Friday, 13th May 2022

For the month of March 2022, the IIP grew 1.9%, compared to 1.7% in February 2022. Manufacturing growth was still weak at 0.9%. This marks the fifth consecutive month that IIP has been below 2%. Power generation and mining grew 6.1% and 4.5%, respectively. The good news is that IIP was up 12.5% on MOM basis, showing good traction in high frequency terms. Supply chain constraints are still pronounced with continued lockdowns in China and the Russia Ukraine war disrupting flow of raw materials for industry. 

Inflation at 7.79% for April 2022 was higher than the Reuters consensus estimate of 7.5%. The big shocker was core inflation touching a 8-year high of 7.24%. Rural inflation spiked to 8.4%, and the inflation was specifically intense in the case of vegetables, cereals, transport and fuel. Food inflation has been elevated at 8.38% despite the promise of a robust Rabi crop. The RBI has already made its intentions clear by hiking the repo rates by 40 bps and CRR by 50 bps. Looking at inflation, more rounds of rate hikes look very likely.

Larsen and Toubro reported 10% growth in net profits at Rs3,621 crore and revenues for Q4FY2022 were also up 10% at Rs52,851 crore. Both profits and sales for the quarter were below analyst estimates. L&T expects order inflows to increase by 12-15%. There was a 100 bps drop in EBITDA margins to 9.1% on account of the sharp spike in raw material and construction costs. L&T sees a potential order pipeline of Rs8 trillion  even as the current order book stands at Rs3.58 trillion. Infrastructure orders tapered in FY22.

First Meridian Business Services, Bengaluru based staffing company, filed its draft red herring prospectus (DRHP) with SEBI for its proposed IPO. The Rs.800 crore IPO will comprise of a fresh issue of Rs50 crore and an OFS of Rs750 crore. The key sellers in the OFS would be Manpower Solutions Ltd, New Lane Trading LLP and Seedthree Trading LLP. Fresh proceeds will be used to repay / prepay debt of subsidiaries. The company boasts of marquee clients like Adani Ports, Dell, Phone Pe, Exide Industries and Eureka Forbes. 

Air India finally got its CEO candidate. Campbell Wilson, CEO of no-frills airline Scoot, will assume charge as the CEO and MD of Air India. Tatas had first selected former Turkish Airlines chairman Ilker Ayci, who had declined to take up the job. Wilson has a background in sales and commercial roles and rose from the ranks of Singapore Airlines. It may be recollected that in FY22 Tata Sons had won the bid for Air India and it has been looking for a full time CEO since then. The primary focus will be on a unique customer service. 

Tata Motors narrowed losses for Q4FY22 to Rs-1,033 crore. Full year net loss came in at Rs-7,605 crore for FY22. Revenues fell 11% yoy at Rs78,439 crore in Q4FY22. Auto companies have been suffering from a global shortage of auto parts and microchips. The India operations are profitable with most of the losses coming from the JLR business. Tata Motors expects the semiconductor problem to rectify only by FY24. JLR posted revenues of £4.8 billion in the Mar-22 quarter. JLR sold 376,381 units in FY22, down 14% yoy. 

One of the world’s most respected PE investors, SoftBank of Japan, reported a record loss of $26 billion at its Vision Fund unit due to portfolio value depletion. This is likely to impact the start-up fund scene in India, where Softbank is already a major investor. Annual loss for Softbank came in at $13.2 billion. There are rising concerns over rising inflation and tapering growth globally. In India, Softbank has investments in Paytm, Ola, Lenskart, FirstCry, Meesho, Unacademy, Zeta, Swiggy, Ola Electric, InMobi; among others

The stock of Hindalco hit a 9-month low at Rs 397 on Thursday 12th May.  EBITDA was 15% lower at $431 million during the quarter amidst operational challenges. Hindalco has fallen 27% in the last one month and 38% from its 52-week high price of Rs636. Novelis reported 34% growth in net sales in Q4FY22 to $4.8 billion. This was an outcome of higher average aluminium prices. Aluminium saw heavy demand from the beverage can and aerospace industry, even as automotive demand was tepid. EBITDA was lower yoy.