Midnight News Update – Nov 16th 2017
The Ministry of Petroleum decided to advance the date of BS-VI compliance for auto vehicles in the Delhi and NCT region from April 2020 to April 2018. This will mean that the oil marketing companies and the auto manufacturers will have to be prepared for this shift from April next year. It will also mean that India will officially leap from BS-IV to BS-VI in a span of just one year. This appears to have been necessitated by the extraordinarily high levels of pollution in the Delhi and NCT region. Auto companies will have to start planning their inventories accordingly ahead of the shift.
Singapore’s sovereign wealth fund, GIC, has picked up another 12 lakh shares in DLF taking its stake in the company to beyond 5%. It may be recollected that GIC was one of the investors in DLF’s commercial rental subsidiary for a valuations of nearly $1.40 billion. GIC is definitely on the radar of one of the world’s most successful sovereign fund as they do see a gradual revival in the real estate market in India. The overall sector has seen a huge churn as companies that could not handle the debt have gone under. The rest are being squeezed either by RERA or by demonetization to the benefit of DLF.
Reliance Jio is not satisfied with its disruption of the telecom industry and is now looking to logically carry forward its presence to the Kirana shop down the street by helping them sell goods through the network owned by Jio. Apparently, Jio has already roped in the likes of ITC, Wipro, Tata Beverages, Dabur, Godrej and AMUL to sell their products using the Jio platform. In fact, some of the technology watchers are of the view that the big threat to online retailers like Flipkart and Amazon could come from Reliance Jio rather than from other ecommerce players. That will mean better valuations for RIL.
New India Assurance, which had a tepid listing a couple of days back, has reported a tripling of net profits for the second quarter of the current fiscal. This improvement in performance was largely driven by a sharp fall in underwriting losses in the quarter. Even as the profits tripled to Rs.748 crore, the underwriting losses fell 41% to just Rs.626 crore. There was a sharp drop in the claims in the motor and health insurance business. The company has revised the prices of most of its insurance products in the quarter which helped this performance. The Solvency ratio has also improved sharply in the quarter.
Even as the government looks set to start its recapitalization package from December, the latest quarter has seen the slowest growth in NPAs in the last few quarters. This may be indicative of the fact the NPA cycle in banks may have finally bottomed out. Gross NPAs of the banking system rose marginally from Rs.8.29 trillion to Rs.8.40 trillion in the second quarter. This is the slowest rate in the last 9 quarters. In fact, between September 2015 and September 2017 the gross NPAs had surged from Rs.3.4 trillion to Rs.8.4 trillion as the RBI got more stringent with its Asset Quality Reviews (AQR). However, the risk may be far from over. With the RBI classifying another 27 companies as potential NPAs, the banks may end up taking a much bigger hit in the coming quarters.
If one purely looks at the Nifty 50 companies, the overall result appears to be positive for the second quarter as a whole. Out of the Nifty 50 companies, 16 companies beat estimates and 24 were in-line with estimates with just 10 companies falling below the estimates. Broadly auto and capital goods had an encouraging quarter while banks and oil marketing companies were at best in line. Consumer goods continues to do well but there were notable outperformers in the IT and pharma pack. While Tech Mahindra outperformed the technology pack, Reddy Labs and Aurobindo to the pharma honours.
