Tuesday, 17th May 2022

The decision by Holcim to sell its India business to Adani family will not attract capital gains tax. The deal is being routed through an offshore Mauritius entity. On Sunday, Holcim sealed the deal to sell 63.3% in Ambuja Cements and 4.48% stake in ACC to Adani family. In the light of Vodafone and Cairn Energy cases, Holcim has concluded that there would be no capital gains levied on the gains made. However, the CBDT is yet to give a confirmation on the matter. There is an existing DTAA signed between India and Mauritius.

Ahead of the LIC listing on 17th May, the markets are worried about the impact of bear hammering on the stock price. The price of the IPO was discovered at the upper band of Rs949. Of course, the retail will pay a discounted price of Rs904 while policyholders will pay a discounted price of Rs889 per share. The GMP was indicating a 10-15% discount on LIC IPO, but that is not an official price. Most analysts expect a discount on listing due to the lukewarm response to the IPO. In the past, large IPOs have had bad listings.

Bandhan Bank stock surged 8% on Monday to touch a price of Rs342.70 after it had reported improvement in asset quality in the March 2022 quarter. Gross NPAs fell 435 bps to 6.46%. For the Q4FY22, the NII was up 44.6% yoy at Rs2,540 crore. Net profit was up 19-fold at Rs1,902 crore in Q4FY22. NIM increased to a healthy level of 8.7%, while provisions fell sharply in the quarter. Bandhan Bank has also raised guidance for earnings growth in FY23 and FY24 to 23% and 17% respectively, on the strength of lower credit costs.

Paytm has decided to terminate its agreement with Prism Johnson to purchase 51% stake in Raheja QBE General Insurance. This was after the deal not being consummated within the stipulated time. However, Paytm has underlined that it remained bullish on non-life insurance and plans to seek a new license for general insurance. The deal was to acquire 51% in Raheja QBE for Rs290 crore. Paytm had planned to acquire the 51% owned by the Rahejas and the 49% owned by QBE of Australia, but deal did not work out.

Tata Power Solar, the renewable solar energy subsidiary of Tata Power, received an order for 300-MW solar power project worth Rs1,731 crore from NHPC. The project will be completed in 18 months under the IREDA CPSU scheme. It will produce approximately 750 million units yearly using Indian-made cells and modules. Tata Power Solar has been driving the valuations of Tata Power in the recent past. It has a pending order book of Rs13,500 crore, and its utility-scale solar project portfolio has now grown to 9.7GW.

Hero MotoCorp expects to see robust growth in FY23 in two-wheeler demand with an economic revival and rising rural incomes post the Kharif harvest. Hero Moto plans multiple product and variant launches in the FY23 and FY24 to gain market share more effectively. Its top line in Q4FY22 took a hit on weak rural demand while spike in raw material price had dented operating margins. Hero Moto expects a sharp surge in replacement demand and it also expects much better finance options to catalyse sales growth in FY23.

L&T expects its IT services business to double revenues to Rs73,980 crore by FY26. It also expects the share of high margin business to jump to 27%. Among its 3 group IT companies, Mindtree and LTI have been merged, while LTTS is still a separate entity. That assumes CAGR growth of 23% over next 3 years. More than 45% of the operating income of L&T comes from the IT business and by 2026, this is expected to grow to 60%. Bulk of the L&T market cap accretion in last few years has come from group IT businesses.

RBI is likely to follow up on its surprise rate hike in May 2022 with more rate hikes in June and August. Most analysts polled by Reuters expect a total of 75 bps rate hike between June and August, although they are not too sure about the quantum of rate hike in June 2022. That would complete the reversal of the COVID rate cuts undertaken by the RBI. The expectations varied from 35 bps to 75 bps rate hike in June. A lot will also depend on whether the RBI amplifies rate hikes with inflation upgrades and CRR hikes.