BQuick On Oct. 7: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. Slowdown Realities: Titan Hit; HDFC Bank, Bajaj Finance Stable
Titan Company Ltd. witnessed a sharp fall in jewellery sales as a sudden surge in gold prices dented consumer demand from mid-June.
- The weakness continued in July leading to a considerable “degrowth” in sales, the Tata Group firm said in its quarterly business update.
- August and September, however, saw a 15 percent growth on year-on-year basis due to increased promotional activities, Titan added.
- The jewellery segment comprises of more than 80 percent of the company’s consolidated revenue.
Weak consumer sentiment also led to a moderation in growth of the watches division.
While an alleged fraud at another Indian bank and struggling non-bank lenders brought the spotlight back on the nation’s troubled financial services sector, two retail focused private lenders reported strong growth.
- In the three months ended September, updates ahead of earnings show that growth recovered for HDFC Bank Ltd., India’s largest bank by market value.
- Non-bank lender Bajaj Finance Ltd. saw its loans and assets grow at close to the long-term average pace.
- The two are among a few thriving lenders that represent an oasis in India’s troubled financial sector that’s battling a bad-loan crisis since 2015.
Read how business performed for the two lenders in the second quarter.
2. Why ITC Isn’t Returning Analysts’ Love
Analysts have been smitten by ITC Ltd. for long, but this year that love has gone unrequited.
- Among consumer goods peers covered by at least 10 analysts, the cigarettes-to-hotels company is the most-preferred stock.
- According to Bloomberg data, 32 of the 37 brokerages tracking ITC recommend ‘Buy’.
- It’s trading at its cheapest valuation in nine years.
- And the average of 12-month target price estimates indicate a 25 percent upside—the best in the group.
- Yet, ITC is languishing with the worst-performing members when the NSE Nifty FMCG Index is trading about 1 percent higher and Nifty 50 is up 6 percent.
Here are six reasons why the ITC stock is struggling.
3. Nifty Stumbles, U.S. Stocks Slip
Indian equity indices ended lower for the sixth-straight day dragged down by losses in Bharat Petroleum Corporation Ltd. and metal stocks.
- The S&P BSE Sensex fell 0.38 percent or 141 points to to 37,531.98.
- NSE Nifty 50 declined 0.43 percent to 11,126.40.
- The September quarter earnings season of Nifty firms kicks off on Thursday with IndusInd Bank Ltd. and Tata Consultancy Services Ltd. Infosys Ltd. will announce results on Friday.
- An investor must turn sector-specific in order to tackle the second-quarter earnings, according to Gaurang Shah, head investment strategist, Geojit Financial Services.
Follow the day’s trading action here.
U.S. equity indices slid while the yuan weakened as traders studied the outlook for a trade deal between China and the Trump administration.
- Automaker shares led the S&P 500 Index lower after Bloomberg reported that senior Chinese officials have indicated the range of topics they’re willing to discuss at upcoming talks has narrowed considerably.
- The euro edged higher for a fifth session, while the pound dipped as European leaders cast doubt on reaching a Brexit agreement in time for the U.K.’s Oct. 31 deadline.
- West Texas Intermediate crude added 1.7 percent to $53.68 a barrel.
Get your daily fix of global markets here.
4. Aurobindo Gets Slap On The Wrist From U.S. FDA
Shares of Aurobindo Pharma Ltd. fell the most in 11 years after the U.S. Food and Drug Administration flagged lack of good manufacturing practices at the drugmaker’s plant in Telangana—a move that may cause disruption in supplies and delay in future approvals.
- The stock tumbled as much as 20.64 percent—the steepest intraday decline since Oct. 8, 2008—to 450.35 apiece.
- The U.S. FDA issued a Form 483, a kind of inspection report, with seven observations, including lack of documentation, equipment cleanliness and quality control.
- BloombergQuint has reviewed a copy of the Form 483 uploaded on the U.S. FDA website. The regulator had inspected the company’s formulation unit-7 from Sept. 19-27.
Some of the issues related to data integrity are “bad”, according to an analyst. Here are the complete observations.
5. What Will Weigh On India Inc.’s Earnings?
Weak demand despite the festival season kicking off in September and the U.S.-China trade war are likely to weigh on India Inc.’s second-quarter earnings despite a record monsoon.
- The Nifty 50 companies will announce their results for the quarter ended September starting with Tata Consultancy Services Ltd., Infosys Ltd., IndusInd Bank Ltd. and Avenue Supermarts Ltd.
- The muted earnings forecast comes after nearly half of the index constituents failed to meet Bloomberg consensus estimates in the preceding three months, resulting in the worst performance in at least three years as a prolonged slowdown in the economy, poor asset quality of lenders and currency fluctuation weighed on corporate earnings.
- BloombergQuint has been tracking the earnings expectation-versus-performance data of Nifty 50 stocks since the second quarter of 2016-17.
Here’s a sectoral analysis of what to expect from the second quarter earnings.
6. Supreme Court Stays Further Cutting Of Trees In Aarey
The Supreme Court on Monday stayed further cutting of trees in Mumbai’s Aarey Colony area, the site for a proposed Mumbai Metro car shed.
- The bench headed by Justice Arun Mishra directed Mumbai’s municipal authorities after Solicitor General Tushar Mehta, appearing for the State of Maharashtra, informed the apex court that no further felling of trees is required for now.
- The authorities have been cutting trees since Friday after the Bombay High Court refused to declare Aarey a forest area and declined to quash Brihanmumbai Municipal Corporation’s decision to cut more than 2,600 trees in the suburban green zone.
The apex court bench also ordered the release of all individuals who were arrested for protesting the felling of trees in Aarey Colony.
7. From Madhavpura Mercantile To PMC Bank: Why Little Has Changed In Cooperative Banking
Issues of ending dual control of cooperative banks and fixing governance remain unaddressed, writes banking historian Amol Agrawal.
- These cases are not exactly one-offs. Cooperative banks have struggled for a long time now.
- It is not as if Reserve Bank of India doesn’t recognise that a review of cooperative banks is needed.
One central lesson from the recent crises is that the regulation has to become ownership-neutral.
8. Oyo Raises $1.5 Billion At $10 Billion Valuation
Oyo Hotels and Homes is raising $1.5 billion from founder Ritesh Agarwal, SoftBank Group Corp. and other investors as the India lodging startup expands into foreign markets such as the U.S. and Europe.
- Agarwal, 25, will spend $700 million to buy new shares in the company as part of a previously reported $2 billion plan to triple his ownership stake.
- Existing investors SoftBank’s Vision Fund, Lightspeed Venture Partners and Sequoia India will contribute the rest of the current round.
We truly believe that we will be able to build a truly global brand out of India, while ensuring that the business is run efficiently and with a clear path to profitability.Ritesh Agarwal, Founder, Oyo Hotels and Homes
Agarwal has built Oyo into India’s second-most valuable startup.
9. Masayoshi Son Is ‘Embarrassed’
SoftBank Group Corp.’s Masayoshi Son says he is unhappy with how far short his accomplishments to date have fallen of his goals.
- “The results still have a long way to go and that makes me embarrassed and impatient,” Son said in an interview with Nikkei Business.
I used to envy the scale of the markets in the U.S. and China, but now you see red-hot growth companies coming out of small markets like in Southeast Asia. There is just no excuse for entrepreneurs in Japan, myself included.Masayoshi Son, CEO, SoftBank Group
- Son built a $13.8 billion personal fortune by transforming SoftBank into a global technology conglomerate and reaping massive returns from investments like Alibaba Group Holding Ltd.
- His $100 billion Vision Fund also holds stakes in some of the world’s biggest technology startups, a portfolio that ranges from ride-hailing and genomics to vertical farms and satellites.
- But trouble at two of SoftBank’s marquee investments -- Uber Technologies Inc. and WeWork -- has cast a shadow of doubt over the Japanese billionaire’s track record just as he’s busy wooing investors for an even bigger fund.
Softbank’s shares have dropped over 30 percent from their peak in April.
10. And The Nobel For Medicine Goes To...
Three researchers from the U.S. and Britain won a Nobel Prize for showing how cells sense and adapt to changing oxygen levels, a line of research that’s already led to the development of new drugs.
- Americans William Kaelin of the Dana-Farber Cancer Institute in Boston, Gregg Semenza of Baltimore’s Johns Hopkins Medicine, and Peter Ratcliffe of the Francis Crick Institute in London received this year’s award for physiology or medicine, the Nobel Assembly at the Karolinska Institute said Monday in a statement.
- “The seminal discoveries by this year’s Nobel laureates revealed the mechanism for one of life’s most essential adaptive processes,” according to the statement.
- “Their discoveries have also paved the way for promising new strategies to fight anemia, cancer and many other diseases,” the statement said.
Their work on what regulates production of red blood cells has significantly impacted drugmakers.