Daily Market Update – Nov 5th 2020

unnamed Daily Market Update   Nov 5th 2020

As the US voting count continues, the first signals of a Biden victory may be emerging. The count stands at 264: 214 in favour of Biden. While Biden has taken a lead in the states of California, Illinois and New York, Trump is leading in Pennsylvania, Texas and Florida. Among the swing states, Biden has already taken Wisconsin and despite strong objections coming from Trump, Biden appears to be surging. However, it is being admitted that the challenge posed by Trump was a lot tougher than people had imagined. For the Democrats to return to power 270 will be the magic mark to cross and they are close.

State Bank of India reported a stellar set of numbers on Wednesday. For the Sep-20 quarter SBI reported 55% growth in profit to Rs.5246 crore on a consolidated basis. This growth in net profit was largely driven by a surge in net interest income or NII as it is popularly known. With most of the major banking results out of the way, SBI had been the only major bank left to announce numbers. The bank asset quality improved as well as its loan loss provisions reduced during the month. However, the bank appears to have two immediate challenges. On the one hand its return on assets or ROA is still very low by banking standards and that could be due to the large capital base of the bank. Secondly, the capital adequacy at around 14% still needs a lot of cushioning before SBI can expand more aggressively.

In a charge sheet filed against the former CEO of ICICI Bank, the Enforcement Directorate or ED has named Chanda Kochhar, her husband Deepak Kochhar, his brother Virendra Kochhar and Venugopal Dhoot of Videocon group in the money laundering case. It may be recollected that Deepak Kochhar is already under judicial custody for non-cooperation in the investigation. ED has alleged that six loans worth Rs.1875 crore were given by ICICI Bank under the leadership of Chanda to Videocon group which turned bad. The audit trail has shown that Deepak Kochhar was a quid pro quo beneficiary in this case.

Hindustan Petroleum has announced a buyback of 10 crore shares at a maximum price of Rs.250 per share amount to Rs.2500 crore. This will constitute around 6.56% of the total outstanding shares of HPCL. It may be recollected that HPCL is currently a subsidiary of ONGC. After the buyback, the ownership of ONGC will come down from 54.7% to 51.1%, which will also indirectly reduce the effective stake of the government. In a tough market when LIC IPO is likely to be put off to the next fiscal year, the government is looking at all possible moves to raise funds and get closer to the divestment target.

Hyderabad based Gland Pharma will open its IPO on November 09 at an indicative price band of Rs.1490-1500 per share. The total IPO size will be just shy of $1 billion at Rs.6500 crore and will be of the largest pharma IPO made in India. Gland Pharma has a B2B business model that focuses on manufacture of injectables. The IPO will be a combination of fresh issue and offer for sale. The company is 74% owned by Fosun of China and the IPO will reduce the stake of Fosun from 74% to 58.3% and hence the government should really have no objection to the issue as it only serves to reduce Chinese stake.

Adani Enterprises, the holding company of the Adani group, has laid out a grand plan to invest up to Rs.50,000 crore in infrastructure projects in the next 5 years of which predominantly the investments will go towards airport infrastructure. It is estimated that nearly Rs.35,000 crore will go towards airports and the balance towards projects in roads, data centres and other projects. Apart from taking over 3 out of the 6 airports that it had bid for, Adani Enterprises has also acquired control over the Mumbai and Navi Mumbai airports. Announcing its results on Wednesday, Adani Enterprises reported net profit of Rs.454 crore for the quarter compared to a small loss in Sep-19 quarter. During the Sep-20 quarter, the group wrote off Rs.129 crore towards oil and gas blocks due to commercial non-viability of the projects.

Related Post

Add a Comment

Your email address will not be published.