Daily Market Update DEC 30th

unnamed Daily Market Update DEC 30th

Air Asia of Malaysia plans to sell 32.67% stake in Indian operations to Tata Sons for a consideration of $37.7 million. Tatas already own 49% in Air Asia India so this will take their stake closer to 82%. It will gel with the Tatas bid for Air India as it gives them a much bigger share of the skies. Air Asia wants to focus more on its core Southeast Asian markets. The move was expected after Air Asia decided to fully exit Japan. Air Asia’s India operations had been draining cash. The sale to Tata Sons will be done by March 2021. It will waive brand license fee payable by Air India to Air Asia Malaysia as part of the deal.

RBI in its latest report has warned that although gross bad loans had moderated in FY20 and in first half of FY21, the asset quality could sharply deteriorate in the quarters ahead. The gross NPAs of the banking system had fallen to 7.5% in Sep-20 on lower slippages and IBC recoveries. RBI cautioned that NPAs would have been much higher in the absence of asset quality standstill for COVID. RBI has pointed that improvement in banks continued till Sep-20 due to moratorium on loans and an asset classification standstill. The restructured advances ratio is up to 0.43% in Sep-20 from 0.36% in Mar-20, hinting at potential stress. During COVID, RBI had permitted a moratorium on loan repayments. As of Aug-20, 41% of retail loans, 69.29% of small business loans and 34.28% of corporate loans were under moratorium.

ICICI Bank has committed to acquire 9.09% stake in Myclassboard Educational Solutions Private Limited, an educational technology online platform. The purchase will be for a cash consideration of Rs.4.50 crore. ICICI bank has also confirmed the news in a regulatory filing to the exchanges. This values the online edtech platform at around Rs.50 crore. Myclassboard offers an online school management platform and it had a turnover of Rs.12 crore in FY-20. This is in sync with ICICI Bank’s plans to add to its online digital franchise with inorganic buys. The transaction is expected to be completed by Feb-21.

Amazon, which has been involved in a prolonged battle with Future Group over its sale of stake to Reliance Retail, asked SEBI to wait for the final order of a Singapore court before clearing the FEL-RRVL merger. Amazon has apparently written to SEBI that the Singapore arbitration court’s ruling had been held valid under Indian arbitration laws by the Delhi High Court. The High Court in its 21 December order had allowed Amazon to oppose the FEL-RRVL deal but left it to regulators, including SEBI, to decide on the validity of the deal. Effectively, it is Amazon-Reliance rivalry playing out with Future Group as proxy.

Tata Motors appears to have benefited from the BREXIT deal considering its strong dependence on Jaguar Land Rover for driving its auto sales globally. JLR can continue to export and import its products between the UK and EU without any tariffs or quotas. The deal was important to Tata Motors because JLR accounts for over 80% of revenues of Tata Motors. The deal will surely help JLR consolidate the sales recovery in the second quarter, which was up 53% sequentially. This will also be helped by the fact that JLR has been relentlessly pursuing its cost reduction efforts which led to 11.1% EBITDA margins in Q2.

Glenmark Pharma launched a fixed-dose combination drug for the treatment of Type 2 diabetes in India, with its rising prevalence in the country. The drug is a combination of Remogliflozin Etabonate and Vildagliptin for management of Type 2 diabetes. In terms of components, the drug has Remogliflozin (100 mg) and Vildagliptin (50 mg) to be taken twice in a day to improve glycemic control in patients. These products have been launched under two distinct brands viz. Remo V and Remozen V. Glenmark had secured approval for the drug from the DCGI in late November 2020. While similar drugs cost Rs.78 per tablet, Glenmark’s Remogliflozin-Vildagiptin combination is available at Rs.14 per tablet, reducing the cost of treatment substantially. There are 7.7 crore adults in India with diabetes as of end-2019.

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