Market Walk

Top Highlights Of The Day – Nov 2nd 2021

Merchandise exports for Oct-21 were up by 42%

As per initial estimates put out by the Ministry of Commerce, merchandise exports for Oct-21 were up 42% at $35.47 billion. The export thrust was driven by engineering goods, petroleum products, jewellery and chemicals. However, imports continued to remain high at $55.37 billion. While the trade deficit is still high at $19.9 billion, it is lower than the trade deficit of $22.59 billion in Sep-21. Gold and oil imports were the key drivers of the import surge. India looks on target for $400 billion in exports for Fiscal 2021-22.

Shortage of semiconductors in Auto companies

Auto companies are being sharply impacted by shortage of semiconductors as is evident in the October auto numbers. Maruti reported 33% fall in auto sales at 108,991 units in Oct-21. The microchip shortage has forced several auto companies to temporarily halt production. Hyundai saw 37% fall in Oct-21 sales at 43,556 units. Even Tata Motors reported 30% fall in auto sales at 52,132 units in Oct-21 on a yoy basis. While order bookings are strong, dealer inventory is running as low as 1-2 weeks and may run out soon.

Bounce in GST collections for the month of Oct-21

Finally, there has been a decisive bounce in GST collections for the month of Oct-21 at Rs1.30 trillion. This is 24% higher on a yoy basis and is the second highest monthly collection since GST was introduced. Taxes on imported goods was up 39% while taxes from domestic transactions were up 19% yoy. In addition, the various State and Central tax departments had used technology to track evaders and plug the gaps in GST collections. The restrictions on non-compliant taxpayers also resulted in sharply higher GST collections.

Govt asks ONGC to give 60% stake in mainstay oil fields to foreign firms

Ministry of Petroleum has asked ONGC to sell 60% stake plus operating control in India’s largest oil and gas producing fields of Mumbai High and Bassein to global companies. The additional secretary pointed out that productivity of the Mumbai High and Bassein were very low and global partners should be invited to enhance output. Yields from Mumbai High have been continuously falling and the Ministry wants to improve recovery from 28% to 32%. Mumbai High and Bassein have been the mainstay assets of ONGC.

SAIL Stock Surge

SAIL stock was up 13% at Rs.130 after it reported stellar 10-fold surge in net profits to Rs.4,304 crore. Even sequential PAT was up 12% in the Sep-21 quarter. SAIL reported 48% spike in standalone revenues on the back of strong volume growth and robust steel prices. EBITDA margins at 26.2% is extremely attractive. However, the EBITDA at Rs.16,395 per tonne was lower than analyst estimates of Rs.18,000 per tonne. It may be recollected that in the Sep-21 quarter, Rakesh Jhunjhunwala had bought a big chunk of SAIL.

Paytm to raise $1.1 billion from the anchor investors ahead of its mega IPO

One97 Communications, the company that owns and operates Paytm, expects to raise $1.1 billion from the anchor investors ahead of its mega IPO opening next week. Paytm is looking to raise Rs.18,300 crore from the IPO. While the anchor list is awaited, it is reported that marquee global names like Blackrock, Canada Pensions, GIC Singapore and other sovereign funds had evinced interest in the Paytm anchor share placement. The anchor is expected to be closed on 03-November. IPO Price band is Rs.2,080 to Rs.2,150.

OMCs raised ATF prices by 13.8% over the last One month

OMCs raised ATF prices by 13.8% over the last 1 month and nearly 96% in the last 1 year .This was on the back of rising global crude prices. This is likely to pinch the airline companies as jet fuel constitutes around 35-40% of the cost of running an airline. This has risen in sync with the 100% spike in Brent Crude prices in the last one year. Rising ATF prices will mean that airline companies will continue to make losses due to negative spread between RASK and CASK. In September the government allowed 100% capacity flying.

Nykaa to have 82.42X subscription of its IPO

FSN E-Commerce Ventures, the company that owns and operates Nykaa, saw 82.42X subscription of its IPO. Against the issue size of nearly Rs.3.000 crore (net of anchor placement), Nykaa received total bids of over Rs.243,000 crore. The QIB portion was subscribed more than 92 times while the HNI portion was subscribed more than 112 times. Nyka is already commanding a GMP of Rs.570 per share over and above the issue price. Nykaa is one of the few profit-making digital plays in India, although just for last one year.

Facebook is now Meta: FB wants to be the face of the metaverse

FB expects its investment in the metaverse to reduce its total operating profit by a whopping $10B this year. Ad sales currently make up 97% of FB’s total — and rely on your scrolling on Apple and Google phones. But the metaverse could be a hub for virtual interaction and commerce, from games and ticket sales to hangouts, all powered by Facebook. FB blamed Apple’s iOS update, which lets users opt out of ad tracking — and warned it could continue hurting sales.Facebook also thinks its stock is a buy – the company increased its share repurchase program by a hefty $50 billion.

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