BQuick On July 7: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Resolving JP Associates Outside IBC
Lenders to debt-laden Jaiprakash Associates Ltd. are working on a resolution plan for the company, which would save them a trip to the insolvency courts.
According to three people in the know, the consortium of lenders, led by ICICI Bank Ltd., is seeking to resolve the company’s debt under the June 2019 stressed asset framework of the Reserve Bank of India.
The plan involves bringing in a global distressed fund to provide a mix of debt and equity funding for JP Associates.
The lenders are currently in talks with investors like Hong Kong-based SSG Capital Management and U.S.-based Tilden Park Capital Management, the people cited earlier said.
The investment would lead to the investor holding a large minority stake in the company
2. Nifty Extends Winning Streak; Global Rally Pauses
India stocks rose at the end of a volatile trading day as investors mulled the outlook for economic growth against corporate risks as the coronavirus continues to spread.
The S&P BSE Sensex climbed 0.5% to close at its highest level since early March, just short of breaking through its 200-day moving average, a key technical barrier.
The NSENifty 50 Index advanced 0.3%.
Reliance Industries Ltd. was the biggest drag on the index with a 1.5% decline; Infosys Ltd. gave the biggest boost to the index with a 4% gain, Bajaj Finance Ltd. was the biggest winner, netting a 7.8% jump.
Follow the day’s trading action here.
U.S. stocks dropped, joining a global slump, as investors turned their focus to signs that the world economy has a long way to go to get back on track.
The S&P 500 Index snapped a five-day winning streak, with hotels, airlines and other companies dependent on the end to coronavirus lockdowns faring poorly.
Tech shares outperformed, sending the Nasdaq 100 higher.
The dollar edged higher and Treasury yields dipped.
West Texas oil fell toward $40 a barrel.
Get your daily fix of global markets here.
3. Facebook’s First-Mover Advantage In Jio Platforms
Facebook’s mega-investment in Mukesh Ambani's Jio Platforms Ltd. did not only bring marquee value, but it also gave the social media giant a first-mover advantage along with strategic benefit.
Facebook owns WhatsApp and hopes to combine India’s most popular messaging app with Reliance’s retail business to push into e-commerce. That will be the first serious effort WhatsApp will make towards monetisation in India.
The stake size and strategic intent of Facebook’s investment explains the one seat the company will have on Jio Platforms’ board.
For all this, as per BloombergQuint’s calculation, Facebook paid less per share for Jio Platforms than the 10 investors that followed.
Read this BQ Blue Exclusive to understand the math involved in the Facebook-Jio partnership.
4. Yes Bank Board Approves Fundraising Via FPO
The board of Yes Bank Ltd. has approved fundraising via a follow on public offer.
“The Capital Raising Committee of the Board of Directors of the Bank (“CRC”), at its meeting held earlier today i.e., July 7, 2020, has approved raising funds by way of a further public offering,” Yes Bank said in a statement to stock exchanges.
It added that the committee would meet “on or after July 10, 2020” to consider and approve the price band and discount if any as permitted under SEBI regulations.
On June 17, Bloomberg reported that the bank was looking to raise around $1 billion (~Rs 8,000 crore) through a public offering. The funds would help push the bank’s Tier-1 core capital ratio ratio to 10% from 6.5% as of March 31.
In March, a clutch of eight lenders led by State Bank of India had infused over Rs 10,000 crore into Yes Bank.
5. Every Time You Sanitise, These Companies Get A Boost
Isopropyl alcohol, a key ingredient in hand santisers and medical disinfectants, saw its price surge more than twofold as the new coronavirus outbreak forced people to focus more on self-hygiene to avoid contagion. For two Indian chemical makers, that provided an opportunity.
Shares of Deepak Fertilisers & Petrochemicals Ltd., the largest maker of isopropyl alcohol in India, more than doubled from their low in March, aided by a rise in demand across segments, including the key raw material for hand sanitisers.
Deepak Nitrite Ltd., not related to Deepak Fertilisers, has also jumped more than 28% so far this year compared with a 12% fall in the Nifty 500 Index during the period. The company started making the compound after the outbreak.
Find out why these companies are rallying during the pandemic.
6. India Sweetens The Offer For Sovereign Investments
India will offer tax exemption on returns that sovereign funds would earn for their investments, be it equity or debt, into transport, logistics, energy, water and sanitation, communications, social and commercial infrastructure projects.
This will come into effect from April 1, 2021, and shall be applicable for financial year 2020-21 or assessment year 2021-22 and subsequent assessment years, the Finance Ministry said in notification.
The tax exemption will boost private sector participation in infrastructure development.
The government has widened the scope of eligible infrastructure sectors for tax exemption.
7. Money Laundering Case Against GVK Group
The Enforcement Directorate has filed a money laundering case against the GVK group, the Mumbai International Airport Ltd. and others to probe alleged irregularities to the tune of Rs 705 crore in the operations of the Mumbai airport, officials said on Tuesday.
The central probe agency has filed the enforcement case information report, equivalent of a police FIR, under the Prevention of Money Laundering Act after studying a recent Central Bureau of Investigation FIR filed against the same entities.
The ED will probe if funds were laundered to amass personal assets and if proceeds of crime were generated by the accused, they said.
"We have not received any notice from the Enforcement Directorate," a spokesperson for GVK said.
The ED is expected to summon company officials to record their statements and it may also attach their assets.
8. Margin Boost For Sugar Mills?
A hike in minimum selling price of sugar will increase the margin across the industry, while improving efficiency through the supply chain, according to Narendra Murkumbi.
A one-time increase of Rs 2—recommended by a task force constituted by Niti Aayog on sugarcane and sugar industry—will lead to a 6% increase in Ebitda margin, the co-founder of Shree Renuka Sugars Ltd. told BloombergQuint.
"Since the industry today is carrying 18-19 million tonnes of sugar [stock], there is also a large inventory gain on this of about Rs 3,600 crore,” he said.
Murkumbi, however, expects cane prices to rise by Rs 100 a tonne. That included, the margin should rise by at least 3.5%, he said.
Watch the full conversation where Murkumbi explains why India's sugar industry has set a global benchmark.
9. A Third Of India’s Bank Loans May Remain Under Moratorium Till August End
A third of India’s bank loans are likely to remain under moratorium despite fewer people opting for payment relief during the three month extension provided by the Reserve Bank of India. That’s according to Suresh Ganapathy, analyst at Macquarie Capital Securities.
Private banks are likely to see a reduction in loans under moratorium—down to to a quarter from a third by August-end—as banks have become more cautious in offering the moratorium and are communicating the benefits of timely repayment to their borrowers.
Public sector banks, on the other hand, may see it reduce to around a third of their total loan book from above 50% previously.
“Overall, one-third of the loan book will remain under moratorium by the end of August which is a reasonable outlook considering the initial fear of it being above 50%,” he told BloombergQuint in an interview.
Here's the more important figure to analyse, according to Ganapathy.
10. Covid-19: India’s Tally Crosses 7 Lakh
India hit a grim milestone of 7 lakh confirmed coronavirus cases, with one lakh additions in a matter of five days.
The country added over 22,000 Covid-19 cases the last 24 hours taking the total tally to over 7.12 lakh, according to the Health Ministry’s 8 a.m. update.
The country has 2.59 lakh active cases while 4.39 lakh patients have been discharged.
There have been 20,160 deaths so far.
Hospitals in Maharashtra are urging recovered Covid-19 patients to serve at the treatment facilities to meet the need for more staff as cases continue to rise.
Dharavi recorded only one new case in the last 24 hours, the lowest since April 1 when the Mumbai slum reported its first positive case.
Meanwhile, in Hyderabad the wheels were put in motion for clinical trials of vaccine candidate Covaxin.
Track news and developments around the Covid-19 outbreak in India here.
Globally, cases neared 1.16 crore with deaths exceeding 5.37 lakh.
Melbourne will be locked down for six weeks after new cases jumped.
The pace of new infections is raising concerns about another virus wave, with Hong Kong reporting its largest number of local cases in almost three months.
Follow the global spread of the virus here.