Previous Day Market Update
Sensex closed at 59667.60 down by -410.28 points
Nifty closed at 17748.60 down by -106.50 points
Invesco Fund, which holds an 18% stake in Zee Entertainment, moved NCLT to call an EGM of shareholders to induct its nominees on the board of Zee Entertainment. Invesco has sought the intervention of NCLT to direct Zee to call for the EGM. Invesco has also demanded that Punit Goenka, the current CEO of Zee be removed. Invesco is the largest shareholder in Zee Entertainment at 18% with the Subhash Chandra family holding 4% in the merged entity, including non-compete compensation. NCLT will hear on 30-Sep.
SEBI decided to introduce swing pricing mechanism for open-ended debt funds. This move will discourage large investors from sudden redemptions. The Swing Pricing framework will only be made applicable when there are net outflows. This ensures fairness for the entering, exiting and existing investors in a debt fund. The swing pricing will ensure that HNIs are not able to leverage very low prices in times of volatility and squeeze profits out of general investors. Swing Pricing will be limited to periods of market dislocation.
Birla Corporation, part of the MP Birla group, plans to double its cement capacity to 30 million TPA by 2027. This is more aggressive than the earlier plan to raise cement capacity to 25 MTPA by 2025. Its current production capacity is 15.6 MTPA and the commission of its 3.9 MTPA plant at Mukutban will take its capacity to 20 MTPA by end of 2021. The advantage will be that new plants would be more efficient and profitable. Birla Corp expects demand for cement to get stronger with huge infrastructure outlays.
HDFC Bank confirmed it had issued 400,000 credit cards since the RBI embargo on fresh cards was lifted in mid-August. HDFC Bank had lost 2% market share during the ban and plans to recoup lost market in next few quarters. From Feb-22, it plans average 500,000 credit card issuances per month. Despite the loss in market share, HDFC Bank remains the leader with over 14.76 million cards outstanding. In India, credit card market is still under-penetrated. HDFC has also tied up with Paytm for credit card co-branding.
Piramal Enterprises has completed the acquisition of Dewan Housing and has paid the full consideration amount of Rs.34,250 crore. This is the first resolution of an NBFC under the IBC. This amount includes an upfront cash payment of Rs.14,700 crores and 6.75% NCDs of Rs.19,550 crores. In addition, if the DHFL cash balance of Rs.3,800 crore is also added, then creditors get a total settlement price of Rs.38,000 crore which is a good 46% recovery. DHFL will now merge with PCHFL and become a 100% subsidiary of PEL.
Sun Pharmaceuticals was up 2% at Rs.793 after it launched a novel formulation in cough management, Chericof-12 in India. Sun Pharma is now trading close to its 52-week high of Rs.804. Chericof-12, the first prescription cough syrup in India gives relief for up to 12 hours and is approved for patients of age group six years and above. It will use the Polistirex Technology entailing complexation of two drugs viz., Dextromethorphan Hydrobromide and Chlorpheniramine maleate with resins and masks the bitter taste.
RBI has removed Indian Overseas Bank from Prompt Corrective Action (PCA) framework. As per its Mar-21 results, IOB was not in breach of the PCA parameters. As stipulated by the RBI, IOB has also provided a written commitment to comply with Minimum Regulatory Capital, Net NPA and Leverage ratio. This removal from PCA will be subject to conditions and continuous monitoring. This allows IOB to expand its credit book, pay dividends out of profits and also decide on commensurate rewards for senior managers.
L&T is in talks to merge its thermal power business with the Indian unit of Singapore-based Sembcorp. It will be a share swap deal but will help L&T to pare debt. The combined business is likely to be valued at $4.5 billion. L&T may move debt of Rs.10,000 crore to the merged entity. In the last few years, L&T has been trying to gradually divest its non-core business and focus purely on its core Engineering, Procurement and Construction (EPC) business. It has already sold its electric.