Daily Market Update – Nov 24th 2020

unnamed Daily Market Update   Nov 24th 2020

SEBI has given its approval for the IPO of biscuit maker, Mrs Bector Foods. The size of the IPO will be Rs.550 crore. This IPO will constitute a fresh issue of Rs.50 crore and an offer for sale of Rs.500 crore. The proceeds from the fresh issue will be used to expand the Rajpura manufacturing facility to create a new line for manufacturing biscuits. In addition, the company also gets to use the stock as a currency for its future expansion plans. Its biscuits are sold under the brands, Mrs Bector Cremica and English Oven. The company originally filed with SEBI in 2018 but withdrew the IPO due to adverse market conditions.

Adar Poonawala of Serum Institute has admitted that he was quite thrilled by the 90% effectiveness displayed by the vaccine candidate put out jointly by AstraZeneca and Oxford Research. Like the other vaccine candidates, Astra also showed over 90% effectiveness in first round but when the second round was repeated after a month, the efficacy fell to an average of 70%. That is considered to be a very good starting point for any vaccine candidate. Serum is the official Indian partner for the Covishield vaccine brought out by AstraZeneca and Oxford Research. Meanwhile, AstraZeneca has also confirmed that it already tied up production of up to 3 billion doses by the middle of 2021. The additional advantage that this vaccine has in the Indian context is that it is cheaper and also the freezing requirements are lower.

October Crude oil imports fell by 22% on a yoy basis to 15.15 MT or about 3.58 million bpd. This was disclosed by the Ministry of Petroleum. This fall in inventory implies that existing demand is getting met substantially through existing inventories and hence imports were not exactly required. However, there is a downside to this as the volume of refined oil products exported also dropped 35.7% to 3.84 MT. The demand for crude has been constricted by weak demand and limited transport needs. If one looks at the core sector and PMI indicators, these are certainly hinting at pick-up in oil demand in the coming weeks.

Templeton Mutual Fund has approached the Supreme Court after the HC ruled that the 6 fund schemes could not be wound up without the consent of the unit holders. Investors in 6 of Templeton’s debt funds have been in the lurch over the last 6 months ever since the fund unceremoniously decided to freeze redemptions in 6 funds due to poor quality of holdings and weak liquidity. Out of the Rs.26,000 crore that was locked up overnight by Templeton’s sudden decision, less than third of the money has been received so it looks like there will be a huge haircut. It is about how long Templeton can delay the truth.

Even as the border row with China drags on, the government has hardened its stance by stymieing all types of investments coming from China and Hong Kong. Investments to the tune of $1.6 billion from China and HK were put on hold and would be permitted after total due diligence is completed. India has already placed restrictions on investment inflows from most of the contiguous nations. This could create a problem as many of the hedge funds that are currently active in India are domiciled either in China or in Hong Kong. India shares an inhospitable 3488 KM border with China; which is the big issue.

Motherson Sumi touched a 52-week high on the NSE but there is a bigger fundamental story at play. The company has just unveiled a 5-year restructuring plan that will prop up the sales revenues of Motherson Sumi to $36 billion by FY25. But there are some other interesting changes too as the company projects that nearly 25% of its revenues by 2025 would come from non-auto business. The company is also plans to achieve 40% ROCE in the coming years. The company is also in the midst of its 3CX10 program which stipulates that no customer, country or component shall account for more than 10% of total business. Even as Motherson plans to continue its inorganic growth, the company wants to keep a discipline of not allowing debt/equity ratio to cross 2.5X. Logistics and aerospace are 2 new areas MSSL is looking at.

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