The budget has kept FY24 Fiscal Deficit target at 5.9% of GDP and has increased the capital expenditure outlay to 3.3%. For direct tax, an increase in income rebate to ₹7 lakh under the new tax regime and no tax for the first 3 lakh under the old regime.
Angel One views on Rupee: Upcoming RBI policy shall be the game changer
Heena Naik, Research Analyst – Currency, Angel One Ltd: The USDINR Spot (CMP: 81.76) is likely to remain in the bearish arena for some more time and could possibly move towards 80.80 levels in the coming days. The Union Budget shall allow the middle-class clan (largest spender) to spend more and support the economy in the due course of time. The next important event is today’s FOMC Policy, and the upcoming RBI policy shall be the game changer for Rupee. For now, USDINR looks bearish.
Fuelled by rise in Seltos, Sonet purchase, Kia India’s vehicle sales grow by 48% in January
With the rise in auto sales by 48% in January, mainly driven sales of Seltos and Sonet, Kia India witnessed an encouraging start to the year 2023. The automaker, on Wednesday, said that its wholesales rose by 48 per cent at 28,634 units in January. The company’s wholesales stood at 19,319 units a year ago at the same time.
The company informed that two of its key models, ie Seltos and Sonet, witnessed an impressive hike in sales. Seltos and Sonet models’ sales stood at 10,470 and 9,261 units during January. Kia Carens stood third in the rankings, followed by Carnival. Around 7,900 units of Kia Carens and 1,003 units of Carnival were sold by the automaker in January 2023. (Read More)
George Alexander Muthoot, MD, Muthoot Finance views on the budget
“The Budget 2023 presented by our Honourable Finance Minister today has touched upon all the right chords of the economy, and it will go a long way to boost capital expenditure, infrastructure, housing, along with consumption. The capex expenditure outlay of ₹10 lakh crore will pave the way to boost economic growth, along with job creation. The enhanced outlay by 66% to Rs. 79,000 crore under the PM Awaz Yojna will boost India’s housing sector, especially in the rural and semi-urban areas. FM’s focus on sustainable cities, creating infrastructure in Tier 2 and Tier 3 cities and Fifty additional airports, heliports, water aerodromes will further boost rural connectivity thereby supporting regional economy.
During the pandemic MSMEs relied heavily on gold loans to meet their credit needs and the budget further has offered a big relief to MSMEs, which have been one of the most impacted sectors during the pandemic. In order to reduce the stress on the segment and increase the flow of funds, the Government revamped the ECLGS scheme via the infusion of ₹9000 crores in the corpus. This will enable collateral for ₹2 lakh crore loans to the small and medium-sized businesses. Further, 95% of the forfeited amount relating to bid or performance security will be returned to the MSMEs by the government and other undertakings. We also believe that the reforms announced with respect to the growth and development of the agricultural sector, animal husbandry and fisheries will further boost these sectors and support the economy. All these measures will positively enhance the scope of Gold-loan NBFCs like us, which are catering to the underbanked sectors of the society.”
Manu Rishi Guptha of MRG Capital expresses his views on the budget
Budget today has given thrust to the growth drivers of infrastructure, agricultural, MSME and personal consumption while relying more on indirect tax receipts to limit the fiscal deficit to 5.9% in FY24
Ø Increase in capital expenditure bys 33% to 10 lakh crores will be good for all construction companies, cement and allied sectors. 50-year interest-free loans to states with caveat of the amount to be spent on capex by FY24 is a good move as states have fallen behind capex spends in FY23
Ø Fund to promote agricultural start-ups and increasing agri credit limit to 20 lakh crores will offer support to the rural sectors. Reduced fertilizer subsidy is a minor negative but a step in the right direction.
Ø Credit guarantee scheme for MSMEs was revamped to 9000 Crores from 1 April 2023. This after the ECLGS scheme gets lapsed in March 2023 will support MSMEs
Ø Increased personal income taxes rebate to 7 lakhs will reduce the effective tax rate for the salaried class and is a big boost to personal consumption. Sectors like housing, autos and banks likely to benefit from this. There is no direct extra benefit given to housing in terms of deduction of interest expenses but reduced personal income taxes will indirectly benefit the housing sector.
Ø Continuation of customs duty on mobile phones, some steel products etc; will offer support to the PLI scheme and domestic industry players.
Ø Divestment target at 61000 Crores seems realistic.
Only miss in our view is the higher reliance on indirect tax receipts to meet the revised FY24 fiscal deficit target of 5.9%. Any global slowdown and spillover effects on India will make this difficult to achieve.
Adani Rout Passes $80 Billion as Stock Sale Fails to Stems Doubt
The crisis of confidence plaguing Gautam Adani is deepening, with the stock rout triggered by Hindenburg Research’s fraud allegations erasing a third of the market value in his group’s companies despite the completion of a key share sale.
The selloff accelerated in afternoon trading, with all of the 10 stocks tied to the billionaire slumping. Adani Enterprises Ltd., the flagship firm that completed a $2.5 billion follow-on stock sale Tuesday, lost as much as 15%.
The turmoil indicates heightened concern over the debt load incurred by the conglomerate after a rapid expansion into industries from green energy to media, with short seller Hindenburg accusing it of inflating revenue. With the selloff passing $80 billion across the group’s stocks, banks have asked for more stock collateral on a loan, Bloomberg reported this week.
“It is a wait-and-watch situation. They have obviously found the investors but concerns of Hindenburg Research have not been addressed,” said Brian Freitas, an analyst at Smartkarma.
The offering by Adani Enterprises was India’s largest follow-on share sale, and was fully subscribed on the final day, aided by a last-minute surge in demand from institutional investors. At least two of India’s biggest business families, including tycoons Sajjan Jindal and Sunil Mittal, are also said to have participated in it, in a sign of solidarity with Adani. (Bloomberg)
IMF expresses concern over possibility of Pak opposition creating hurdles in govt’s hard economic decisions: Reports
The IMF has expressed concern that Pakistan’s opposition parties might create hurdles in the way of implementing the tough economic decisions of the cash-strapped Shehbaz Sharif-led government, media reports said on Wednesday.
The views of the global lender came as a high-level delegation led by the International Monetary Fund (IMF) Mission Chief Nathan Porter on Tuesday met Finance Minister Ishaq Dar and other officials as part of the opening session of 10-day long talks for the completion of the much-delayed programme review for a bailout package.
Porter raised the question about the implication of the opposition’s role in difficult decisions that Pakistan would have to take to avoid the default, The Express Tribune newspaper reported.
“The fund had concerns that the opposition might create some problems in the way of rolling out additional taxation measures that the government was planning to impose to revive the talks,” it quoted Porter as saying.
However, Finance Minister Dar assured the IMF mission head that the government believed in political dialogue and there was nothing to worry about.
Metal index tanks 2% as Adani Enterprises sheds 15% in today’s session and is dragging the index
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Adani stocks along with HDFC Life and SBI Life drags the Nifty 50 despite an otherwise strong market
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Gold rates today at life-time high after budget 2023 proposal. Buy or hold
Gold rates today climbed to a new lifetime high of ₹58,060 per 10 gm on Multi Commodity Exchange (MCX). The gold future contract for February 2023 started rising amid the budget speech of Finance Minister Nirmala Sitharaman and went on to climb to its record high by the time FM finished her speech in the parliament. Highlighting the connection between the gold price rise and FM Sitharaman’s budget speech, commodity market experts said that gold price today hit a new high because of the budget proposals to increase the import duty on silver Dore, bars and articles to align them with that on gold and platinum. (Read More)
PSU Bank index tanks as Adani stocks slide continues to affect the Banking sector
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Bajaj Auto’s total vehicle sales decline in January
Bajaj Auto reported a decline in its total vehicle sales in January. The automaker posted a 21% dip at 2,85,995 units last month. The company’s vehicle sales stood at 3,63,443 units in the year-ago period.
Sales of two-wheeler dropped 25% at 2,41,107 units in January 2023 compared to 3,23,430 vehicles sold in the same month the previous year, with domestic sales rising 4% at 1,40,428 units and exports declining a whopping 46% at 1,00,679 during the period under review over 2022. (Read More)
Post-budget reaction on Education Sector
Sumit Rai founder of EUGateway: “It’s great to see the Union Government’s focus on education and launch Pradhan Mantri Kaushal Vikas Yojana 4.0. In order to skill the youth for international opportunities, 30 Skill India International Centres will be set up across different States that will push students into different career opportunities. Also, the announcement of 100 labs for developing apps using 5G services will be set up in engineering institutions and her announcement on focusing on a national digital library for children and adolescents will provide quality books.
Ajay Gupta, the Founder of Bachpan Play Schools and Academic Heights Public Schools, and the Co-Founder at Rishihood University: We welcome the government’s focus on building a knowledge-driven economy to provide all students with equal opportunities and foster inclusive development. Employing more teachers and support staff for the Eklavya model schools will greatly benefit tribal students. The setting up of a national digital library and the creation of other knowledge assets for children (such as new labs) will also provide them with access to quality books, enhancing their learning experience and driving our country’s progress.
Credit Suisse stops accepting bonds of Adani’s group amid Hindenburg row
Switzerland-based investment banking company Credit Suisse has stopped accepting bonds of Adani group as collateral for margin loans to its private banking clients, a sign that scrutiny of the billionaire Gautam Adani’s finances is growing after allegations of fraud by short-seller Hindenburg Research.
The Swiss lender’s private banking arm has assigned a zero lending value for notes sold by Adani Ports and Special Economic Zone, Adani Green Energy, and Adani Electricity Mumbai Ltd, Bloomberg agency reported. (Read More)
Dinesh Kanabar from Dhruva Advisors views on Budget:
• Reducing the max marginal rate of tax very welcome. 42 per cent was indeed steep. Govt has done right by reducing to 39 per cent.”
• “The fact that we have had to reduce 39000 compliances just shows how many compliances we have had to live with and why we have still a long way to go on Ease of Doing Business!!”
• “Apparently, payments to MSME will be allowed only on payment basis. Hence one will need to track all dealings with MSME and track payments”
• “Settlement Scheme for Arbitration matters. Very interesting. Hopefully should provide a way for those litigating with the Govt an easier option to realise cash early
Geojit Financial Services views on Capex outlay: Bond markets are getting jittery as expenditure looks elevated so far
Satish Menon, Executive Director at Geojit Financial Services: Capex outlay increased by 33% to ₹10 lakh crore for FY24. At this level, public capex will be 3.3% of GDP. Equity indices are in the green so far. But bond markets are getting jittery as expenditure looks elevated so far. 10-year bond yield has climbed 2 basis points to 7.38% since the FM announced the hike in capex outlay. A lower fiscal deficit will cool bond markets.
Budget 2023: What has become cheaper, what’s more expensive; Full list
Customs duty on kitchen electric chimney increased to 15% from 7.5%
Govt to reduce basic customs duty on seeds used in manufacturing of lab-grown diamonds.
Govt to reduce customs duty on shrimp feed to promote exports.
Govt to continue with concessional basic customs duty of 2.5 pc on copper scrap.
Govt proposes to cap deductions from capital gains on investments in residential houses to ₹10 crore
Custom duty on cigarettes increased, said FM Nirmala Sitharaman. I propose to reduce the number of basic custom duty rates on goods other than textiles and agriculture, from 21 to 13. As a result, there are minor changes in the basic custom duties, cesses and surcharges on some.
Mukesh Ambani overtakes Gautam Adani to become richest Indian in the world
Reliance Industries Chairman Mukesh Ambani has overtaken Adani Group chairman Gautam Adani to become the richest Indian in the world with a net worth of USD 84.3 billion, according to Forbes Real-time billionaire list for 2023.
Ambani overtook Adani after the Reliance Industries Chairman’s assets went up 0.19 per cent with an increase of wealth by USD 164 million while Gautam Adani’s assets went down by 4.62 per cent with the industrialist’s weath pegged at USD 84.1 billion according to the real time tracker of Forbes of 5 pm EST on Tuesday.
Adani who figured among the top three billionaires in the world has dropped in the ranking to number 10 just below Mukesh Ambani. At the top of the list is French luxury fashion giant’s LMVH’s Bernard Arnault and family. In December 2022, Louis Vuitton’s founder and CEO Bernard Arnault overtook Elon Musk as the world’s richest person.
However, these values fluctuate constantly. If there is a gain in Adani’s stock, it is expected Adani’s personal wealth will rise too.
This comes following a report by US short-seller Hindenburg Research on the Adani Group alleging a decades-long fraud scheme, “brazen accounting fraud, stock manipulation and money laundering” (ANI)
Anand Rathi, Founder & Chairman, Anand Rathi Group reaction on Budget
A 33% increase in capital expenditure to 10 lac crore rupees, the highest ever will go a long way in building roads, ports, and airports — crucial for making India a reliable investment destination. Investment of Rs. 2.4 lac crore in Railways is commendable. Boost to capex before the national polls is an indication Modi is focused on realizing his dream of making India a factory for the world.
The gross borrowing estimate of 15.43 trillion rupees for next year is lower than the survey estimates of 15.77 trillion rupees. Hopefully, that should cheer the bond markets. Net borrowing at 12.3 trillion rupees, however, is higher than the estimate. Need to see how much of that could be raised via green bonds.
India’s maiden sovereign green bond issuance last month fetched a better-than-expected yield and the next tranche is planned for Feb. 9.
FM has reduced the Fiscal Deficit target to 5.9% for 23/24, which is a welcome move and should help in maintaining the interest rate lower.”
S Ranganathan, Head of Research at LKP Securities views on Budget
S Ranganathan, Head of Research at LKP Securities: In keeping with its focus on inclusive growth, the Union Budget has hiked outlays on Infrastructure and Agriculture which in our view would have a force multiplier impact on the economy.
Increased Outlay towards Energy Transition, Railways, Affordable Housing & Urban Infrastructure indicates GOI resolve on enablers for growth.
Fiscal Deficit estimated at 5.9% of GDP meets street expectations on fiscal prudence.
The Budget has put more money in the hands of the people through relief from Income Tax which to our mind is a very positive step.
Budget leaving Taxation on Capital Gains untouched is a big positive.
We rate the Union Budget 9/10
Budget: ₹9,000 cr corpus for revamped credit guarantee scheme, revamped credit guarantee scheme will be effective April 1, 2023
Budget: Government’s gross borrowing for FY24 is pegged at 15.43 trillion
Budget: No news on bank privatisation
More than an hour into the Budget 2023 speech, FM Nirmala Sitharaman has not touched up on any key banking sector reforms including the long held promise of privatisation of public sector banks.
Budget: New tax slabs under old tax regime
0-3 lakh nil
3-6 lk 5%
6-9 lk 10%
9-12 lk 15%
12-15 lk 20%
above 15 30%
Budget: Increase in income rebate to ₹7 lakh in the new tax regime
Budget: Startups – Date of incorporation tax benefits extended to 31 March 2024 from 31 March 2023
Budget: Clothes, garments to get expensive
Budget: IT return processing time reduced
– Average processing time for ITRs reduced from 93 days to 16 days
– We intend to roll out next-gen common IT Return forms and strengthen grievance redressal mechanism
Noon Update: Indices give a stable reaction to budget as Sensex remains around 500 pts higher and Nifty around 100 pts
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Budget: Cigarettes to get more expensive
Budget: Customes duty reduced on parts of mobile phones such as camera, lens, etc
Budget: Tax exemption on capital goods and lithium batteries
Budget: FY24 Fiscal Deficit target 5.9% of GDP
FY2024 fiscal deficit target at 5.9% of GDP
Fiscal Deficit target below 6.5% by 2025-26
FY24 gross borrowing target at ₹15.43 lakh crore
Budget: ₹9,000 cr corpus for revamped credit guarantee scheme, revamped credit guarantee scheme will be effective April 1, 2023
Budget: National Financial Information Registry o be designed in consultation with RBI
NFIR to be designed to promote credit, facilitate inclusion. NFIR to be designed in consultation with RBI.
Budget: Customs duty on lab-grown diamonds to be reduced
Budget: Funds allocated to scrap old vehicles, including old ambulances
Budget: All cities and towns to have 100% mechanical de-sludging of septics tanks
All cities and towns will be enabled for 100% mechanical de-sludging of septics tanks & sewers to transition from manhole to machine-hole mode.
Budget: Teacher recruitment for residential schools to serve tribal regions
The Centre will recruit 38,800 teachers and support staff for 740 Eklavya Model residential schools serving 3.5 lakh tribal students
Budget: 30 skill India centres to be set up across India
FM Budget of PM-AY: Pradhan Mantri Awas Yojna allocation increased by 66% to ₹79,000 crore
FM Budget Speech Highlights: PAN to be used as common identifier for all digital systems; KYC system to be simplified
PAN will be used as common identifier for all digital systems of specified Govt agencies.
National Data Governance Policy will enable anonymised data; KYC process will be simplified by adopting risk-based system
FM on Ease of Doing Business for MSMEs: Reduced compliance and decriminalisation of legal provisions
FM says that more than 39,000 compliances have been reduced and over 3,400 legal provisions decriminalised
FM Budget speech highlights: Centre to continue 50-year interest-free loans to state governments for one more year
FM Speech Highlights on Research and Technology: Pharmaceuticals and AI
– New programme to promote research in pharmaceuticals
– Three centres of excellence for Artificial Intelligence ecosystem
– 100 Labs to develop 5G technologies and applications
FM Speech Highlights on Green Growth through Clean Plants and Sustainable Cities
– Govt to launch a ₹2,200 crore Aatmanirbhar clean plant programme
– Sustainable cities for tomorrow: Rs10,000 crore for urban planning reforms for modernization of urban cities.
– Green Growth: ₹35,000 crore for green transition
FM Budget Speech on Railway Capex: Railway capex budget increased to ₹2.4 trillion
Adani Stock Slump Worsens as Key Share Sale Fails to Lift Mood
The crisis of confidence plaguing Gautam Adani is deepening, as a worsening rout in stocks shows the Indian tycoon’s ability to pull off a key share sale has failed to lessen wider concerns about Hindenburg Research’s fraud allegations.
All of the 10 stocks tied to the billionaire’s Adani Group dropped in Mumbai trading, with Adani Total Gas Ltd. leading the declines with a 10% plunge, a daily limit. Adani Enterprises Ltd., the conglomerate’s flagship firm that completed a $2.5 billion follow-on stock sale Tuesday, lost as much as 3.7%.
The declines show that Adani Enterprises’ latest fundraising isn’t enough to restore investor confidence, with US-based Hindenburg’s scathing report erasing $76 billion, or nearly one third of the market value from the group’s stocks. Prolonged weakness in the shares may also undermine broader sentiment toward India, until recently a top investment destination for Wall Street.
“It is a wait-and-watch situation. They have obviously found the investors but concerns of Hindenburg Research have not been addressed,” said Brian Freitas, an analyst at Smartkarma. (Bloomberg)
FM’s budget speech: Capital expenditure outlay is being increased by 33% to 10 lakh crores—3.3% of GDP. This will be 3 times the outlay in FY19. Effective capex will be ₹13.7 lakh cr; forming 4.5% of GDP
FM’s budget on green growth: Implementing policies for green growth. Green policies will help reduce carbon intensity and promote green jobs
FM’s Budget Speech: Budget focuses on job creation, upliftment of youth, and tourism
We made significant progress in sustainable goals. Also achieved many milestones in Swachh Bharat, PM Suraksha Bima Yojana, Direct benefit transfer, and Jan Dhan accounts, says FM.
Promotion of tourism to be taken up in mission mode, including via PPPs.
RBI partially relaxes remittance transaction restrictions on SBM Bank
The Reserve Bank of India (RBI) on Wednesday partially relaxed the restrictions it had imposed on SBM Bank (India) ltd to stop all transactions under the Liberalised Remittance Scheme (LRS). The central bank said that the bank initiated corrective actions and made a submission for the relaxation of the restriction.
In a press release, the reserve bank said it has lifted restrictions on SBM allowing ATM/POS transactions under LRS through KYC-compliant internationally active debit cards issued by the bank. (Read More)
FM’s Budget Speech: Agriculture accelator Fund to be set up
– Agriculture accelator Fund to be set up to bring modern technology and increase productivity
– Will enable self help groups to reach next level of economic empowerment
From FM’s Budget Speech: Economy has become formalised
We have made a significant progess in many sustainable developmnet goals. Economy has become formalised: FM
In the 75th year of independence, world recognise Indian economy as bright start.
YES SECURITIES – IOCL BUY; SRF BUY; Greenpanel BUY; Max Financial BUY; TTK Prestige BUY; ACC BUY
Indian Oil Corp. Ltd (IOCL IN): Earnings miss estimates on weaker margins
IOCL’s 3QFY23 reported Ebitda at ₹35.9bn (-62% YoY; +83% QoQ), missed our and street estimates, primarily on weaker than estimated reported GRM at USD 12.9/bbl. The adjusted (for inventory loss) core GRM as per our estimates stood at ~USD 17.4/bbl. Correction in crude oil and product prices during the quarter, resulted in plausible inventory losses, weighing on reported GRMs. Retail marketing margins on Petrol and Diesel, however improved QoQ to ₹10/ltr (2Q: ₹(0.04)/liter) and ₹(5)-(6)/ltr, (2Q: ₹(12)/ltr), which in our assessment was offset partially by marketing inventory losses. IOCL 9M operating profit nevertheless remains in black, despite the challenging operating environment As we write, while Petrol margins have moderated to ₹5.5/ltr, the loss on retailing of Diesel has also narrowed to ₹(3-4)/ltr. We expect retail marketing to normalize over FY24-25e and maintain BUY with a TP of ₹120/sh.
SRF Ltd (SRF IN): Strong Chemicals segment drives earnings
SRF’s 3QFY23 Ebitda at ₹8.3bn (-5% YoY; +8% QoQ), stood in-line with our and street estimates, with broader earning trends in-line with expectations. In the 9M period the operating earnings have grown by 25% YoY, driven by CB segment. Over 3QFY23, CB revenue at ₹17.6bn registered a growth of 23% YoY, driven by demand traction for both specialty chemicals and fluorochemicals, helping offset 6% YoY lower PFB revenue at ₹12bn and 21% YoY lower TTB revenue at ₹4.3bn. While weaker demand for nylon tyre chord fabric impacted TTB revenues; start of new BOPET & BOPP lines in India and globally led to drop in PFB revenues. Continued investment towards capacity addition in CB, along with introduction of new product lines in specialty chemicals and fluoropolymers are likely to maintain earnings growth CAGR of ~ 20% for SRF. Maintain BUY.
Greenpanel Industries Ltd (GREENP): Imports continue to hurt domestic performance!
We believe, MDF industry will continue to grow at CAGR of 15-20% for next-5 years & GREENP will be one of the biggest beneficiaries of the same. Factoring the import threat & rising domestic competition, we have revised our revenue & margins expectations for FY24E. At CMP, we believe the stock is available at lucrative valuations of P/E(x) of 14.5x on FY24E EPS & major headwinds seems to be factored. Hence though we have revised our FY24E earnings downwards by 16%, we retain our BUY rating on the stock.
Max Financial Services Ltd: New Non-Par product drives super-normal VNB margin, Maintain BUY
(1) The Smart Wealth Advantage Guaranteed (SWAG) product had a standout launch. (2) The growth of the key Banca channel continues to look optically weak on a YoY basis while a sequential recovery ensues. (3) We maintain ‘BUY’ rating on MAXF with a revised price target of ₹1075.
TTK Prestige Ltd (TTKPT IN): Normalcy to return from FY24; maintain BUY
TTKPT registered disappointing performance with revenue declining 9%. Revenue decline can be attributed to1) shifting of Diwali festival to Q2 vs Q3 in the previous year, 2) lower demand on high inflationary environment, 3) decline in wallet share for the kitchen and 4) Lower pick-up in inventory by the dealers. Gross margins have seen sequential expansion; however, the expansion was lower than expected as company is still holding high costs inventory. We expect FY22-25E normalized growth trajectory of 9% revenue CAGR. With margins also expected to reach 15.3% by FY25, we estimate FY22-25E EBITDA and PAT CAGR of 7.5% each respectively. We continue to value the company at 40x FY24 EPS and arrive at a revised PT of Rs987 maintain BUY.
ACC Ltd (ACC IN): Revenue in-line; muted cost beat margins
ACC Ltd (ACC) reported in-line revenue of Rs45.4bn (+7% y/y & +14% q/q) largely supported by overall volume growth of +3% y/y and +12% q/q to 8MT, aided by pickup in construction activities. EBITDA/PAT came at Rs3.8/1.9bn, declined by 32/43% y/y respectively. In Q4CY22, ACC charged exceptional items of Rs791mn towards a) one time Information technology transition cost b) towards special incentives. ACC’s total cost/te came 4% below YSECe to Rs5400 (+10% y/y) softened by 7% sequentially resulting in EBITDA/te of Rs492 beat by 37% to YSECe (v/s Rs24/te in Q3CY22). At CMP stock trades at 10/7x EV/EBITDA on FY24/25E. We rolled our estimate to FY25E and arrived at a BUY rating with revised price target of Rs2488, valuing the stock at 10x EV/EBITDA on FY25E.
Budget speech underway
Finance Minister Nirmala Sitharaman is presenting the Narendra Modi government’s 11th Union Budget in Parliament. This is the fifth budget presentation by the FM. Check this link for live updates
Budget 2023: Why banking stocks are surging before FM Sitharaman’s speech
According to stock market experts, banking stocks are rising because of two major reasons — Adani Enterprises FPO passing the acid test and getting subscribed over 100 per cent and the expected credit growth policy for Indian banks in the upcoming budget. They said that expectations are high about the government’s thrust on capex and focus on fiscal consolidation. They went on to add that private banks like ICICI Bank and Axis Bank have given strong quarterly numbers and hence they are expected to continue attracting bulls’ interest. They said that Prime Minister Narendra Modi’s thrust to make India a $5 trillion economy is expected to come with PLI schemes for the manufacturing sector and hence State Bank of India or SBI, Bank of Baroda and Punjab National Bank (PNB) may attract attention of long term positional investors. (Read More)
Adani stocks drag in today’s session with Adani Enterprises shedding more than 3%
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India factory growth slowed to 3-month low in Jan, hiring near pause
India’s manufacturing industry started the year on a weaker note, expanding at the slowest pace in three months in January as output and sales growth slackened, a private survey showed on Wednesday.
The Manufacturing Purchasing Managers’ Index, compiled by S&P Global, fell to 55.4 last month from 57.8 in December, well below the 57.4 predicted in a Reuters poll.
Still, it remained well above the 50-mark separating growth from contraction for a 19th straight month.
“Despite some loss of growth momentum, the sector looks set to at least remain in expansion mode as the final quarter of the current fiscal year draws to a close,” Pollyanna De Lima, economics associate director at S&P Global, said in a news release.
“There was a mild resurgence in cost pressures, which manufacturers linked to higher prices for items like energy, metal and electronic components. The rate of cost inflation remained historically subdued, but companies nevertheless hiked their fees as demand resilience facilitated the passing on of additional cost burdens to clients.” (Reuters)
Bank index leads the rally as it gains more than a per cent with most stocks trading higher
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Shah Rukh Khan’s Pathaan becomes fastest Hindi movie to enter 300-crore club
Pathaan, starring Shah Rukh Khan, Deepika Padukona and John Abraham in lead roles, earned 21 crore net on January 31, bringing its seven-day total in India to ₹315 crore. The movie beat Baahubali 2’s Hindi version, which took 10 days to join the 300-crore club, becoming the fastest Hindi film to surpass that milestone.
The Hindi version of K.G.F: Chapter 2 entered the 300-crore club on the 11th day, Aamir Khan’s Dangal on the 13th day while Ranbir Kapoor’s Sanju and Salman Khan’s Tiger Zinda Hai took 16 days to reach the milestone, tweeted trade analyst Taran Adarsh. (Read More)
ICICI Bank shines in early trading as it leads the stock market rally with gains of around 3%
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Ranjeet Mahtani, Partner, Dhruva Advisors on GST: Decriminalize certain GST offenses
Views on GST by Ranjeet Mahtani, Partner, Dhruva Advisors: The GST Council recommended various amendments to the GST law; expectations on this front include: to decriminalize certain GST offenses. Besides this, for the period from July 2017 to January 2019, clarity on the taxability of high sea sales – these are excluded from the GST from February 2019. Separately, there is an urgent need to set-up and notify the GST Appellate Tribunal given that the GST law has been in place for more than 5 years, without an effective appellate mechanism
INDIA BONDS-Bond yields tad lower ahead of budget announcement
Indian government bond yields were marginally lower in early trading on Wednesday, as market participants awaited the federal budget announcement due in the next few minutes.
The benchmark 10-year yield was at 7.3346% as of 09:55 a.m. IST, after closing six basis points lower at 7.3438% on Tuesday, posting its biggest single-session fall in two months.
“The market is almost expecting some positive move in the form of a lower-than-feared borrowing number and if it turns out correctly, it does not want to get caught on the wrong side,” a trader with a primary dealership said.
Market participants have said the 7.26% level would act as a crucial bottom for the benchmark bond yield. (Reuters)
Oil & Gas index is in red despite most stocks trading higher with Adani Total dragging the index
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China’s Jan factory activity contracts at slower pace amid COVID infections
China’s factory activity shrank more slowly in January after Beijing lifted tough COVID curbs late last year which helped ease pressure on manufacturers though infections among workers hampered production, a private sector survey showed on Wednesday. The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) nudged up to 49.2 in January from 49.0 the previous month but missed expectations in a Reuters poll of 49.5. (Read More)
Sun Pharma tanks in early trading as it sheds more than 1.5%
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Back Buy or sell: Vaishali Parekh recommends 3 stocks to buy ahead of budget speech
Vaishali Parekh of Prabhudas Lilladher has recommended three intraday stocks before the beginning of the budget 2023 speech, here we list out full details of those intraday stocks for today:
1] Tata Motors: Buy at ₹452, target ₹570, stop loss ₹444;
2] Railtel: Buy at ₹124.50, target ₹130, stop loss ₹122; and
3] VRL Logistics: Buy at ₹535, target ₹557, stop loss ₹525. (Read More)
Indices jump at the start as Sensex climbs 400 pts and Nifty 100 pts
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Geojit Financial Services views on today’s market: If the budget turns out to be good, with no unpleasant surprises, there can be short covering leading to spurt in the market
Dr V K Vijayakumar, chief investment strategist at Geojit Financial Services: The massive FPI selling in Indian markets have impacted market sentiments. NSDL data shows FPI selling of ₹28852 crores in January. The actual selling in the cash market is a mammoth ₹53887 crores in January. FPIs are selling in India and buying in cheaper markets like China, Hong Kong and South Korea where valuations are attractive. This “short India and long other cheaper markets” strategy has led to big underperformance of the Indian market, so far this year. While China, Hong Kong and South Korea are up by 5.4 %, 10.4% and 8.4% respectively in January India is down by 2.4%. This kind of underperformance is unlikely to last long. FIIs are also hugely short in the derivatives market.
If the budget turns out to be good, with no unpleasant surprises, there can be short covering leading to a spurt in the market. On the other hand, if there is some negative proposal like hiking the LTCGs tax to 20%, FIIs will continue to sell, pushing the markets further down. The Economic Survey reflects optimism on the growth and corporate earnings front. This augurs well for the markets in the medium term.
Income tax cuts, factory perks: What to watch for in Budget 2023
India’s budget on Wednesday will test the government’s resolve to stay fiscally prudent as expectations of lower taxes, wider social security net and further boost to production gather steam before national elections.
Finance Minister Nirmala Sitharaman may tweak income-tax slabs to provide relief to the nation’s vast middle class and increase spend on the poor through programs such as rural jobs, while ramping up financial incentives for local manufacturing, according to economists and reports in local media.
Social welfare programs would get “appropriate” allocation as “the gap between have and have nots has widened,” said India Ratings & Research Pvt. economist Devendra Kumar Pant. Inflation has eroded spending power and relief in tax “can provide the much-needed thrust to the consumption demand.” (Read More)
Sensex in green at the preopen session; Coal India, PGCL, Infosys in focus in today’s session
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Reliance Securities Stock in Focus for Today: Prince Pipes
STOCK IN FOCUS
Prince Pipes (CMP 623): We expect Prince to expand its leadership with the manufacturing expertise, leveraged distribution and competitive agility in the pipes sector. In view of the expected pick-up in demand, cost optimization measures and series of strategies for the next level of growth, we have our BUY rating on the stock with Target Price at Rs700.
Intraday Picks
APOLLOHOSP (PREVIOUS CLOSE: 4,256) BUY
For today’s trade, long position can be initiated in the range of Rs4,190-
4,160 for the target of Rs4,350 with a strict stop loss of Rs4,090.
SBILIFE (PREVIOUS CLOSE: 1,220) BUY
For today’s trade, long position can be initiated in the range of Rs1,206-
1,200 for the target of Rs1,254 with a strict stop loss of Rs1,179.
HINDUNILVR (PREVIOUS CLOSE: 2,577) BUY
For today’s trade, long position can be initiated in the range of Rs2,566-
2,552 for the target of Rs2,630 with a strict stop loss of Rs2,515.
Intel slashes employee, exec pay amid PC market downturn
Intel Corp on Tuesday confirmed that it has implemented broad employee pay cuts.
The reductions will range from 5% of base pay for mid-level employees to as much as 25% for Chief Executive Pat Gelsinger, while the company’s hourly workforce’s pay will not be cut, a person familiar with the matter told Reuters.
Intel spokesperson Addy Burr said the “changes are designed to impact our executive population more significantly and will help support the investments and overall workforce.” (Reuters)
Stocks to Watch: Coal India, Infosys, Adani Ports, PGCL, Jindal Steel, IHCL, Tata Motors, Godrej Consumers, Vodafone Idea, and Westlife Foodworld
Britannia Industries, Ashok Leyland, Jubilant Foodworks, Gillette India, IDFC, and Tata Chemicals will be among the stocks in focus as they declare their December quarter earnings today. (Read More)
RPT-India’s Jindal Steel and Power says enquiries from European buyers on the rise
India’s Jindal Steel and Power Ltd (JSP) has received a flurry of enquiries from European buyers seeking finished steel products, indicating an uptick in exports in the current quarter through March, a senior company executive said on Tuesday.
His comments come after JSP reported a nearly 68% drop in profits for the quarter ended Dec. 31, hit by the government’s decision to levy an export tax in May last year on some steel intermediates and a fall in global demand.
“We did see some increase in the order book and a lot of enquiries (from Europe),” Bimlendra Jha, managing director of Jindal Steel and Power, told Reuters in an interview.
Hit by the government’s decision to levy the export tax, India’s overall exports of finished steel more than halved during the first nine months of the fiscal year that began in April 2022.
That sharp drop forced the government to lift the export tax in November, but steel companies have complained about a loss of share in traditional markets, including Europe. (Reuters)
Footfalls for Hindi films slump up to 50%
Yash Raj Film’s Pathaan has offered a glimmer of hope for the beleaguered Hindi film industry, but cinema attendance in Hindi-speaking markets has plummeted by nearly half post-covid. Even though big hits such as Bhool Bhulaiyaa 2 and Drishyam 2 have reported 15 million ticket sales, theatre owners lamented that they are only a fraction of the pre-covid blockbusters such as Bajrangi Bhaijaan and Dangal, which raked in a staggering 50 million each.
Footfalls for Hindi cinema fell to 189 million in 2022 from 341 million in 2019, 316 million in 2018 and 301 million in 2017, according to media consulting firm Ormax. (Read More)
Rupee falls 36 paise to a 3-week low against USD ahead of Budget, Fed decision
The rupee depreciated by 36 paise to close at a three-week low of 81.88 against the US dollar on Tuesday after the Economic Survey 2022-23 said the domestic unit may remain under pressure on account of plateauing of exports and subsequent widening of the current account deficit.
Forex traders said significant foreign fund outflows and a muted trend in domestic equities also dented investor sentiment ahead of the Union budget and Federal Reserve Policy announcement on February 1.
At the interbank foreign exchange, the domestic unit opened weak at 81.61 against the dollar and lost further ground to fall below the 82 level. The rupee finally ended at 81.88, registering a decline of 36 paise over its last close.
During the session, the local unit witnessed an intra-day high of 81.58 and a low of 82.07 against the US dollar. In the previous session on Monday, the rupee settled at 81.52 against the American currency. (PTI)
Power Grid Corporation net rises nearly 11 pc to ₹3645 cr in Q3
State-run Power Grid Corporation on Tuesday posted a nearly 11 per cent rise in its consolidated net profit to ₹3,645.34 crore in the December quarter compared to a year ago mainly on the back of higher revenues.
The consolidated net profit of the company was ₹3,292.97 crore in the quarter ending December 31, 2021, a BSE filing showed.
The total income of the company rose to ₹11,530.22 crore in the quarter from ₹10,723.61 crore in the same period a year ago.
The board of directors in a meeting held on 31st January 2023 approved the payment of a second Interim Dividend of ₹5 per equity share of ₹10 each (or 50 per cent of the paid-up equity share capital) for the Financial Year 2022-23.
The company incurred a capital expenditure of ₹5,429 crore and capitalized assets worth ₹5,190 crore (excluding FERV) on a consolidated basis till 9MFY23, a company statement said. (PTI)
Fiscal deficit close to 60%; core output up
India’s fiscal deficit for the current financial year approached 60% of the year’s target in December, a month in which the economy saw a rise in core sector output. Meanwhile, eight core infrastructure industries grew 7.4% in December, against 4.1% a year earlier.
According to official data released on Tuesday, the fiscal deficit till December reached 59.8% of the FY23 target, led by the increase in capital expenditure and the moderate rise in tax collections. (Read More)
Adani Group acquires Haifa port for $1.2 bn, Israeli PM Netanyahu lauds deal as ‘enormous milestone’
The Adani Group on Tuesday acquired the strategic Israeli port of Haifa for USD 1.2 billion and vowed to transform the skyline of this Mediterranean city as part of its decision to invest more in the Jewish nation, including opening an artificial intelligence lab in Tel Aviv.
Adani Group chairman Gautam Adani, whose business empire was rocked by allegations of fraud by US short seller Hindenburg Research, appeared alongside Israeli Prime Minister Benjamin Netanyahu for signing of the deal to takeover Haifa Port, and spoke of investment opportunities.
Prime Minister Netanyahu described the Haifa port deal with the Adani Group as an “enormous milestone”, saying it will significantly improve connectivity between the two countries in many ways.
The Port of Haifa is the second largest port in Israel in terms of shipping containers and the biggest in shipping tourist cruise ships.
“I think this is an enormous milestone…Over 100 years ago, and during World War I, it was the brave Indian soldiers who helped liberate the city of Haifa. And today, it’s very robust Indian investors who are helping to liberate the port of Haifa,” Netanyahu said. (PTI)
PayPal to cut 2,000 workers affecting 7% of workforce
PayPal Holdings Inc. said it will cut 2,000 staffers as it contends with a macroeconomic slowdown that’s weighed on the firm’s business in recent quarters. The cuts, which will affect about 7% of staff, will happen in the coming weeks, Chief Executive Officer Dan Schulman told employees in a memo.
“While we have made substantial progress in right-sizing our cost structure, and focused our resources on our core strategic priorities, we have more work to do,” Schulman said.
Schulman has been vocal about his plans to improve his firm’s operating leverage — or the ability to grow revenue faster than expenses — and PayPal last year embarked on a cost-cutting initiative that it said would result in $1.3 billion in savings this year. (Read More)
Infosys admits appeal against UK tax assessment: Report
Software services major Infosys on Tuesday admitted that it has appealed against a corporation tax assessment by the UK authorities as British media reports referenced the company’s annual report to reveal the dispute.
Reports here are flagging that the firm co-founded by British Prime Minister Rishi Sunak’s father-in-law, Narayana Murthy, was contesting a GBP 20 million tax bill with His Majesty’s Revenue and Customs (HMRC) department.
The dispute, first revealed by ‘The Times’, comes at a sensitive time for Sunak who sacked his Conservartive Party chief, Nadhim Zahawi, after an investigation found he had breached the ministerial code of ethics over his tax affairs.
“Infosys provides details of certain ongoing disputes with various regulatory authorities, including this specific tax matter with HMRC,” an Infosys spokesperson told ‘The Times’.
“The company has filed an appeal against a tax assessment in the UK and obtained a stay on the payment of the tax demand from HMRC,” the spokesperson said.
There is no suggestion of wrongdoing by Infosys, the newspaper highlights. (PTI)
Tata Motors to raise prices of passenger cars from today
The prices of Tata Motors passenger vehicles such as Tata Tiago, Tata Punch, Tigor, etc will be increased from today, 1 February 2022. There will be an increase of 1.2% on every vehicle on a weighted average basis. According to Tata Motors, the price increase is due to a rise in overall input cost. In January, the automaker had raised commercial vehicle prices by up to 2%. (Read More)
Coal India net profit soars 70% in Q3 on higher demand; co declares second interim dividend
State-owned Coal India has reported a consolidated net profit of ₹7,755.55 crore for the third quarter (Q3FY23), up 70% from ₹4,558.39 crore in the corresponding quarter of last year, as production at the company increased due to higher power demand amid extreme weather conditions. That beat an average estimate of ₹7,678.03 crore by Bloomberg analysts.
On a sequential basis, net profit after tax (PAT) rose 28% from ₹6,043.55 crore in the previous quarter (Q2FY23).
The mining giant’s consolidated revenue from operations during the quarter under review increased to ₹35,169 crore, compared with ₹28,433 crore in the same period last year. (Read More)
HNIs, institutional investors help Adani FPO sail through
In a huge relief for billionaire Gautam Adani, institutional investors and family offices of high net worth individuals (HNIs) salvaged the ₹20,000 crore follow-on public offering (FPO) of Adani Enterprises Ltd, ensuring the issue was subscribed 1.12 times, up from just 0.03 times the previous day.
However, retail investors and Adani employees remained disinterested, given that shares were available for less in the secondary market.
Apart from anchor investors, who invested ₹6,000 crore last week, qualified institutional buyers (QIBs)—largely foreign institutional investors—and HNI family offices participated big-time for the remaining ₹14,000 crore. (Read More)
Budget 2023 to focus on growth, smaller fiscal gap amid Adani woes
India is set to unveil a budget that will chart a path for sustained robust growth and fiscal prudence although the fallout from Hindenburg Research’s allegations on the Adani Group poses an overhang on the presentation.
Finance Minister Nirmala Sitharaman will announce the last full-year budget before Prime Minister Narendra Modi seeks a third term in elections due in the summer of 2024. From 11 a.m. in New Delhi, she is expected to report a spending plan of more than $544 billion in the financial year starting April to boost jobs, fund social welfare and provide perks for manufacturing, according to a survey of economists.
The budget speech will likely be guided by concerns over slowing economic growth and limited fiscal space that the government said it seeks to rebuild to help counter a bleak global outlook. In an annual report card on Tuesday, the finance ministry forecast gross domestic product growth of 6.5% in the fiscal year ahead, compared with the 7% estimated for the current period. (Read More)
Wall Street climbs on Wednesday to add more to its strong January
Wall Street closed out a strong January with more gains on Tuesday, ahead of what many investors hope will be one of the Federal Reserve’s last hikes to interest rates for a while.
Markets got a boost after a report showed that that growth for workers’ pay and benefits slowed during the end of 2022. While that’s frustrating for people trying to keep up with soaring prices, markets see it as an encouraging sign of easing pressure on inflation and possibly a gentler Fed in the months ahead.
The S&P 500 rose 58.83 points, or 1.5%, to 4,076.60. The benchmark index notched its third winning month in the last four. The Dow Jones Industrial Average rose 368.95 points, or 1.1%, to 34,086.04. The Nasdaq rose 190.74 points, or 1.7%, to 11,584.55.
With the pace of inflation cooling since the summer, virtually all of Wall Street expects the Fed on Wednesday to announce its smallest increase to interest rates since March, at 0.25 percentage points. That would be the latest stepdown after it pushed through four straight increases of 0.75 points and then a hike of 0.50 points.
Such moves try to stamp out inflation by intentionally slowing the economy and dragging down on prices for stocks and other investments. The worry is that too-high rates would cause a severe recession and drop-off in corporate profits. (Reuters)
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