Stock Market Investment Shot, 19th September 2022

Last week, 6 out of the top-10 most valuable companies in India by market cap suffered value erosion of Rs200,281 crore. The losses were led by IT frontliners. Among major losers, TCS lost Rs76,346 crore and Infosys lost Rs55,832 crore. Other market cap losers included Reliance Rs46,852 crore, Hindustan Unilever Rs14,015 crore, HDFC Ltd Rs4,621 crore and HDFC Bank Rs2,615 crore. Among gainers, Adani Transmission gained Rs17,720 crore, SBI Rs7,274, Bajaj Finance Rs6,436 crore while ICICI Bank gained Rs5,287 crore.

It is reported that the Ontario Teachers’ Pension Fund will buy 30% stake in Mahindra Susten for Rs2,371 crore. Mahindra Susten, the sustainable energy business of Mahindra group, will first transfer renewable power assets to an INVIT with Avendus Capital acting as financial advisor to Mahindra Group. Mahindra Group will receive Rs1,300 crore inflow. Ontario will deploy additional Rs3,550 crore into the business. Mahindra Susten also has a renewable EPC business, an IPP business as well as solar footprint across India.

The period from April to mid-September saw advance tax collections rise 17% to Rs2.95 trillion yoy. This spike in collections is on the back of revival of economic activity, stable policies, streamlining of processes, and plugging leakages. While Rs2.29 trillion came from corporates, Rs0.66 trillion came from individuals. This year has also seen quicker refund turnarounds leading to improved advanced tax payments. The CBDT has already issued tax refunds for FY22 to the tune of Rs1.35 trillion till date, nearly double of last year.

Foreign portfolio investors (FPIs) infused Rs12,084 crore into Indian equity markets in the first 17 days of September. This is far short of the Rs51,200 crore of net equity buying by FPIs in the month of August 2022 Between October 2021 and June 2022, FPIs sold equities worth Rs2.46 trillion and the turnaround started in a small way in July 2022, before picking up steam in August. FPIs are still confident of continued growth momentum in India. However, last few days has seen some caution from FPIs ahead of Fed meet.

Tirupati based Amara Raja Batteries will focus on the electric vehicle (EV) segment. India’s second largest battery manufacturer will focus on renewable energy markets and energy storage systems. Amara Raja will be investing Rs7,000 crore on lithium-ion, even while continuing traditional acid batteries franchise. Amara Raja is already supplying cells to some EV manufacturers in India. To facilitate this shift, the merger of Amara Raja Power Systems and Amara Raja Infrastructure is expected to be completed by end of 2022.

Inox Green Energy, a subsidiary of Inox Wind, is planning to hit the IPO market by October 2022 to raise Rs740 crore. The IPO will comprise of a fresh issue of Rs370 crore and offer for sale (OFS) of Rs740 crore. It will be the company’s second attempt at completing the IPO. Inox Green Energy Services is engaged in providing long-term operation and maintenance (O&M) services for wind farm projects, specifically for Wind Turbine Generators (WTGs) and the infrastructure supporting evacuation of power from the WTG.

With the latest IPO of Harsha Engineers being subscribed 74.70 times, a slew of IPOs are likely to hit the market in the next few weeks. Aadhaar Housing Finance, Five-Star Business Finance and Ixigo are the 3 companies likely to hit the IPO market soon. Aadhar Housing, an affordable housing financier, will raise Rs7,300 crore via the IPO. Five Star Business, a micro lending NBFC, will raise Rs2,752 crore via an OFS. The third IPOs is likely from IXIGO, an overseas travel agent, which will raise Rs1,600 crore from IPO route.

Diversion of excess feedstock for ethanol production has led to jump in production capacity to 923 crore litres annually. The focus on ethanol blending is likely to help save Rs30,000 crore of foreign exchange for India annually. The government plan to convert farmers from “Annadaata” to “Urjadaata” may be easier said than done, due to the sensitivities of food production. To reduce the pressure of rising crude imports, the government had pulled back the deadline for ethanol blending by over 5 years, and that has helped.