Tata Steel is likely to hit capital expenditure to the tune of Rs.9000 crore during the current year FY20. The outlays are largely to expand steel capacity to tap the rising steel demand. Nearly Rs.1367 crore will be for India operations, including the Kalinganagar plant. The balance will be towards capital expenses of Tata Steel Europe. Tata Steel has prioritized the pellet plant and the cold rolling mill based on current demand. The capex was originally slated to be around Rs.12,000 crore, which was reduced later and the company now wants to adopt a cautious stance and evaluate demand patterns before committing.
DLF plans to raise nearly Rs.2,000 crore via sale of land to existing or future joint venture (JV) partners. This is part of the deleveraging of the balance sheet which the company commenced about 2 years back. As of December, the total debt of DLF stands at Rs.4866 crore and the funds raised will be used to partly defray the loans from the books. DLF already has a joint venture with Singapore’s sovereign wealth fund, GIC. DLF currently has a rental portfolio of nearly 36 millions square feet of which 32 million is office space and the remaining is retail space. DLF profits have been on the rise.
Oil India will move the TDSAT against the DOT order asking OIL to pay Rs.48,489 crore towards AGR dues. This appears to be a case of liberal interpretation by the DOT after the Supreme Court passed an order in October saying that AGR charges will have to be paid on telecom and non-telecom revenues. The DOT interpreted this as a signal to seek AGR dues on the oil and gas revenues of OIL too. Interestingly, some of the large PSUs like OIL, Indian Railways and Power Grid had been allotted spectrum and this logic of AGR has been applied to them also. DOT may find it hard to enforce here.
According to data put out by the Ministry of Commerce, gold imports for the 10 months period Apr-Jan 2020 fell 9% to $24.64 billion. This has narrowed the current account deficit by nearly $30 billion in the comparable 10-month period. Gold imports started falling after the sensitive Indian market reacted to a sharp spike in gold prices. Gold crossed $1500/oz in the global market while Indian gold prices touched life-time highs of Rs.42,000/10 grams. Indian imports about 800 tonnes of gold annually and this a source of worry for the RBI as it depletes the foreign exchange reserves without any productivity.
It was a bullish week with 8 out of the top 10 companies adding nearly Rs.1.10 trillion to market cap during the week. Reliance Industries alone contributed nearly 30% of the total accretion to market cap. Among the other companies that contributed substantially included TCS, HUL, ICICI Bank, Bharti Airtel and Bajaj Finance. Both HDFC Bank and HDFC slid during the week on higher inflation concerns and also the worsening situation of Vodafone solvency. For the week overall, the Sensex climbed up by 115 points but the kurtosis continued with most of the action coming only from the handful of heavyweights in the index. The performance of the market could have been much better had it not been for the pressure on most of the large banks after the inflation came in sharply higher at 7.59%.
Even before the details of the LIC IPO have been announced, the Stock Broker’s Association has committed to mobilize nearly 1 crore investors. A mega IPO from a time tested brand, gives brokers across India to go on a spree to open trading accounts and demat accounts using IPOs as a reason. There has not been a massive retail IPO for a long time after Coal India which happened nearly 10 years ago. The government is looking at the LIC IPO as something impactful on the same lines as the Saudi Aramco IPO which virtually redefined the IPO market in the Middle East and also created a huge retail base.
