BQuick On Oct. 25: Top 10 News Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Last Ditch Effort
Promoters of Essar Steel Ltd., the Ruia family, have offered to repay creditors of the steel firm in an attempt to withdraw it from the insolvency resolution process.
- In a press statement on Thursday, the company’s shareholders said they are willing to pay Rs 54,389 crore to creditors.
- The company said that Essar shareholders will offer upfront cash payment of Rs 47,507 crore to all creditors. This includes Rs 45,559 crore to the senior secured financial creditors.
- Under the insolvency and bankruptcy code, withdrawal of an insolvency plea is allowed if 90 percent of committee of creditors approve. But that's only before inviting and expression of interest for the asset by a resolution professional.
- In the Essar Steel matter, the process has moved way ahead and is almost close to finalisation of resolution applicant. Last week, the committee of creditors had picked ArcelorMittal as the preferred bidder.
2. Singh Brothers, Their Guru, And A Trump Tower Developer
A BloombergQuint investigation finds that of the Rs 7,315 crore that Malvinder and Shivinder Singh made when they sold their family firm Ranbaxy Laboratories Ltd., at least Rs 1,100 crore was invested via a series of real estate transactions that served mostly to enrich Basant Bansal and Roop Bansal—the brothers who founded M3M Group.
- The Bansals started their flagship company M3M India Ltd. in 2007 and have since become a leading developer of luxury residential and commercial real estate in the Gurgaon—Haryana area.
- They are also developing a Trump Tower in the area, at a reported cost of Rs 1,200 crore.
- The Singhs funded companies associated with Shabnam Dhillon—wife of their spiritual guru Gurinder Singh Dhillon. These entities, in turn, funded companies owned or associated with the Bansals, and then bought them back at astonishing valuations.
- These transactions, details of which were traced via filings with the Registrar of Companies, enriched the Bansals by over Rs 1,100 crore, as per BloombergQuint’s calculations.
3. Earnings: Bharti Airtel, Maruti Suzuki, JSW Steel, Yes Bank
Bharti Airtel Ltd. reported a surprise net profit in the July-September quarter aided by a one-time deferred tax gain.
- Net profit rose to Rs 119 crore from Rs 97 crore in the June quarter.
- Revenue rose 1.7 percent sequentially to Rs 20,423 crore.
- Operating profit fell 7.7 percent to Rs 6,244 crore.
- Operating margin narrowed 300 basis points quarter-on-quarter to 30.5 percent.
- ARPU fell to Rs 105 from Rs 101 from Rs 105.
Maruti Suzuki India Ltd.’s quarterly profit declined for the first time in more than four years because of higher commodity costs and a weaker rupee.
- Net profit fell 10 percent year-on-year to Rs 2,240.4 crore.
- Revenue rose 3 percent to Rs 22,433 crore.
- Ebitda fell 7 percent to Rs 3,431 crore.
- Margin contracted to 15.3 percent from 16.9 percent.
Yes Bank Ltd.’s profit missed estimates in the July-September quarter on higher provisions.
- Net profit fell 4 percent to Rs 965 crore.
- Net interest income rose 27 percent to Rs 2,407 crore.
- Gross non-performing asset ratio rose to 1.6 percent from 1.31 percent.
- Net NPA ratio rose to 0.84 percent from 0.59 percent.
- The lender also set aside a lower proportion of funds to cover for bad loans.
JSW Steel Ltd.’s profit more than doubled to Rs 2,126 crore in the July-September quarter, meeting estimates.
- Revenue rose 25 percent over the year-ago period to Rs 21,552 crore.
- Ebitda rose 61.6 percent to Rs 4,906 crore.
- Margin expanded 520 basis points to 22.8 percent.
4. Indian Markets Decline; U.S. Stocks Gain
Indian equity benchmarks fell after a day's breather as an equities rout that wiped out this year’s gains for U.S. stocks spread to Asia.
- The S&P BSE Sensex Index fell 1 percent or 344 points to 33,691.
- The NSE Nifty 50 Index dropped 0.98 percent or 100 points to 10,125.
- Nifty fell 7.8 percent in the October F&O series, which was its worst performance since November 2011 when it fell 8.6 percent.
U.S. stocks rallied at the opening of trading, led by gains in technology shares, in the wake of Wednesday’s rout that wiped out this year’s gains in benchmark indexes.
- Strong earnings results from Twitter, Microsoft and Tesla helped push the S&P 500 Index into positive territory for the first time in seven days.
- Intel, Amazon and Alphabet all report after the close.
- The Bloomberg Dollar Spot Index gained 0.1 percent, while the euro weakened 0.1 percent to $1.1382.
- The yield on 10-year Treasuries rose three basis points to 3.14 percent, while the two-year note yield increased three basis points to 2.86 percent.
- West Texas Intermediate crude rose 1 percent to $67.51 a barrel.
5. Here’s Why Shares Of Two-Wheeler Makers Are Falling
Shares of two-wheeler makers have fallen since the second quarter results were announced as higher commodity costs hurt operating margin.
- Bajaj Auto Ltd., Hero MotoCorp Ltd. and TVS Motor Co. fell between 2 percent and 8 percent.
- That’s because cost of goods sold and rising prices of raw materials impacted their operating performance.
- Margin fell to the lowest in several quarters even as the two- and three-wheeler makers reported healthy volume growth.
6. What 19th Century Art Dealers Teach Us About Investing
The great art dealers of the 19th and 20th centuries amassed enormous fortunes even as the best painters died in poverty. What can equity investors learn from how ‘they did it’?
- The great investors bought vast quantities of art. In investing terms, they diversified.
- Diversification is an important tool to de-risk a portfolio.
- More businesses are dying faster these days. Concentration could be a risky idea if you are not a professional investor, writes Vishal Khandelwal.
7. Why India’s Second-Oldest MF Is Wary
India’s second-oldest mutual fund has grown wary on non-banking financial companies after landmark defaults by IL&FS group fueled a cash crunch in the sector.
- Canara Robeco Asset Management is exercising caution on investments in short-term debt issued by NBFCs, as the fallout from Infrastructure Leasing & Financial Services Ltd. adds to strains caused by asset-liability mismatches.
- The company is a joint venture between Canara Bank and Netherlands-based asset manager Robeco.
A triple-A bond is top-rated till it blows out.Avnish Jain, Head - Fixed Income, Canara Robeco Asset Management
8. Fiscal Deficit At 95.3% Of FY19 Target
India’s fiscal deficit rose further in September, inching closer to the government’s budgeted target for financial year 2018-19.
- Fiscal deficit—the gap between the government’s revenue and expenditure—stood at Rs 5.94 lakh crore at the end of September.
- That's 95.3 percent of the budgeted estimate of Rs 6.24 lakh crore for 2018-19. The gap had stood at 91.3 percent in September last year.
- The total expenditure for the April-September period rose to Rs 13.04 lakh crore, or 53.4 percent of the full-year target.
9. ECB Sticks To Plan To Rein In Stimulus
The European Central Bank still intends to cap its bond-buying by year-end and leave room for an interest-rate increase late next year, even amid mounting signs that the euro-area economy is wilting under global pressures.
- The Frankfurt-based institution said it will buy 15 billion euros ($17 billion) of bonds a month through December, with a final decision to end the program contingent on incoming information.
- Policy makers reiterated that interest rates will remain at their present record lows “at least through the summer” of 2019.
10. The CBI Turmoil And AIADMK MLAs’ Ouster
The Supreme Court on Thursday agreed to hear a petition filed by senior lawyer Prashant Bhushan demanding an Special Investigation Team probe against Central Bureau of Investigation officials, including Rakesh Asthana, who has been accused of bribery.
- Meanwhile, the Opposition alleged that CBI Director Alok Verma was sent on a forced leave to cover up allegations of wrongdoing in the Rafale deal.
- But Verma will remain the CBI director while Asthana will continue as the special director, CBI’s official spokesperson said on Thursday.
Justice M Sathyanarayanan of the Madras High Court on Thursday upheld the Tamil Nadu speaker’s decision to disqualify the 18 AIADMK MLAs. They were disqualified in September 2017, under the anti-defection law.
- The strength of the Tamil Nadu Assembly is 234 members.
- The AIADMK government has a wafer-thin majority of 116 out of 234 MLAs.
- The DMK and its allies have 97 MLAs, one short of the Thiruvarur constituency that fell vacant after former CM M Karunanidhi’s death in August this year.
- The disqualified MLAs are loyal to TTV Dhinakaran, who has now formed his own party - the AMMK.