Stock Market Investment Shot, 29th June 2022

In a major succession move, Mukesh Ambani stepped down as director of Reliance Jio Infocomm, handing over the reins to son Akash. The board had already approved the appointment. The transition assumes importance in the light of Jio Platforms planning an IPO in the near future. His twin sister, Isha, is driving the retail business. Akash was closely involved with the launch of JioPhone in 2017 as well as the major share placements with marquee investors and key acquisitions. Mukesh will focus on providing guidance.

Zomato lost 14% value in 2 days and depleted nearly $1 billion in market cap since it announced the deal to take over Blinkit last week. While Quick Commerce has been a slippery area as a business model, investors are also worried about the 7% equity dilution that the stock swap will result in. The total Blinkit deal is worth Rs4,447 crore. While Zomato has envisaged investment outlays of $400 million for Blinkit, analysts believe it could be much more than that. Efficient and consistent fulfilment has never been easy.

On Tuesday, the rupee plunged sharply by 48 paise to close at 78.85/$, largely on account of sustained FPI outflows and a surge in crude prices. The RBI intervention was missing and it looks like the central bank may only come back to defend the rupee around the 80/$ levels. With the Fed holding its hawkish tone, there has been a rush from the oil companies to buy dollars. Brent has rallied back to above the $117/bbl levels. RBI did defend the rupee briefly around the 78/$ levels but gave up against momentum.

Allied Blenders and Distillers, better known for their Officer’s Choice brand whisky, have filed the draft red herring prospectus (DRHP) for a Rs2,000 crore IPO. The IPO will comprise of a fresh issue of Rs1,000 crore and an offer for sale of Rs1,000 crore. The company is also looking at a pre-IPO placement of Rs200 crore, in which case the IPO size will be reduced proportionately. The proceeds from fresh issue will be used to repay debt. Allied Blenders, part of the Chhabria group, has a total portfolio of 10 brands of IMFL.

GST Council approved key changes in tax rates on goods and services plus other procedural changes. This included putting 28% GST on casinos, online gaming and horse racing. It also approved withdrawal of GST exemption on hotel accommodation below Rs1,000 per day and levy of 5% GST on hospital room rent above Rs5,000 per day. Regarding e-way bill on intraday state movement of gold and jewellery, a limit of Rs2 lakh has been envisaged. There will be verification post registration of high risk taxpayers under GST.

After a brief lull, the stock prices of pure oil refiners like MRPL and Chennai Petroleum rallied by over 8% on Tuesday on the back of a sharp rebound in the price of crude oil. Oil has moved up after it was clear that Saudi Arabia and UAE had little room to expand output. Oil refiners have been one of the big gainers in this rally as their gross refining margins (GRMs) have expanded sharply even as there has been little impact on marketing margins, which is the challenge for the likes of IOCL and BPCL. Reliance was up 1%.

Whitehat Jr, the children’s IT training unit of Byju’s has already asked 300 of their team members to go and this number is now likely to rise to 600. This is reflective of the general pressure that most of the edtech stocks are under. This has impacted employees located in India and abroad. In addition, around 800 employees of Whitehat Jr had also resigned in March and April of this year. Byju’s had acquired the company in 2020 for a consideration of $300 million. Whitehat posted total loss of Rs1,690 core in FY21.

You can call it marriage in the clouds. Jio Platforms and DigiBoxx, an Indian file storage and sharing platform, have partnered with the intent of offering cutting-edge storage solutions and also for providing cloud consolidation for Reliance Jio customers. Jio users signing up for DigiBoxx will get additional 10 GB storage. For DigiBoxx, this allows them a massive platform for their proprietary cloud technology. It is expected to deliver an unparalleled user experience for all Jio users looking for extra storage solutions.