The latest IMF World Economic Outlook projected India’s GDP contraction to worsen to -10.3% for FY21. However, this was expected to be followed up with positive growth of +8.8% in the year after that. IMF has also projected that global GDP would contract by -4.4%. The US economy would contract by -5.8% in 2020 but bounce back with +3.9% growth in 2021. According to the IMF, China would be the only major economy to show positive growth at +1.90% in 2020. The previous estimates of the IMF had pegged India’s GDP contraction at -9.6% so the latest estimates are nearly 70 basis points worse.
Software major, Wipro, reported 3.4% yoy fall in net profit at Rs.2466 crore for the Sep-20 quarter. However, on a sequential basis, the revenues were higher by 3.15%. Overall revenues at Rs.15,115 crore were marginally lower by 0.07% in Sep-20 quarter on a yoy basis. The company saw an expansion in margins and also robust cash generation as is evident from the sharp spike in cash flow from operations as a percentage of the net profits. Along with results announcement, Wipro also announced a buyback of 23.75 crore shares at a maximum price of Rs.400 per share aggregating to Rs.9500 crore. In terms of third quarter guidance, Wipro has hinted at sequential growth of 1.5- 3.5% in revenues in the Dec-20 quarter. Wipro will also be acquiring Eximus Design, a leading engineering services company.
Karnataka Bank reported 12.23% higher net profit of Rs.316 crore for the first half of the fiscal year ended Sep-20. For the September quarter alone, the profits were 12.7% higher at Rs.119.35 crore. During the quarter, deposits of the Bank grew to Rs.72,923 crore while advances grew to Rs.54,099 crore. On the asset quality front, the gross NPAs fell from 4.78% to 3.97% while the net NPAs fell from 3.48% to 2.21%. Karnataka Bank saw its share of CASA deposits rising to 29.17% of its total deposit mix, which is still very low by normal private bank standards. Bank has recovered well from COVID impact.
Ministry of Finance allowed 20 states to raise up to Rs.68,825 crore via borrowings to meet GST revenue shortfalls in the current year. The GST Council meeting on 12 October was inconclusive with non-BJP states unwilling to accept the borrowing model. The 20 states have decided to go ahead and borrow to meet the shortfall arising out of GST implementation. Nirmala Sitharaman noted that no consensus had been arrived at for the dissenting states that had refused to borrow. One of the dissenting finance ministers, Thomas Isaac of Kerala, has expressed unhappiness at the arbitrary decisions of the Council.
SRF Ltd, one of India’s leading speciality chemicals manufacturers, launched a qualified institutional placement or QIP offering to raise Rs.750 crore from institutional investors. SRF also informed the stock exchanges that the floor price for the institutional sale of shares would be set at Rs.4168.73 per share. This is based on a SEBI prescribed formula. This is at a discount to the recent closing price of SRF. The company plans to use the proceeds of the sale of shares to fund organic and inorganic growth. This includes ongoing capital expenditure as well as prepayment and repayment of outstanding borrowings.
Vedanta will refund the money raised from banks and bondholders after its plan to delist Vedanta failed due to lack of demand. Vedanta Resources had created a war chest of nearly $3.15 billion including $1.4 billion raised via bonds and $1.1 billion raised via loans. Last week, minority shareholders of Vedanta Ltd, led by LIC, rejected the deal by asking for a price of Rs.320 per share as against the floor price of Rs.87.50 set by Vedanta Resources. The Vedanta group had, in the past, incurred the ire of shareholders by throwing corporate governance standards to the wind in the Anglo American deal. Vedanta is yet to decide if it intends to pursue the delisting program again. Shareholders have also questioned the timing of the recent $2.3 billion write-down on its oil assets. Vedanta Resources has a huge debt problem.