Daily Market Update MAR 19

Untitled 5 Daily Market Update MAR 19

Previous Day’s Market Update

Sensex closed at 49,216.52 down by 585.10 points

Nifty closed at 14557.85 down by 163.45 points

In a victory for Amazon, the Delhi High Court ruled that Future Retail and its promoters wilfully violated the order of the Singapore based arbitrator, SIAC. The order has restrained the FRL deal from going ahead. The court also ordered the attachment of assets of Future Coupons, Mr. Biyani and other promoters. IT also directed Biyani to be present at the next hearing in the case on 28 April. The court also imposed a penalty of Rs.2 million on Future group. The plea was made by Amazon which holds a 49% stake in Future Coupons. The court rejected FRL’s argument that if the deal failed, Future group would go into liquidation.

Bajaj Auto will increase its dividend pay-out ratio and has finalized a structured model for dividend pay-outs in future. Under the new structure, Bajaj can declare dividends up to 90% of standalone profits if surplus cash is more than Rs.15,000 crore. If cash surplus is between Rs.7,500 crore and Rs.15,000 crore, dividend will be restricted to 70-90% of profits. This will be much higher than the historic dividend pay-out rate of 50-60% of profits. Based on latest surplus cash of more than Rs.16,200 crore, the company is likely to fall in the highest bracket and declare dividends in the range of Rs.131 to Rs.143 per share. That would imply a very attractive dividend yield of over 4%. Since Bajaj has limited capital expenditure options in the next few years, higher dividend visibility helps valuations. It is expected to boost ROE by 350 bps.

SBI Mutual Fund will commence monetizing of assets of the 6 schemes of Franklin Templeton, which were shut in April 2020. The monetization will start from next week. The Supreme Court has already approved the standard operating procedure or SOP prepared by SBI MF for the same. SBI MF confirmed that out of the 6 schemes, 5 were cash positive and they had already disbursed Rs.9,120 crore to unit holders. Now the funds have accrued another Rs.1,370 crore for distribution. The 6 schemes received cash flows of Rs.15,272 crore over last one year via maturities, coupons and prepayments. The final haircut is not known.

Adani Green Energy, one of the star performers of the Adani Group, has raised $1.35 billion debt for its renewable assets portfolio. The funding will initially finance the 1.69 GW hybrid portfolio of solar and wind renewable projects which will be set up in 4 SPVs in Rajasthan. A total of 12 global banks have committed funds for this facility. It is expected to be the first certified green hybrid project loan in India. This latest liquidity infusion eases the company’s path towards its vision of scaling capacity to 25 GW by 2025. This thrust also positions Adani Green to capture growth in the attractive Indian renewable sector.

The financial arm of Piramal Enterprises is all set to market its biggest-ever bond issue to part-finance the takeover of Dewan Housing. PEL had won the bid last month in NCLT after a close contest. Piramal Capital plans to raise close to Rs.3,000 crore via debt notes. However, only a part of the proceeds will be used to fund the takeover of DHFL. This acquisition will enable Piramal to substantially expand its Indian lending operations and diversify its real estate loan book. Company insiders admit that the takeover of DHFL will help Piramal to grow exponentially, which would have otherwise taken them many years to achieve.

The consistent selling in equity markets over the last 5 days led to erosion of shareholder wealth to the tune of Rs.800,000 crore. During this period, the Sensex lost 2063 points, with a sharp fall from higher levels on all the days. The FOMC meet on 17 March was generally positive with its dovish tone but it had little impact on equity markets as the correction continued. Among the big losers on Thursday were HCL Tech followed by Infosys, Dr Reddy, TCS, Tech Mahindra and Reliance Industries. However, in these tough markets there were also gainers like ITC, Bajaj Auto, M&M, Maruti and Bharti Airtel. Markets were driven lower by concerns of possible fresh economic restrictions on account of rising COVID cases in India. Among key BSE indices; sharp declines were seen in IT, energy, healthcare, realty and capital goods sectors.


%name Daily Market Update MAR 19

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