BQuick On Oct. 24: Top 10 News Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Zydus, Cadila Go Shopping
Zydus Wellness Ltd. and its parent Cadila Healthcare Ltd. have jointly agreed to acquire the Indian portfolio of Kraft Heinz Co., which includes milk drink Complan, for Rs 4,595 crore.
- Zydus will fund the acquisition via a mix of debt and equity, the company said in an exchange filing today.
- In addition to Complan, the brands being acquired include the Glucon D instant energy drink, Nycil talcum powder and Sampriti clarified butter.
- The deal also involves two large manufacturing facilities in Aligarh and Sitarganj along with the operations, marketing and support teams of Kraft Heinz.
2. Earnings: Kotak Mahindra Bank, Bajaj Auto, Wipro, IndiGo, Bharti Infratel
Kotak Mahindra Bank Ltd.’s second-quarter profit met estimates on the back of healthy loan growth.
- Net profit rose 14.8 percent year-on-year to Rs 1,141.6 crore.
- Net interest income, or core income of the lender, rose 16.3 percent to Rs 2,689 crore.
- Gross non performing assets ratio fell to 2.15 percent from 2.17 percent in the June quarter.
- Provisions declined to Rs 354 crore from Rs 469.6 crore earlier.
Bajaj Auto Ltd.’s quarterly profit growth slowed as expected due to rising commodity costs.
- Net profit rose 3.7 percent to Rs 1,152 crore.
- Revenue rose 21 percent on a yearly basis to Rs 7,986 crore.
- Ebitda rose 3 percent to Rs 1,341 crore.
- Margin contracted to 16.8 percent from 19.7 percent.
Wipro Ltd.’s profit missed estimates as it recorded a loss from a one-time settlement with one of its key clients.
- Net profit fell 9.9 percent quarter-on-quarter to Rs 1,886 crore.
- Revenue rose 2.4 percent to Rs 14,568 crore.
- EBIT margin contracted 260 basis points to 14.4 percent.
InterGlobe Aviation Ltd. reported its first quarterly loss as rising fuel prices, a weaker rupee and competitive fares hurt the parent of India’s largest carrier.
- Net loss stood at Rs 652 crore.
- Revenue rose 17 percent to Rs 6,185 crore.
- Yield declined 10 percent to Rs 3.21.
- Cost per seat increased by 24 percent to Rs 3.74.
Bharti Infratel Ltd.’s quarterly profit fell as Vodafone India Ltd. and Idea Cellular Ltd. halted using the company’s towers after their merger.
- Net profit declined 6 percent quarter-on-quarter to Rs 600 crore.
- Revenue fell 1 percent to Rs 3,648 crore.
- Ebitda fell 1 percent to Rs 1,506 crore.
- Margin fell 10 basis points to 41.3 percent.
3. Airtel's $1.25 Billion Africa Haul
Bharti Airtel Ltd. will raise close to $1.25 billion by selling stake in its profitable African business.
- Warburg Pincus, Temasek, Singtel, SoftBank Group International, and two others have agreed to invest in the African unit by subscribing to new shares.
- Bharti Airtel said it will use the proceeds to repay debt and for the growth of its African operations.
- The telecom operator had earlier said it is working on a plan for an initial public offering of its Africa unit in the next one year, to help reduce its debt.
- Investors reacted positively with shares rising the most in nine years and closing 10.8 percent higher.
4. Indian Markets Snap Decline; U.S. Stocks Fluctuate
Indian equity benchmarks snapped their four-day losing spree after Brent crude dropped on Tuesday.
- The S&P BSE Sensex Index rose 0.55 percent or 187 points to 34,034.
- The NSE Nifty 50 Index advanced 0.77 percent or 78 points to 10,225.
- For most part of the day, the Sensex and the Nifty were volatile.
- 16 of the 19 sector gauges compiled by BSE ended higher.
- The S&P BSE Telecom Index surged 4.9 percent, while the S&P BSE Healthcare Index was top loser, down 0.3 percent.
- The rupee strengthened by 41 paise to close at more than three-week high of 73.16 against the U.S. dollar.
U.S. stocks turned mostly lower after upbeat corporate results from companies including Boeing Co. failed to shake the gloomy mood that has gripped markets this week.
- European stocks rallied, while Asian shares slipped even as China’s gauge climbed.
- The dollar strengthened as the euro slumped. The pound weakened on Brexit worries.
- West Texas Intermediate crude rose 0.5 percent to $66.75 a barrel.
5. The Price Of Popularity
Monsoon season may be over, but India’s investors are at risk from a different kind of flood.
- Indian stocks have been the biggest emerging-Asian beneficiaries of the wave of liquidity that swept over world markets in the wake of the global financial crisis, according to data compiled by Bloomberg. That may also make them the most vulnerable, now that the waters are receding.
- Foreign investors have pumped a net $101 billion into the country’s equities from the beginning of 2009 through the end of last quarter, Bloomberg calculations using cumulative year-end net investment flow data show.
- That’s more than the combined offshore purchases of South Korean and Taiwanese stocks over the period.
- Thailand is the only emerging Asian market excluding China that has seen outflows.
6. Bank Credit Growth Jumps
Bank credit growth rose to its highest in more than four years as strains in the domestic debt market pushed borrowers back towards the banking system.
- Bank credit rose 14.35 percent for the fortnight ending Oct. 12, data released by Reserve Bank of India showed.
- Credit growth stood at 12.51 percent in the previous fortnight.
7. No Fire Sale In Property Market
A slowdown in lending from non-bank financial services companies to property developers won’t trigger a fire sale as the situation is not as bad as in the aftermath of the 2008 Lehman collapse, according to Kotak Investment Advisers.
- To generate cash, developers can make bulk sales to real estate funds and other such buyers, said S Sriniwasan, managing director at Kotak Investment Advisers, adding that stronger developers can be invited to build on undeveloped land parcels.
- “But distress sales are unlikely to be the answer,” he added.
- Non-bank lenders, particularly housing finance companies, face liquidity concerns after defaults by Infrastructure Leasing & Financial Services Ltd. and its subsidiaries triggered fears of a contagion in the financial markets.
- Delays and defaults happened in the past, but companies were able to tide over that due to ample liquidity, Sriniwasan said.
This time, only the fitter NBFCs would survive.S Sriniwasan, MD, Kotak Investment Advisers
8. Life Comes Full Circle For Rana Kapoor
Rana Kapoor is trying to broker a peace pact with co-founder late Ashok Kapur's family. And to do that, and in the best interests of the bank, he must climb down from the harsh position he took in 2013, writes Ira Dugal.
- A failure to do so, will mean uncertainty not just for the bank he built, but his own rights as a promoter of the bank.
- Since the nomination rights are joint, Kapur’s family can choose to withdraw their support of Kapoor’s seat on the board as an 'Indian Partner' representative.
9. The Food Inflation Conundrum
Over the years, India has seen many a protest over rising prices of food items like onions and tomatoes. However, over the last two years, the situation has been dramatically different. Prices of food items have increased too slowly at times, leaving policymakers confused and farmers distressed. This is unlikely to change in the near term.
- An absence of the seasonal rise in food prices, together with strong output seen during the Kharif season, could mean that food inflation will remain low for the remainder of this year.
- While this may help keep overall inflation in check and allow policymakers to keep interest rates on hold, it could reignite concerns about distress in parts of India’s rural economy.
- At the crux of the current inflation scenario is a simple demand and supply equation, said Vasant P Gandhi, professor at the Centre For Management In Agriculture, IIM Ahmedabad.
10. CBI Vs CBI: Alok Verma Challenges The Centre
The director of the Central Bureau of Investigation Alok Verma has filed a petition challenging the government's decision to send him on leave. The Supreme Court, on Friday, is set to hear the plea.
- In his petition, Verma told the Supreme Court that the Chief Vigilance Commissioner and the Centre took an “overnight decision” to divest him of the CBI director’s role. This, he alleged, is contrary to Section 4B of the Delhi Special Police Establishment Act.
- Verma alleged that the “present circumstances” occurred when “certain investigation into high functionaries did not take the direction that may be desirable to the government.”
- He also lashed out at CBI Special Director Rakesh Asthana, saying that he impeded investigations and also concocted evidence against Verma in an attempt to damage his reputation.
- Finance Minister Arun Jaitley said the decision to send Verma and Asthana on leave was an interim order, to facilitate a fair probe in the case, which will be undertaken by a Special Investigation Team.
- Congress President Rahul Gandhi linked the government action against Verma to the alleged Rafale scam.