Weekly Capsule – (Sep 21 – Sep 25)

weekly cap 1 Weekly Capsule   (Sep 21 – Sep 25)

News Announcement

Impact Analysis

  • Mistry family finally decides to exit their holdings in Tata Group
  • Mistry family owns 18.4%in Tata Sons which is conservatively valued at around Rs.180,000 crore
  • Tatas will have the right of first refusal but pricing of the deal is yet to be finalized and could be a bone of contention
  • Tata Group may have an onerous task funding the buyback of Mistry stake
  • Tata Sons will be forced to sell its most profitable investment in TCS to raise the required amount to buy out Mistry family
  • While Mistry family will seek a premium for control, the Tatas will try and bargain for a holding company discount
  • Route Mobile gets a very strong listing on the stock exchanges
  • Route Mobile listed at a premium of 105% to the issue price but by the end of the week it was nearly 150% higher
  • This is the second premium listing in the IPO market within a week after Happiest Minds also more than doubled on listing
  • Chemcon and CAMS get heavily oversubscribed but not Angel Broking
  • While Chemcon was oversubscribed 149 times and CAMS 46 times, Angel just got about 3.94 times oversubscribed
  • Normally, it is the oversubscription that determines the grey market premium and the subsequent listing price
  • UTI AMC, Mazagon Docks and Likhitha Infrastructure IPOs to open on 29 Sep
  • UTI AMC and Mazagon Docks will be an offer for sale while Likhitha Infrastructure will be a fresh issue of shares
  • UTI IPO will entail PSU banks and LIC reducing their stake to 10% as per SEBI requirements. All 3 IPOs will close on 01 Oct
  • Aurobindo Realty to buy GMR’s Kakinada SEZ stake for Rs.2610 crore
  • For Aurobindo Realty, this will be an important diversification into owning project properties with high growth potential
  • The Rs.2610 crore that GMR will get from the sale will be used to partially defray its mountain of debt
  • Vodafone wins international arbitration award for Rs.20,000 crore at Hague
  • This capital gains tax imposed on the Vodafone purchase of Hutch stake in 2007 has now been quashed by the IAT
  • This would be good news for Cairn PLC, which has been facing a similar kind of harassment on its stake sale to Vedanta
  • Hetero Drugs has launched Favipiravir drug for Rs.2640 per pack
  • The Favipiravir drug has been designed to address COVID-19 cases of much lower intensity as compared to Remdesivir
  • This product will be made available across pharmacies and hospitals but will only be sold against prescriptions
  • Pallonji Group to restructures debt worth Rs.10,900 crore
  • This restructuring will be part of the 2-year window provided by the RBI for restructuring of corporate debt
  • The Pallonji group essentially operates in the construction space and is currently facing a huge cash crunch
  • ED attaches Rs.127 crore London flat of Rana Kapoor under PMLA
  • This was necessitated as Kapoor had hired a consultant to ring-fence the property in London from the legal case
  • The PMLA came into the picture after it was alleged that Rana Kapoor family had diverted funds to personal accounts
  • Latest Reuters poll indicates that RBI may hold status quo on rates
  • The next meeting of the Monetary Policy Committee is scheduled on October 01 to discuss the rates trajectory
  • CPI inflation has been on a sharp uptrend in the last five months and that is likely to induce status quo on rates
  • After Silver Line, KKR also picks up a stake in Reliance Retail Ventures
  • Reliance has till date sold 3.03% stake in Reliance Retail for a total consideration of Rs.13,000 crore
  • This values the retail business at around $59 billion and adds heft to the overall Reliance group valuation
  • LIC, GIC and New India Assurance have been identified as TBTF insurers
  • Being Too Big to Fail or TBTF ensures that the government would also be willing to support these institutions in a crisis
  • However, the TBTF also comes with a cost as it entails higher levels of regulation, reporting and compliance
  • The government has extended the IBC scheme by another 3 months
  • This will ensure that no company can be declared bankrupt or referred to the NCLT till December 24 this year
  • While this would be a boost for the corporates, it remains credit negative for the banks as their dues get stuck
  • Airtel and Idea continue to lose customers in June 2020
  • For Jun-20, Vodafone idea lost over 48 lakh customers while Airtel lost nearly 11.3 customers. Jio gained 45 lakh customers
  • Despite Jio cornering 45% share of telecom market, Airtel did better than Jio in terms of adding broadband customers
  • JP Morgan to pay penalties of $1 billion to the US Department of Justice
  • This follows allegations that traders at JP Morgan spoofed orders in commodities to drive prices higher
  • Spoofing is an act of putting huge orders for short periods and withdrawing the orders to create a semblance of demand
  • KKR, Bain and Blackstone in race to buy 42% promoter stake in Granules
  • The overall market cap of Granules is Rs.9000 crore so the promoter stake should be worth Rs.4000 crore
  • Like Carlyle taking a stake in Sequent, PE funds have shown huge interest in the India API and CRAMS story
  • CAG points to discrepancies in IGST sharing by centre with the states
  • CAG has pointed out that Rs.13,944 crore of IGST in 2018-19 was not apportioned to states which could be a major issue
  • As per the GST Act, the centre is required to transfer 50% of IGST collections to the states plus an additional 42%
  • Uday Kotak gets an extension as chairman of the board of IL&FS
  • The debt burden of Rs.90,000 is yet to be resolved and it was supposed to be substantially resolved by Mar-20
  • However, the COVID pandemic delayed the process and the extension is to ensure continuity in the resolution process
  • New Labour Bill may favour industry over the trade unions
  • The Labour Bill subsumed 25 bills and offers industry the leeway to hire and fire workers
  • While it will make strikes tougher, it is also likely to lead to more units shifting to the organized sector
  • Reliance Jio to launch low priced smart phones with a price tag of Rs.4000
  • This is likely to sharply widen the customer base for Reliance digital offerings as the rural markets are likely to open up
  • Reliance Jio plans to manufacture nearly 20 crore smart phones in 2 years and directly compete with Xiaomi

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