DLF reported a sharp 66% growth in net profits to Rs.247 crore for the fourth quarter ending March 2018. Total income was sharply lower at just around Rs.1850 crore for the fourth quarter, largely due to the hiving off some of its key businesses. For the full year 2017-18, the net profit of DLF was up almost 6-fold at Rs.4463 crore. This was largely accounted for by exceptional income arising from the sale of its commercial rental business unit. During the last fiscal, the company had completed total projects covering over 8.6 million SFT. DLF is slated to reduce its debt levels to zero by March 2019.
The INR fell by 12 paisa to close at a 16-month low. The INR closed at Rs.68.12/$ despite the RBI intervening occasionally to stem the fall in the dollar. There was a sharp demand for dollars from importers and banks which had led to the sharp fall. In fact, forex traders are also worried by the rising trade deficit, the CAD getting beyond the 2% mark and the spill over in the fiscal deficit by 30 basis points. The big worry on a continuing basis is the sharp rise in the price of Brent Crude which has already crossed the level of $80/bbl, putting tremendous strain on India’s 75% reliance on imports.
Petronet reported record net profits of Rs.522 crore for the fourth quarter ended March 2018. Petronet is the largest importer of liquefied natural gas (LNG) into India. Apart from higher volumes processed, Petronet also benefited from greater efficiency in production. In the fourth quarter, the company processed 18% higher imported gas at 213 trillion BBTU. Sales for the same period were up by 34% at Rs.8739 crore. The company stock prices have corrected sharply in the last few months and analysts are already recommending the stock at lower levels.
India’s largest commodity exchange by volumes, MCX, has officially launched copper options contracts on the MCX. Copper is traded quite aggressively on the LME and other global exchanges and it is a critical product in electric products and construction. Each copper contract will have a lot size of 1 tonne each. Indian commodity markets are unique in the sense that they can only offer options on futures and not options on spot as the ambit of SEBI regulation is restricted to the futures market and not to the spot market. This is likely to emerge as a good method to hedge risk for copper buyers and sellers.0
The 3 large government owned insurance majors will require risk capital infusion to the tune of Rs.10,000 crore before they can consider a merger as announced by Arun Jaitley in the last Union Budget. National Insurance, Oriental Insurance and United India Assurance are slated to merge in a move to bring about cost cuts and get better synergies of common facilities. These 3 companies will need to bring their solvency margins to 1.50 times their liabilities. However, insurance experts opine that capital must not be a constraint for these insurance companies as they are holding on to premium assets in their balance sheet, which can fetch healthy valuations. The three-way merger is expected to be completed by the end of March 2019, so that the impact can be shown in the current budget.
Moody’s and India Ratings have downgraded the ratings of PNB after the huge Rs.13,000 crore losses write off in the fourth quarter of 2018. Moody’s has already cut the rating of PNB to Junk and the stock has also corrected nearly 70% from its peaked early last year. The Nirav Modi scam combined with spillage in NPAs took a huge toll on the profitability of the bank. The negative rating could mean that the RBI could order something like Prompt Corrective Action (PCA) on PNB to keep its liabilities from deteriorating further from current levels. Stock did see some traction on Bhushan recover plan.
