11 Best Stock Market News: India’s stock benchmarks rose, aided by gains in healthcare, energy and consumer durables stocks, amidst weak global cues after the first confirmed case of omicron covid-19 strain and Federal Reserve chair’s reiteration of the need of faster tapering of stimulus sapped sentiment.
The S&P BSE Sensex rose 0.36% to 57,892.50. The NSE Nifty 50 also advanced by similar magnitude to 17,236.05. Housing Development Finance Corp. contributed the most to the index gain, increasing 1.9%. Mahindra & Mahindra Ltd. had the largest increase, rising 2.5%. In early trading, 37 of 50 shares rose, while 13 fell.
Dish TV Climbs Amid Report That Bharti Airtel Is In Early Talks For Majority Stake In The Company
Shares of Dish TV India Ltd. rose over 4.8% in intraday trade to Rs 18.4 apiece amid reports that Bharti Airtel Ltd. is eyeing a majority stake in the company.
- According to a Mint report, Bharti Airtel held discussions with Essel Group Founder Subhash Chandra and offered Rs 20 per share for 5.93% stake of the promoter group. Subhash Chandra has not yet accepted the offer, said the report.
- If Subhash Chandra approved the offer, he would make a recommendation to Dish TV India’s chairman, the report cited a person familiar with the matter.
- In early trade, 4.35 million shares of Dish TV India changed hands in a bunched trade. The details of buyers and sellers are not immediately known.
- Trading volume on the stock was 142.6 times the 30-day average volume, for this time of the day.
Trade Deficit Surges In November
India’s trade deficit widened in November, with the preliminary trade data pegging the figure at $23.27 billion compared to $19.73 billion in October.
According to ICRA Rating, this is the highest on record.
Trade Deficit At Record High In November As Exports Moderate
India’s trade deficit widened in November as exports fell more than imports sequentially.
Preliminary trade data released by the government shows that the trade deficit for November was at $23.27 billion compared with $19.73 billion in October. This, according to ICRA Ratings, is the highest on record.
- Merchandise imports were at $53.51 billion in November.
- Imports were up 57.18% year-on-year but down 3.3% month-on-month.
- Merchandise exports were at $29.88 billion.
- Exports were up 26.5% year-on-year but down 16.2% month-on-month.
The trade deficit in the trailing three months has scaled up to a substantial $65 billion, with imports exceeding $50 billion each since September 2022. We now expect the current account deficit to exceed $20 billion in Q3 FY22.
Key Export Items
- Engineering goods exports stood at $8.1 billion, up 37% year-on-year. They were, however, lower than the $9.4 billion from October.
- Petroleum product exports at $3.8 billion were 145% higher than a year ago, but lower than the $5.3 billion in October.
- Gems and jewellery exports were at $2.4 billion in November compared to $4.2 billion in October. They were 11% lower than a year ago as well.
- Electronic good exports were steady sequentially at $1.4 billion, up 30% over the preceding year.
Key Import Items
- Petroleum, crude and and product imports were up 132% over a year ago at $14.7 billion. Imports were only marginally higher than the $14.4 billion in October.
- Electronic goods were at $5.7 billion, up 22% over a year ago. Imports fell compared to $6.8 billion in October.
- Gold imports at $4.2 billion were 37% higher than a month ago, but lower than $5.1 billion last month.
“The holidays in the festive season have substantially dented the momentum in merchandise exports in November 2021, bringing them down to the lowest level of FY22,” said Aditi Nayar, chief economist at ICRA. “We’re cautiously optimistic that the exports momentum will revive, although the uncertainty engendered by the Omicron variant poses a concern regarding the immediate outlook.”
SEBI Proposes A Fix For PNB Housing-Preferential Issue Kind Of Situation
Much of PNB Housing Finance Ltd.’s time this year has been spent in a litigation battle, which ended anti-climatically, with the market regulator. At the centre of it was a preferential issue proposed by the housing financier which the regulator objected to on pricing. Now, the regulator’s primary market advisory committee has made recommendations to fix the issue that emanated from PNB Housing Finance’s dispute with Securities and Exchange Board of India.
The suggestions say:
- A preferential issue resulting in change in control or allotment of more than 5% to an investor or to investors acting in concert to require a valuation report. The valuation should then be considered for pricing the issue.
- If the Articles of Association mandate a stricter pricing formula compared to what’s prescribed under ICDR, that should be adhered to.
- If a preferential allotment will result in change in control, the valuation report should suggest a control premium. Such an allotment is to be done only after a reasoned recommendation from a committee of independent directors. The committee shall also disclose the voting pattern of its meeting.
The proposals are clearly made to ensure a PNB Housing-like situation doesn’t arise in the future, experts BloombergQuint spoke with said.
To recap, it all started with a letter by SEBI objecting to the preferential allotment pricing by PNB Housing’s board. The company sought to raise Rs 4,000 crore via a preferential allotment of shares to select shareholders led by Carlyle Group.
SEBI told PNB Housing Finance to undertake a valuation of the shares as per its Articles of Association—that mandate a registered valuer’s report for such fundraising. PNB Housing Finance objected to it saying pricing has to be done as per SEBI’s Issue of Capital and Disclosure Requirements Regulations.
The matter reached the Securities Appellate Tribunal, resulting in a split verdict, which the Supreme Court refused to decide upon.
Things couldn’t have been left in a regulatory vacuum after the Carlyle-PNB Housing Finance deal got called off—which is why we’re seeing these proposals from the PMAC, Ravi Kumar, partner at IndusLaw, told BloombergQuint.
That said, if they’re implemented, it will be hugely problematic because the minute there is a requirement for a valuation report to justify pricing (of listed securities), there will be ripe challenges in court on this aspect, Kumar said.
The existing regulations on pricing of preferential allotment work well since they are objective. There’s a formula to determine the floor price to prevent abuse. Now, leave the rest to the market. The moment you get into a valuation exercise to determine control premium, it opens the door for anybody to question that in courts
Both the experts also opposed the proposal to get independent directors to specify whether control premium is being charged and if not, then give reasons for it.
A company’s board is duty-bound to ensure that they get the best price possible, Kumar said. “I don’t think we need to get so prescriptive given the fall-out of a couple of cases.”
They already have this fiduciary responsibility under the company law and Listing Regulations, Maggon added. “I somehow feel this is an overkill.”
Not all suggestions by the PMAC are unwelcome. To account for market volatility and make preferential allotments attractive for promoters and existing investors, the PMAC has recommended a formula change.
Currently, pricing has to be a higher of –
- Average of the weekly high and low of the volume weighted average price during the 26 weeks preceding the relevant date; or
- Average of the weekly high and low of the volume weighted average price during the two weeks preceding the relevant date.
The suggestion is reduce 26 weeks to 60 trading days and replace two weeks with 10 trading days in the existing formula.
JMC Projects Jumps 17% On Rs 1,795 Crore Order Win
Shares of JMC Projects India Ltd. rose nearly 17%, the biggest intraday gains in over two months, to Rs 106.9 apiece, after the company secured new orders worth Rs 1,795 crore in water supply projects and B&F projects in India.
JMC Projects’ order inflows for the current fiscal year surpassed Rs 9,750 crore with the latest order.
All the five analysts tracking the company maintained ‘buy’ recommendations. The overall consensus price of analysts tracked by Bloomberg implied an upside of 53.5%.
Lupin Partners With UK’s TTP For Soft-Mist Inhalation Technology
- Shares of Lupin Ltd. jumped nearly 1.40% after the company’s wholly-owned subsidiary Lupin Inc. entered into an agreement with TTP Plc to acquire exclusive, worldwide rights to develop, manufacture, commercialise products using TTP’s soft-mist inhalation technology platform.
- Lupin expects to provide healthcare professionals with alternative solutions to deliver inhaled medicines to patients globally, by leverage the technology.
- Soft-mist inhalation technology aids targetted delivery of the drugs from an inhaler devices without using propellants. Lupin expects applications across respiratory care with this technology.
- Of the 42 analysts tracking the company, 21 maintained ‘buy’, 11 maintained ‘hold’ and 10 maintained ‘sell’ recommendations. The overall consensus price of analysts tracked by Bloomberg implied an upside of 12.9%.
Gujarat Fluorochemicals Hits Record After ICICI Securities Initiates Coverage With ‘Buy’ Rating Citing Company’s Advantage In Fluoropolymers Business
Shares of Gujarat Fluorochemicals Ltd. climbed over 15%, the biggest intraday gain in almost eight months since April 9, 2021, to a record Rs 2,369.95 apiece after brokerage firm ICICI Securities initiated coverage on the stock with a ‘buy’ recommendation, with a price target of Rs 3,086, an implied return of 49.81%.
- Gujarat Fluorochemicals is in a sweet spot as rising demand for fluoropolymers driven by battery, solar panel and green hydrogen verticals.
- Expansion into other fluorine derivatives provides an avenue for sustained growth as it expands the company’s addressable market.
- Company’s bold capex plan of Rs 2,500 crore over the next three years likely to lead to earnings growth of 45.9% CAGR over FY21-24E (on low base).
- Expect RoCE (post-tax) to improve from 6.7%-18% over FY21-24E.
- High entry barriers in fluoropolymers augur well for the company as the requirement of expertise in managing the reactive chemistry of fluorine, specifics of loading, storage and transport of the material, restriction in the supply of R-22 (for TFE monomer) and R-142B (for VDF monomer) and long gestation period in the business lends an advantageous position.
- Company remains the sole manufacturer of fluoropolymers in India and is among the very few players outside China with a large fluoropolymer portfolio.
- Gujarat Fluorochemicals has an edge in specialty fluoropolymers segment as well in which China has limited global presence.
- Expect fluoropolymer revenue to grow at 32.9% CAGR over FY21-24E
- Battery chemicals and other new-age verticals to offer the company a huge option value.
- Efforts to reduce working capital to 100 days from 164 days in FY21 along with utilisation of advances should aid free cash flow.
- Expect the company to have very little net debt at the end of the forecast period.
- Stock is trading at P/E multiple of 20xFY24 which is reasonable compared to peers like 42.1x for Navin Fluorine and 27.5x for SRF.
Of the five analysts tracking the company, four maintained ‘buy’, and one maintained ‘hold’ recommendations. The overall consensus price of analysts tracked by Bloomberg implied an upside of 15.4%.
Trading volume on the stock was 10.5 times the 30-day average volume, for this time of the day.
SBI Partners With Adani Capital For Co-Lending To Farmers
State Bank of India Ltd. signed a master agreement with Adani Capital Pvt Ltd., the NBFC arm of Adani Group for co-lending to farmers to purchase tractor and farm implements to increase efficiency in farm operations and crop productivity.
Larsen & Toubro Ties Up With ReNew Power For Green Hydrogen Business In India
- Larsen & Toubro Ltd. will partner ReNew Power to jointly develop, own, execute and operate green hydrogen projects in India.
- In a statement to exchanges, L&T said that green hydrogen demand in India will rise to 2 MMTPA by 2030, for applications such as refineries, fertilisers and city gas grids.
- This is in-line with India’s green hydrogen mission and would require investments of $60 billion.
Maruti Suzuki: Rising Input Costs Forcing Company To Pass On Some Impact To Customers Through A Price Hike
- Maruti Suzuki reiterated that cost of vehicles continue to be adversely impacted due to increase in various input costs. In an exchange filing, the company said that the additional costs have made it imperative for the company to pass on some impact to customers through a price hike.
- The price rise has been planned in January, 2022.
- The price rise shall vary for different models.
BCPL Railway Infra Climbs The Most In Over Two Months After Bagging Order From East Coast Railway; Project Cost: Rs 19 Crore
Shares of BCPL Railway Infrastructure Ltd. rose nearly 3.5%, the biggest single day gain since October 27, to Rs 45.05 apiece after the company bagged an order from the East Coast Railway, Electrical, Construction, Bhubaneswar, Head Quarters.
In an exchange filing, the company said that the order was received for electrification of a new line in Sambalpur division of East Coast Railway. The total project cost is Rs 19 crore.