.
Bajaj Auto surprised analysts with its operational performance.
4. Infosys On SEBI's Radar
The market regulator has begun its probe into alleged non-disclosure of price-sensitive information by Infosys Ltd.'s management and corporate governance lapses in the wake of allegations levelled by a whistleblower, officials told PTI on the condition of anonymity.
- Securities and Exchange Board of India is also examining possible insider trading in the company's securities, they added.
- Sources said the regulator has already asked the stock exchanges to collate trading data of Infosys' shares as well as about derivative positions, while details are being sought about alleged non-disclosure of key information.
- The regulator may also summon the company's top management and others.
The role of independent directors may also come under the scanner.
5. Nifty Rebounds, U.S. Stocks Fluctuate
Indian equity benchmarks resumed gains after a one-day blip.
- The S&P BSE Sensex rose 0.24 percent or 94.99 points to end at 39,058.83.
- The NSE Nifty 50 rose 0.14 percent to end at 11,604.
- Seven out of 11 sectoral gauges compiled by NSE ended higher, led by the NSE Nifty Auto Index’s 1.3 percent gain.
- On the flipside, the NSE Nifty Media Index was the top sectoral loser, down 1.3 percent.
Follow the day’s trading action here.
U.S. stocks fluctuated as investors sifted through a batch of earnings reports.
- The S&P 500 Index traded near the 3,000 level.
- Boeing Co. led gains in the Dow Jones Industrial Average after mapping out a sharp boost to output of the 737 Max.
- Pound fluctuated as the European Union considered granting another delay to the Oct. 31 Brexit deadline.
- Oil rose after a surprise drop in inventories.
Get your daily fix of global markets here.
6. PVR’s QIP Opens
India’s largest operator of multi-screen theaters launched a qualified institutional placement issue.
- The floor price has been set at Rs 1,809.53 per share, according to PVR Ltd.’s exchange filing.
- That’s a 2 percent premium to the PVR stock’s closing price on Wednesday.
- The company added that it could offer a discount of up to 5 percent, as per SEBI’s regulations.
- Earlier in the day, two people aware of the development told BloombergQuint on the condition of anonymity, that PVR could look to raise nearly Rs 700 crore, or $100 million, via the issue.
Here’s how the debt picture looks like for the multiplex operator.
7. S&P Sounds The Contagion Alarm
The risks of contagion are rising in the Indian financial sector and any failure of a large shadow lender could lead to a “solvency shock” to banks, S&P Global Ratings said.
- India’s shadow lenders get a substantial part of their funding from banks, and the weaker ones have seen a sharp rise in their borrowing costs and a big drop in their equity values, the ratings firm said in a report.
- That could have knock on effects on India’s banks, especially if they are perceived to have governance issues.
Here’s what S&P expects the government to do.
8. Things Can Only Get Better: ASK Investment
This is the right time for investors to buy in India, according to the head of nation’s largest portfolio manager, as corporate earnings can only get better from here.
- For Prateek Agarwal, chief investment officer at ASK Investment Managers, which manages about Rs 19,500 crore for rich investors, optimism stems from two things crucial for corporate profits—tax and interest rates.
- “There are two line items after operating profit—the interest rates and corporate taxes. Both are at the lowest levels than most of our period in history,” Agarwal said at a BQ Edge event in Mumbai.
Because of these two things itself, you should expect the profit-to-GDP ratio start to expand a bit.Prateek Agarwal, CIO, ASK Investment Managers
Watch the full interview with Agarwal here.
9. Justice Arun Mishra Won’t Recuse From Hearing Land Acquisition Case
Supreme Court of India Justice Arun Mishra won’t recuse himself from hearing a case related to land acquisition despite contradictions in two previous judgments, one of which he had passed.
- A five-judge constitution bench is hearing petitions on interpretation of Section 24 of the Land Acquisition Act. Justice Mishra, who’s heading the bench, had earlier declined the request for recusal and asked the parties to prove as to why he should not hear the matter.
- Before the hearing on recusal started, Bloomberg Quint had reached out to senior advocate Arvind Datar, Sanjay Hegde and Rakesh Dwivedi of the Supreme Court who said Justice Mishra shouldn’t have been included in the five-judge bench.
- This stems from a case related to a law passed in 2013 when Parliament passed the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act.
Find out complete details of the case here.
10. $300-Billion Plan To Halt Global Warming
$300 billion. That’s the money needed to stop the rise in greenhouse gases and buy up to 20 years of time to fix global warming, according to United Nations climate scientists. It’s the gross domestic product of Chile, or the world’s military spending every 60 days.
- The sum is not to fund green technologies or finance a moonshot solution to emissions, but to use simple, age-old practices to lock millions of tons of carbon back into an overlooked and over-exploited resource: the soil.
- “We have lost the biological function of soils. We have got to reverse that,” said Barron J. Orr, lead scientist for the UN Convention to Combat Desertification.
- “If we do it, we are turning the land into the big part of the solution for climate change,” Orr said.
Land restoration can potentially give humanity 15-20 years more than they have to adopt carbon-neutral technologies.