The woes for PSU banks continued with Union Bank recording a loss of Rs.2583 crore in the fourth quarter of the fiscal. Gross NPAs of Union Bank increased sharply from 13.03% to 15.73%. However, the bank chairman has confirmed that most of the stress may have been provided for. Markets, however, are not too sure as it is now believed that the RBI’s new stressed asset norms could take the NPAs to higher levels in the next few quarters. With more NCLT Resolutions likely to come in, there could be an improvement in the NPA levels of the bank. As of now the outlook continues to be bleak.
PC Jewellers announced a buyback of up to 1.21 crore shares at a price of Rs.350 per share aggregating to Rs.424 crore. The stock has corrected sharply in the last couple of months with allegations of price manipulation and insider selling. The stock touched a low of Rs.100 before bouncing to settle above the Rs.200 levels. The buyback represents 3.07% of the capital of the company. The promoters of the group have committed that they will not participate in the buyback offer. PC Jewellers also came under the scanner after it was linked to Vakrangee, which is currently being investigated by SEBI.
In light of the recommendations made by the Uday Kotak committee, SEBI has notified new governance norms for listed firms. SEBI has called for the post of Chairman and MD to be split. SEBI has also called for increasing the number of independent directors to 6 with at least 1 women director. This will be applicable for the top 500 companies by market cap. Going ahead, independent directors will be permitted to remain as directors in a maximum of 7 companies only. New norms also give a larger say to shareholders in critical issues like director’s remuneration and royalty payments.
Bank of America has come out with report saying that Brent Crude at $100/bbl could be a reality in the year 2019. This level was last seen in 2014 before the multi-year slide in oil started. While shrinking inventories could be one reason for the rise in oil prices, the recent US decision to walk out of the Iran Nuclear deal could actually push oil prices towards $100/bbl. In fact, BoFA is the first Wall Street bank to predict oil at $100/bbl. BoFA expects the price of Brent Crude to touch $85 by the end of 2018 itself. It also expects that the 1.8 million barrels supply cut by OPEC and Russia will continue through 2019.
The Wal-Mart CEO has confirmed that the US retail giant will comply with all tax related requirements in India. It may be recollected that there are massive tax related litigations with respect to Vodafone and Cairn India which have not yet been satisfactorily resolved. It may be recollected that Wal-Mart had bought a 77% stake in Flipkart for a sum of $16 billion giving Flipkart an enterprise valuation of $21 billion. While the tax contours are still not clear, there is likely to be a capital gains implication to the deal. In the case of Cairn deal and the Vodafone deal the dispute pertained to a form versus substance argument. While the company had adopted the form approach to the deal, the Income Tax department had adopted a substance approach. The two cases are still under litigation.
Titan reported a 40% jump in net profits to Rs.282 crore for the fourth quarter of the fiscal year. This was largely driven by a strong operating performance in the jewellery segment. Net sales were higher by 11.7% at Rs.3916 crore. While the revenues from the watches and the eyewear segment were flat to negative, the revenues from the jewellery was the major positive contributor. Titan has been emerging as one of the most important stocks in the Tata Group and it is also likely to benefit substantially from the restructuring of the Tata Group. Titan could actually lead Tata’s retail foray.
