BQuick On August 8: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. The Rise And Stumble Of IL&FS
From “concept to execution”, Infrastructure Leasing & Financial Services Ltd. boasts of providing any and all services linked to infrastructure projects. It’s that breadth and complexity that may have come back to bite it.
- On Tuesday, ICRA downgraded the long-term rating on Rs 4,475 crore worth of debt securities from AAA to AA+.
The rating revision takes into account the company’s elevated debt levels owing to the funding commitments towards Group ventures.ICRA
- Since IL&FS operates as a RBI-registered ‘Core Investment Company’, its own operations are limited to investments in other group companies.
- As such, the health of its subsidiaries has a direct bearing on the CIC’s own finances.
- The immediate concern for the group is emerging from IL&FS Transportation Networks—a subsidiary that was established in 2000.
Read more on IL&FS’ weakening fundamentals.
2. The Lender That Doesn’t Lend
Public sector lender Dena Bank will not be able to give any fresh loans till at least December 2018, the Reserve Bank of India has told the bank’s management, according to a senior official at the bank.
- The RBI had asked the bank to stop all fresh lending in May.
- In July, the bank approached the regulator, requesting it to ease some of the lending restrictions, RS Singh, executive director at Dena Bank told BloombergQuint.
- However, the RBI told Dena Bank that these restrictions would continue for at least two more quarters.
Read more on Dena Bank’s mounting woes
3. Nifty Closed At A Fresh Record High; U.S. Stocks Slip
Indian equity benchmarks rose to new all-time closing highs led by Reliance Industries Ltd., Oil and Natural Gas Corporation Ltd., ICICI Bank Ltd. and State Bank of India.
- The S&P BSE Sensex Index rose 0.6 percent or 222 points to 37,888.
- The NSE Nifty 50 Index climbed 0.53 percent or 61 points to 11,450.
- The Nifty rose to an all-time closing high for the fourth session in a row.
- Twelve out of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Energy Index’s 1.9 percent gain.
Follow the day’s trading action here
The rally in U.S. stocks faltered as China and America escalated their trade dispute with fresh tariffs.
- The S&P 500 Index edged lower after a four-day advance as Washington and Beijing set dates for new levies on billions in goods.
- Tesla shares erased early losses as the intrigue around plans to go private remained.
- The Stoxx Europe 600 Index fell 0.2 percent.
- The Bloomberg Dollar Spot Index was flat.
- West Texas Intermediate crude fell 1 percent to $68.45 a barrel.
Get your fix of global markets here
4. Earnings Update: BPCL, Cipla, HPCL, Lupin,
Bharat Petroleum Corporation Ltd.’s profit beat analyst expectations in the April-June period due to better refining margins.
- Net profit fell 14 percent quarter-on-quarter to Rs 2,293.3 crore, according to its stock exchange filing.
- Revenue rose 9.9 percent to Rs 71,697 crore.
- Operating profit increased 4 percent to Rs 3,875.3 crore.
- Operating margin contracted 30 basis points to 5.4 percent.
- Inventory gains rose 6 times to Rs 2,679 crore.
For BPCL’s earnings fineprint, click here
Hindustan Petroleum Corporation Ltd.’s profit beat analyst estimates in the first quarter on the back of inventory gains.
- Net profit declined 1.6 percent sequentially to Rs 1,719.2 crore.
- Inventory gains jumped 12.1 times to Rs 1,905 crore.
- Revenue rose 11.2 percent quarter-on-quarter to Rs 67,629 crore.
- Earnings from interest, tax, depreciation and amortisation rose 9.2 percent to Rs 3,191 crore.
Here’s a snapshot of HPCL’s first quarter performance
Lupin Ltd. reported a lower-than-expected profit in the quarter ended June on a drop in sales in the U.S. and Japan.
- Net profit fell 44 percent year-on-year to Rs 202.7 crore.
- Sales in North America, Lupin’s largest market, fell 26 percent.
- Revenue fell 0.4 percent to Rs 3,856 crore.
- Earnings before interest, tax, depreciation and amortisation fell 32 percent to Rs 527 crore, while margins contracted to 13.7 percent.
Here’s how Lupin fared in the April-June period
Cipla Ltd.’s profit surpassed analysts’ estimates in the April-June period, even as its operational performance fell short of expectations.
- Net profit rose 10 percent year-on-year to Rs 451 crore.
- Revenue rose 12 percent to Rs 3,939 crore.
- Earnings before interest, tax, depreciation and amortisation rose 12.3 percent to Rs 726 crore, below the Rs 773-crore forecast.
- Ebitda margins remained largely unchanged at 18.4 percent.
Here’s a look at Cipla’s first quarter performance
5. Bharti Airtel Plans To List Africa Unit In One Year
Bharti Airtel Ltd. plans an initial public offering of its profitable African business in the next one year to pare debt amid an intense tariff war in India.
- The share sale will give flexibility to its balance sheet, Singapore Telecommunications Ltd, which owns 48.9 percent in Bharti Telecom Ltd.—promoter company of Bharti Airtel, said in its earnings briefing.
- Bharti Airtel International (Netherlands) B.V. is present in 14 African countries and ranks among the top three players in all markets.
Read more on how much Bharti Airtel can get from the IPO
6. NSE Not Averse To A Merger If It Makes Sense
The National Stock Exchange of India Ltd. is open to strategic mergers and acquisitions, according to Managing Director and Chief Executive Officer Vikram Limaye, who didn’t rule out the possibility of combining with the Multi-Commodity Exchange Ltd.
- “We aren’t averse to inorganic opportunities if it makes strategic sense—be it domestic or international,” Limaye told BloombergQuint.
- The NSE is in talks to merge with India’s biggest commodity exchange, the Economic Times had reported in July citing unnamed people aware of the matter.
- The market regulator had allowed unified exchanges for both stocks and commodities starting Oct. 1. The MCX, however, had denied any such talks.
Read more on NSE’s future plans
7. Ikea’s First India Store Looks Like This
Swedish furniture maker Ikea will launch its first Indian outlet tomorrow.
- The 4,00,000-square feet showroom on the outskirts of Hyderabad will display around 7,500 products.
- About 1,000 of these will sell for less than Rs 200 apiece, Bloomberg News reported.
Here’s a peek into the facility.
For more pictures of Ikea’s first Indian store, click here
8. India’s Economy Is ‘An Elephant That’s Starting To Run’
India is on track to hold its position as one of the world’s fastest-growing economies as reforms start to pay off, according to the International Monetary Fund.
- Ranil Salgado, the IMF’s mission chief for India described India as an elephant starting to run, with growth forecast at 7.3 percent in the fiscal year through March 2019.
- Key risks to economic growth flagged by the IMF include higher oil prices, tightening global financial conditions and tax revenue shortfalls.
- Authorities should take advantage of stronger growth to bring down debt levels, simplify the consumption tax system and continue to gradually tighten monetary policy, IMF said.
Here’s what IMF said about India
9. Tesla Board Weighs Musk’s Go-Private Gambit
Tesla Inc. directors said they knew last week about Elon Musk’s surprise proposal to take the electric-car maker private, but both the board and CEO have a long way to go to convince investors the idea is credible.
- “The board has met several times over the last week and is taking the appropriate next steps to evaluate the proposal of taking the company private,” Tesla's directors said in a statement.
- Tesla hasn’t disclosed any sources of financing, and no one has stepped forward publicly to say they’re backing the plan.
- Musk owns an almost 20 percent stake in Tesla, meaning he’d still need roughly $70 billion in financing to take Tesla private.
Here’s the update on Musk’s plan
10. These Three Women Made It To Chief Economist At Big Banks
While there’s still nothing like equality in numbers with men, women are taking on prominent economic roles at major banks from Wall Street to the City of London.
- HSBC Global Chief Economist Janet Henry joined the bank in 1996, at a time when she was the only woman on its global economics team. Now women account for 13 of her 39-strong global group.
- Catherine Mann left a professor’s role at Brandeis University in 2014 to become the chief economist at the Organization for Economic Cooperation and Development, making her the second woman in the body’s history to take on the role. About four years later, she made the jump to Citigroup.
- Michala Marcussen joined Societe Generale in 1994, and was named the group’s chief economist last year. In finance generally, Marcussen says, the dearth of women economists is partly because of “the supply-side issue.”
Here’s how the three women chief economists climbed up the ladder