Market Walk

Daily Market Highlights OCT 12th

Previous Day Market Update 

Sensex closed at 60135.78 Up by 76.72 points

Nifty closed at 17,945.95 Up by 50.75 points

A day after the Government issued the Letter of Intent to Tata Sons for Air India acquisition, the board of Tata Sons will meet on Tuesday to discuss fund raising plans. Tata Sons plans to raise debt to fund the acquisition. Tata Sons has to pay Rs.18,000 crore which includes Rs.2,700 crore in cash and Rs,15,300 crore by way of assumption of debt. The AGM in September had approved debt raising plans of Rs.40,000 crore but it may only clear Rs.15,000 crore now. Turning around Air India will cost them another $3 billion.

The battle of wits between Invesco and Zee is getting tougher. Invesco, which owns 17.88% in Zee, has raised questions over the proposed merger of Zee with Sony Pictures. It believes that the transaction was not in the best interests of shareholders and would only benefit the promoters, as it gifts a 2% stake to the Zee promoters towards a non-compete clause. They also had objections to Punit Goenka getting a 5-year term at the combined entity. Invesco also expressed concerns about Zee’s strident PR campaign.

Rakesh Jhunjhunwala-backed Akasa Air has got NOC from the Ministry of Civil Aviation to start operations by mid-2022. The next step would be to apply to the DGCA for an operating permit. Akasa Air was promoted by former Jet CEO Vinay Dube and Rakesh has invested Rs.248 crore in the venture. Aditya Ghosh, former Indigo CEO, is also part of the venture. Akasa endeavours to be India’s most reliable, green and affordable airline. Akasa proposes to prise open the aviation market with affordable flying for all.

Tata Motors rallied by another 8% on Monday to cross Rs.415 and touch its highest level since January 2018. Tata Motors has rallied close to 40% in just the last one month, that is almost 10 times the rally in the Nifty. The latest trigger came after Tata Motors sought to raise $1 billion by selling a stake in its EV unit. This deal would value the EV business at $8 billion and would re-rate the valuations of Tata Motors. TPG and Temasek are among the likely investors. JLR improved performance despite the chip shortage.

Another Tata group company to rally sharply in the last few months is Tata Power, which has hit a new high of Rs.194 on the stock exchange. The stock has also seen heavy volumes in recent days. Interestingly, the stock of Tata Power has rallied by 40% in just the last 2 weeks when the Nifty was almost flat. Tata Power is going big on electric vehicle charging infrastructure (EVCI) across India, in association with TVS Motors. Tata Power also aims to scale up its renewable energy portfolio from 4 GW to 25 GW by CY-2030.

A recent report by KPMG has highlighted the way digital companies have driven the IPO market in India in the first half of FY22. The report has also pointed out that big digital names would continue to drive the IPO boom in the second half too. KPMG also noted that a lot of the money printed during the Trump era was also finding its way into stock markets. In 2021, IPO collections have crossed $10.8 billion and with 3 months to go, it looks all set to better the 2017 record. LIC, Paytm, OYO, Policybazaar are in the IPO queue.

HCL Technologies expanded its strategic partnership with Google Cloud. The intent is to jointly launch healthcare and life sciences solutions. This alliance will deliver best of HCL and Google Cloud’s deep health care and life sciences strengths. HCL’s Google Cloud Native Labs will assist to accelerate these solutions with Google Cloud support. While Google Cloud provides a veritable platform, HCL Tech brings to the table experts with decades of domain expertise. This will help deliver cutting-edge, cloud-native solutions.

GMR Infrastructure will complete the demerger of its airports and non-airports business by Dec-2021. As the next step, the GMR group also plans to bring down its corporate debt levels to zero. Between 2020 and 2021, GMR had already reduced its corporate debt from Rs.6,700 crore to Rs.4,500. It had recently received Rs.1,690 crore from the divestment of its Kakinada SEZ to Aurobindo Realty. It has also sold some of its land at Krishnagiri and will monetize 1900 acres of land. Airports will generate FCF over next 3 years.

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