Tuesday, 10th May 2022

It was a sharp slump for the Indian rupee as it touched a new all-time low of 77.50/$. The rupee fell by 60 paisa as the US dollar touched a 20-year high. Apart from the dollar strength, the sharp outflows by FPIs has also led to a run on the rupee. Most trades found banks rushing to buy dollars and hedge on behalf of the oil companies. The rupee has lost 115 paisa just in the last 2 sessions. The Bloomberg Dollar Index, a gauge of the dollar against a basket of hard currencies is now at 104 levels even as Brent is at $111/bbl.

The LIC IPO was subscribed 2.95 times at the close of the sixth day of subscription (including Saturday and Sunday). The IPO generated bids worth Rs.43,934 crore. Enthusiasm was seen among retail investors, employees and policyholders while among institutions, it was domestic players that hogged a chunk of the IPO. LIC IPO saw 73.3 lakh retail applications (an all-time record), but slightly lower than the 1 crore applications that the government was targeting. Previously, Reliance Power had got 48 lakh applications. 

IndoStar Capital Finance was locked at 10% lower circuit at Rs.184.30 after the company found certain discrepancies in its commercial vehicle loan portfolio. The stock has already fallen 68% from its issue price of Rs.572. IndoStar counts Brookfield and Everstone among its co-promoters. IndoStar is engaged in providing used and new CV financing to SMEs. It also provides affordable home finance. IndoStar will now make an additional provision of Rs.557 crore to Rs.677 crore. The full review will be completed shortly.

Avenue Supermarts, the operator of D-Mart chain, hit an 8-month low of Rs.3,486. The stock has fallen 12% in last 2 days and has corrected 41% from its 52-week high of Rs.5,900. Even in the recent fall, the stock of Avenue Supermarts has fallen 26% against the Sensex falling 10% in the last six months. Blended revenue per square feet was lower by 8%. The stock also got hit because Axis MF is the largest institutional holder with 3.56% stake. There have been concerns over recent front running allegations at Axis MF.

PVR plans to shift its strategy to aggressively expand its screen launches as it emerges from the prolonged COVID slowdown. PVR plans to add 120-125 screens in FY23, which is more than the annual accretions in screens in the pre-COVID period. For FY23, it plans capex of Rs.400 crore. It will now look to tap Tier-2, Tier-3 and Tier-4 markets. In FY21, PVR added 13 new screens and in FY22 it added 29 screens. PVR is now at 854 screens and plans to touch 1,000 screens by close of FY23. Cinema advertising continues to lag.

The Indian government plans to shortly initiate discussions with Russia to secure concessions on sunflower oil imports. This has become urgent after the spike in domestic edible oil prices and the recent decision by Indonesia to ban export of palm oil. India is aiming for concessional rates for shipments after Russia capped exports of sunflower oil at 1.5 million tonnes. India is angling for getting sunflower oil at lower than market prices, in the same way as it has been getting crude oil from Russia at below market rates.  

Aadhar Housing has finally got approval for its IPO after a full After 5 months of filling DRHP with SEBI. Aadhar Housing Finance is backed by Blackstone. The Aadhar Housing IPO plans to raise Rs.5,800 crore via OFS in which Blackstone is going to participate. Blackstone had picked up this stake from DHFL, after the latter went bankrupt in 2019 for Rs.2,200 crore and invested an additional Rs.1,300 crore in Aadhar. The fresh portion of the IPO will be used to boost its Tier I capital base, which is already robust at 45.87%. 

It looks like the FPIs have largely steered clear of the LIC IPO over valuation and geopolitical concerns. This was evident even in the anchor portion wherein the mutual funds dominated with 72% participation followed by domestic insurance companies. FPIs have filled up just 2% of the overall IPO QIB quota. Even in the anchor portion, the interest mainly came from sovereign funds rather than portfolio managers. This is likely to raise some concerns for future tranches of the LIC stake sales as planned by the government.