Wednesday, 18th May 2022

India may revise its stake sale in BPCL lower and sell just about 20-25% stake instead of selling its entire 52.98% stake in BPCL. The government had originally planned to raise $8-10 billion from the complete stake sale but that was not working out. In 2020, BPCL was expecting to get bids from Saudi Aramco and Rosneft of Russia, but they stayed out due to low oil prices. PE outfit, Apollo Global Management, and Vedanta Group are currently the final bidders. That is likely to reduce the disinvestment flows for the year FY23.

For Q4FY22, Bharti Airtel reported 165% higher net profits at Rs2,008 crore. Revenues were 22.3% up at Rs31,500 crore while average revenues per user (ARPU) was up 22% yoy at Rs178. This was on the back of a sharp tariff hike in Q3FY22. However, the numbers may not be comparable as the Q4FY22 profit also includes exceptional gains of Rs906 crore on account of gains on sale of telecom tower assets as well as a settlement with strategic vendor. OPM improved to 50.8% and Airtel added 2.15 crore customers in FY22.

In a twist in India’s oil equations, Russia became the 4th largest oil supplier to India in April 2022. The low prices offered by Russia is leading to a spike in volumes and better market share in India at 6%. That is a supply of 277,000 bpd in April 2022 compared to just 66,000 bpd in March 2022. Russia is now sanctioned by the West, but India continues to support Russia by buying their oil in such stressed times. In April 2022, the share of African oil fell from 14.5% to 6% while US share halved to 3%. OPEC share is at a record low. 

IOCL reported -31.4% lower net profits for Q4FY22 at Rs6,022 crore but FY22 profits set a new record. Revenues were up 26.1% yoy at Rs206,461 crore for Q4FY22. There was a margin squeeze in petchem and loss in auto fuel sales due to static prices even amidst rising crude prices. GRM of $11.25/bbl was offset by weak petchem margins. For FY22, IOC sold 86.407 million tonnes, including exports. IOCL announced a bonus issue in the ratio of one-for-two shares. It has paid a final dividend of Rs.3.60 per share pre-bonus. 

WPI inflation for April 2022 came in at a 17-year high at 15.08%, higher by 53 bps on MOM basis. The high WPI inflation level comes on an already high base of 10.74% in April 2021. This marks the 13th month that WPI inflation has been in double digits. Food and fuel were major drivers of WPI inflation with fuel rising 38.66%. With retail inflation at 7.79%, this was bound to happen. With CPI and WPI inflation being almost unrelenting, the RBI will have little choice but continue the rate hikes in the June and August policies too.

LIC listed on the bourses nearly 8% lower and despite several attempts at bouncing back, closed at Rs873. The closing was near the low point of the day and it is not only below the issue price, but also below the discounted IPO price applicable to retail shareholders (Rs904) and policyholders (Rs889). Traders as well as analysts are already demanding a bumper dividend from LIC to offset the price impact. The street view is that if LIC tries and maintains a dividend yield of 3-4%, then it can act as a support base for the LIC price.

International Holding Company PJSC, based out of Abu Dhabi, invested Rs15,400 crore in 3 Adani group entities. IHC invested Rs3,850 crore each in Adani Green Energy and Adani Transmission while it invested Rs7,700 crore in Adani Enterprises. It is not clear, what this means in terms of equity stake. Currently, the trade between the UAE and India has already touched $41 billion. IHC has pioneered several such strategic investments in renewable energy. Adani group will invest $50 billion over next 9 years in green hydrogen. 

In a significant ruling, the Supreme Court said that state moneylending laws will no longer apply to NBFCs. In other words, RBI would have the sole powers to regulate NBFCs and this does away with the current system of dual regulation by the RBI and the state governments. This would also ensure that there is zero political interference from the state governments. In the past NBFCs were stifled by state regulations on interest capping and directed lending. NBFCs will reach out to a larger base of customers and borrowers.