Telecom Sector
Telecom sector is looking at another potential turnaround as Airtel’s net subscriber additions in the past quarter are the highest. Last week Airtel declared an addition of 13.9 million subscribers mostly in 4G as compared to Jio’s 7.3 million additions. In addition, Airtel has done well to keep its churn ratio to an all-time low level of 1.7%. Retention of Postpaid users is the biggest contributor. Airtel is all set to take on Jio in the FTTH broadband segment and is developing its own 5G open radio access network. A few months delay in Jio’s deal with Google to develop a low-cost Android device has given a window of opportunity for Airtel to capitalize on its subscriber base acquisition from Vodafone Idea.
Sugar Industry
In its current state, the industry is faced with chronic oversupply. High production cost has led to using subsidies for selling sugar in the international market. Moreover, consumption in India has stagnated to 19 kg per capita per year on the back of increased scrutiny for its impact on health and obesity. To counter these issues, the mills have begun an online campaign with the help of nutritionists, medical practitioners and health experts to deliver webinars and conduct workshops to boost domestic demand. This will cut overseas sales and save the government money by reducing export subsidies.
Banking Sector
Starting Nov 1, ICICI will start charging Rs.50 per cash deposit to its customers on all non-working days and outside of the working hours on other days. This comes on the back of Axis bank doing the same from August 1. This comes as a major step towards pushing digitization of banking and discouraging physical presence for the customers. This will have a huge impact in reducing fixed costs for the banking sector as they can reduce the number of Brick and Mortar branches along with the ATMs. Charges after certain limits have also been introduced by PSBs and charges on Locker visits post a certain number is also in the process of implementation.
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Quarterly Results (Auto Sector)
The Indian Auto sector has seen signs of recovery with sales numbers for passenger vehicles have been positive for most of the major players. There is still some weakness when viewing the commercial vehicles sales figures.
Revenues for Maruti have been up 10% yoy and profits up by 1% yoy. The onset of festive season is boding well for the Auto players as Diwali has traditionally been a hot time for car sales in India.
Most of the companies including Maruti Suzuki seem to have missed the demand estimates and it still remains to be seen if they can convert this pent up demand into regularizing revenue streams.
Forex Reserves:
India’s Foreign Exchange reserves touched an all time high of $560.532 billion in the week ended October 23rd. During the reporting week, reserves saw a major increase in the foreign currency assets (FCA) which rose by $5.202 billion. Gold reserves were up by $175 million to $36.860 billion as per RBI.
This is welcome news as there is an increasing pressure on Indian Government to maintain the fiscal deficit in a manageable range. On top of which the increase in government borrowings has been another worrying factor.
The country’s reserve position with IMF has climbed by $27 million and the special drawing rights rose by $8 million. This will provide further scope for the Government to help out with their borrowing woes.
Domestic Equity:
GE Power: Shares of GE Power India Ltd. snapped a six-session losing streak after the company said it will continue to pursue opportunities in a business segment that focuses on reducing sulphur dioxide emissions even as its promoter plans to exit the new-build coal power market globally.
The total flue-gas desulphurisation market (including captive power plant) in India is 225 GW, out of which about 82 GW (Rs 33,000 crore) has been already been ordered till date by majorly central public sector utilities with a few state utilities and IPP (independent power producer),” according to an exchange filing.
GE Power India, it said, to date has been awarded 10 FGD projects, amounting to about 13 gigawatts (representing about 15% market share), which are now in various stages of execution. The balance potential market for FGD in India, which remains to be ordered in the next three to five years, is estimated to be around 143 GW, the filing said.
Pidilite Industries: Pidilite Industries — the manufacturers of the popular Fevicol brand of adhesives — has signed a definitive agreement to acquire the US-based Huntsman Group’s Indian subsidiary for ₹2,100 crore on Thursday.
Huntsman operates a 100% subsidiary in India, Huntsman Advanced Materials Solutions, which directly competes with Fevicol, as it manufactures and sells adhesives, sealants and other products under brands such as Araldite, Araldite Karpenter and Araseal in the country.
Pidilite Industries share price rose 2% in the early trade on Thursday after the company acquired Indian subsidiary of Huntsman Group, namely HAMSPL.
International Equity:
ANT Group: The Chinese giant is likely to pull off the largest initial public offering (IPO) in history, hoping to raise $34.4 billion. If successful, it will overshadow the IPO debut of Saudi Aramco in December 2019, which had raised a then-record $29.4 billion.
The Ant Group provides digital payment services and operates digital finance technology platforms. Ant Financials IPO would value the company at about $315 billion, which will be bigger than the largest bank in the United States – JP Morgan Chase & Co, whose market cap was $296 billion as of October 30, 2020. Ant is set to be larger than payment rival PayPal Holdings Inc., media giant Walt Disney Co. The company’s valuation will be among the largest financial companies in the world like Visa and MasterCard.
Alibaba Group Holding: Alibaba Group Holding Ltd. helped modernize brick-and-mortar retail with consumer data and online services. Now it hopes to do the same for China’s multi trillion-dollar manufacturing arena. Alibaba’s newest line of business offers data analytics and back-end technology to manufacturers so they can customize and fine-tune factories in response to consumer demand.
Alibaba is betting that its years of observing consumer behavior will be useful to the country’s producers. Smaller manufacturers are struggling to adapt to changing consumer needs in a slowing economy. Alibaba’s starting point is apparel but it eventually aims to help more manufacturers parse data, automate logistics and maintain just-in-time inventory, much as it already does for Chinese convenience chains and big-box retailers.
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