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WEEKLY CAPSULE & IMPACT ANALYSIS


Posted on 25-Jan-2019 Comments  0

Weekly Capsule (Jan 21– Jan 25) and Impact Analysis
News Announcement Impact Analysis
In a setback for defaulters, Supreme Court upholds Bankruptcy Code
The petition against the promoter ban on bidding for NCLT companies has been rejected by the SC
That means the Ruias will not be now permitted to bid for Essar Steel and the deal will go to Arcelor Mittal
DLF cracked over 5% on Friday after CBI raided the DLF offices
CBI carried out searches across the offices of DLF across the capital over alleged irregularities in land allocation
This pertained to the case filed by the CBI against Mr. BS Hooda, the former chief minister of Haryana
Maruti net profits slumped by 17% to Rs.1489 crore in third quarter
Profits fell on the back of higher inputs costs and higher market costs during the quarter
Maruti has also been under pressure due to the weak auto sales, especially in Maruti’s core consumer segment
Zee Entertainment crashed 31% in a single day on Friday
The stock cracked after news of raids on an Essel group company for accepting deposits after demonetization
Markets were also rife with rumours that the promoters of Zee were aggressively trying to sell 50% of their stake
Net profits at Yes Bank fell by 7% to Rs.1001 crore in the third quarter
The company had to take a huge provision of Rs.478 crore on loans pertaining to its exposure to IL&FS
The bank also faced some pressure on the net interest margins in the quarter with gross NPAs above 2%
Yes Bank appointed Ravneet Gill as the next CEO of the bank
Gill, a former Deutsche Banker, will succeed Rana Kapoor on March 01st this year
The RBI had refused to give an extension to Rana Kapoor due to allegations of misstating of NPAs
Graphite companies correct over 50% from their peak of August 2018
The underperformance was on the removal of anti-dumping duties leading to higher imports from China
Graphite electrodes go into the manufacture of electric arc furnaces used in steel plants
Etihad hires Alvarez & Marshal to help in Jet Airways turnaround
Alvarez & Marshal will conduct a due diligence on Jet Airways before Etihad increases its stake in the airline
Banks have agreed to restructure loans of Jet Airways subject to funding support from the promoters
L&T reports 37% growth in net profits at Rs.2042 crore in Q3
The higher profits were largely driven by strong project execution by the services and infrastructure business
Even the top-line revenues from operations were 24% higher at Rs.35,709 crore in the third quarter
Reuters anticipates shift in RBI stance in the February policy
RBI is likely to shift its policy stance from a hawkish stance to a neutral stance in the February policy announcement
However, Reuters sees any rate cuts only around the middle of the year after the new government is in place
US tries to lobby with India to lift ecommerce restrictions
US companies like Amazon and Wal-Mart stand to lose immensely due to the ecommerce restrictions
Indian government is not too keen to accommodate the US request considering that this is an election year
Wilbur Ross rules out any immediate trade deal between US and China
According to the Commerce Secretary, Ross, there are larger structural changes that the US expects from China
However, considering the weak GDP growth, China may not be too keen to accommodate the US conditions
Piyush Goyal takes charge as the interim finance minister
Goyal will present the budget in the absence of Jaitley who is currently undergoing treatment in the US
The interim budget will be presented on February 01st as against the vote on account in an election year
Vodafone Idea plans to raise Rs.25,000 crore equity funds
The funds will be largely raised through the promoter groups; Vodafone PLC and the Aditya Birla Group
The funds will be used to pare the debt of Rs.126,000 crore and reduce the interest servicing burden
Moody’s has upgraded IDBI Bank by 2 notches after closure of LIC deal
LIC had infused Rs.14,000 crore of capital into IDBI Bank and paid an additional Rs.6,000 crore for the government stake
This will give LIC a banking license and give IDBI Bank a much larger and sound balance sheet
Gita Gopinath of IMF warns about any laxity on fiscal prudence
Gopinath was referring to India’s fiscal deficit challenge in the sidelines of the WEF at Davos
India’s fiscal deficit is likely to go for a toss due to lower revenues and sharply higher welfare expenses
Mutual funds forced to write down IL&FS SPV exposure
This was after ICRA downgraded the mutual funds of Aditya Birla AMC, HDFC AMC and UTI AMC
The SPV of IL&FS had defaulted on the loans despite having sufficient resources to service the loan
Divestment target for 2019-20 likely to be set at Rs.80,000 crore
This will be a mix of minority stake sale, strategic sale, asset sales and SOTP-based selling of divisions
The government is expected to fall short of the current year target by nearly Rs.20,000 crore on weak revenues
India emerges as the world’s second largest steel producer above Japan
India is in the midst of a major expansion of steel capacity and is expected to triple by 2030
However, the overall capacity even in 2030 will only be a portion of the current Chinese capacity of 857 MT
World leaders at Davos rule out the possibility of an economic slowdown
Despite IMF projecting 20 bps fall in global GDP growth, CEOs are confident of avoiding a slowdown
Interestingly, India is likely to grow at around 7.5%, much faster than China, which is expected to touch 6.3%
L&T buyback was rejected by SEBI on technical grounds
The consolidated debt of L&T group was more than twice the combined equity post buyback
The confusion arose over the interpretation of debt as consolidated versus stand alone debt
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