The telecom company looks to raise $750 million which it will deploy in reducing the debts.

India’s third largest telecom operator Bharti Airtel said that its Africa subsidiary intends to go ahead with an initial public offering for listing on the London Stock Exchange, the company announced in a BSE filing. With this, the telecom company looks to raise $750 million which it will deploy in reducing the debts, it further said. The company is also eyeing to list Airtel Africa on the Nigerian Stock Exchange (NSE). The mobile service provider had earlier submitted a registration document to the UK Financial Conduct Authority for approval. Airtel Africa had revealed its plan for going public early in 2018.

Currently operational in 15 African countries, Bharti Airtel has over 9.9 crore users spread across three African regions primarily. Out of Nigeria; East Africa, and the rest of Africa, Nigeria brings most of the profits for the company and also accounts to half of the company’s EBITDA and 40% of its total revenue. Speaking on the recent quarterly results, Airtel Africa MD and CEO had said that Africa growth story remains strong as the company has reported a 12% revenue growth for the full year. The company also reported a spike in the traffic growth of 73%. Airtel had ventured into Africa business about nine years ago.

Meanwhile, Bharti Airtel Africa has posted its quarterly results and said that it is making more money per user now. With an increase in average revenue, the telecom is now getting Rs 123 per user at an average. However, the same is still not at par with the sustainable level in the telecom business, MD and CEO, India & South Asia, Gopal Vittal had earlier said. Bharti Airtel’ rival Reliance Jio, which is owned by Mukesh Ambani, garners an average of a little over Rs 126 per user.

According to Bharti Airtel’s recent quarterly release, Sunil Bharti’s telecom company has over 40 crore users across 16 countries. Airtel’s various services include telecom operations in India, South Asia and Africa, digital TV services and Airtel business. The company has 38 crore subscriptions for its telecom services alone.

 https://www.financialexpress.com/market/ipo-news/bharti-airtels-africa-arm-to-proceed-with-initial-public-offering-looks-to-raise-750-million/1597329/

RBI seen cutting rates by at least 25 bps, may turn ‘accommodative’ after dismal GDP

Beginning a three day review on Tuesday, the Reserve Bank of India’s six-member monetary policy committee (MPC) can draw comfort from subdued inflation. Running at 2.92 % annually in April, it has stayed below the medium term target of 4% for the past nine months.

A worrying slowdown in India’s economy makes a cut in the central bank’s benchmark interest rate highly likely this week, but analysts say policymakers should also find ways to boost banks’ liquidity to ensure they drop their lending rates too.

Beginning a three day review on Tuesday, the Reserve Bank of India’s six-member monetary policy committee (MPC) can draw comfort from subdued inflation. Running at 2.92 % annually in April, it has stayed below the medium term target of 4% for the past nine months.

Two-thirds of 66 economists polled by Reuters expect the MPC to wrap up on Thursday by cutting the repo rate by 25 basis points, but that survey was taken even before India released far worse than expected economic growth numbers, so expectations for a cut have probably hardened.

If they are right, and the RBI does lower the repo rate to 5.75% it will be the third meeting in a row since February that India has cut interest rates. The last time it moved this quickly to lower rates was in 2013 to revive the moribund economy from growth rates that had slipped to a decade low.

The trouble is banks are laden with bad debt and are scared of losing customers if they cut deposit rates, constraining their ability to cut lending rates despite all the prods from the RBI.

State Bank of India, the country’s largest lender by assets, has cut its key lending rate by only 10 basis points in response to the 50 bps cuts by the RBI.

A series of defaults at lender Infrastructure Leasing and Financial Service Ltd last year has raised concerns about the country’s shadow banking industry with other lenders also facing trouble accessing capital and rating downgrades.

The RBI had retained its “neutral” stance after the rate cut in April but traders said a change in this stance to “accommodative” will be more comforting for markets than just a rate cut, especially after the recent GDP numbers.

“Liquidity woes in banking system are far from over,” said Lakshmi Iyer, Chief Investment Officer (Debt) at Kotak Mahindra Asset Management Company.

“Given the global as also domestic scenario, the MPC may well choose to gratify the markets with a benchmark rate cut. What is more important for markets is the MPC guidance than the actual rate action.”

The economy really does need help.

Data out on Friday showed annual economic growth running at 5.8% in the January-March quarter, sharply down from 6.6% in the previous quarter, well below forecasts and the slowest in more than four years.

“The market is expecting RBI to cut the rates by at least 25 basis points, and we will not be surprised if they decide to cut the rate by even 50 bps, to infuse liquidity and push growth,” said Romesh Tiwari, head of research at CapitalAim.

FISCAL, RAIN AND OIL UNCERTAINTIES
Re-elected last month for a second term regardless of the slowdown, Prime Minister Narendra Modi needs to stop the rot, and his economic strategists are working on big-bang reforms.

New Finance Minister Nirmala Sitharaman is due to present a budget on July 5 that many analysts expect to be expansionary, though the she cannot afford to let the deficit slip too much.

Until then the RBI will have to live with the uncertainty over the new minister’s fiscal plans, while knowing that when the government does boost spending it will go some way to boosting banks’ liquidity.

Also, the effect of the drain on banks’ liquidity from political parties’ demand for cash during the election campaign should begin to fade.

Oil prices and the monsoon rains are less predictable. The central bank had lowered its Jan-March 2020 inflation forecast to 3.8 percent but warned it could be higher if food and fuel prices rise abruptly or if the fiscal deficit overshoots targets.

https://www.financialexpress.com/economy/rbi-seen-cutting-rates-by-at-least-25-bps-may-turn-accommodative-after-dismal-gdp/1597317/

Analysts said India is benefiting from the weakness in global markets that is resulting into fall in oil prices, US bond yields and dollar

The markets on Monday rallied sharply, with the benchmark Sensex and the Nifty closing above 40,000 and 12,000 for the first time after weak economic data, coupled with slump in oil prices, increased expectations of a rate cut by the Reserve Bank of India (RBI).

The Sensex ended at 40,267.62, up 553 points, or 1.4 per cent, while the Nifty added 166 points, or 1.39 per cent, to close at 12,089.

The gains came despite a slump in global equities amid fears of economic slowdown due to the US-China trade conflict. Driven by the robust show by indices, investor wealth rose by Rs 1.76 trillion.

Analysts said India was benefiting from the weakness in global markets which is resulting in a fall in oil prices, US bond yields and the dollar. The 10-year US bond yield has declined from 2.54 per cent to 2.1 per cent in the past one month.

Brent crude prices have gone down by 15 per cent to below $64 a barrel in the past fortnight. Prices, however, were volatile on Monday. The fall in global oil prices has helped ease macroeconomic pressure and the inflation outlook, providing more comfort to the RBI.

The 10-year government bond yield ended below 7 per cent for the first time since November 2017. The rupee appreciated 43 paise to end at 69.26 against the dollar.

Foreign portfolio investors (FPIs) have stepped up their India investment amid softening of US bond yield. On Monday, FPIs invested Rs 3,069 crore in the domestic market.

The RBI will announce its bi-monthly monetary policy on Thursday. In the last two policy reviews, it had cut the repo rate by 25 basis points each. According to experts, the RBI will go for another round of rate cut, the third in a row, on Thursday to prop up economic growth, which dropped to a five-year low in the final quarter of 2018-19, and benign inflation. The gross domestic product data, released Friday, showed growth in the fourth quarter of 2018-19 slowing to 5.8 per cent — the slowest in several quarters.

“Two things one needs to look out for is the RBI policy and the FM’s plan to revive growth. The markets are going to latch on to every word that the finance minister is going to speak about how she is going to revive growth,” said Andrew Holland, CEO, Avendus Capital Public Markets Alternate Strategies.

Market players said the market is hoping that since we have a stable government with a more significant mandate, there will be continuity in reforms and the government will take quick action that will reverse slowdown. However, they expressed concerns about the valuations.

“It’s not a cheap market, and the market is trading at the higher end of the valuation range. From now on, the onus will be on earnings. If it comes quickly, the market will be fine. If earnings revival does not happen, markets will be disappointed,” said Jyotivardhan Jaipuria, founder, Valentis Advisors.

The broader market underperformed the benchmarks with the NSE Midcap 100 Index rising by 0.96 per cent and the NSE Smallcap 100 gaining 0.28 per cent.

All of BSE’s 19 sectoral indices gained, with the auto index gaining the most.

https://www.business-standard.com/article/markets/sensex-ends-above-40-000-mark-all-19-indices-rise-auto-gains-the-most-119060301621_1.html

LTTS in a BSE filing said that L&T will sell up to 40,34,399 equity shares of face value of Rs 2 each

Larsen & Toubro Technology Services (LTTS) Monday said its promoter L&T plans to sell 4.03 million shares on June 4 and 6.

LTTS in a BSE filing said that L&T will sell up to 40,34,399 equity shares of face value of Rs 2 each that represent 3.88 per cent of the total paid up equity share capital.

The floor price of the offer shall be Rs 1,650 per equity share of the company. The shares will be sold on June 4 (for non-retail investors) and June 6 (for retail and non-retail investors who choose to carry forward their unallotted bids), it said.

At the end of March 2019, L&T held 78.88 per cent shares in LTTS. Shares of LTTS closed at Rs 1723.75 apiece Monday, down 2.18 per cent from the previous close on the BSE.

https://www.business-standard.com/article/pti-stories/l-t-to-sell-40-34-lakh-ltts-shares-119060301396_1.html

An application for the certificate of registration has now been submitted to the central bank. The new venture is expected to hit the market by January

IIFL India Private Equity Fund has acquired about three fourths of the total shareholding in KadaiEshwar (KE) Housing Finance, a non-banking finance company, for about Rs 100 crore, two people aware of the transaction told ET.

An application for the certificate of registration has now been submitted to the central bank, and the new venture controlled by IIFL PE is expected to hit the market by January 2019. The NBFC was launched by C. Ilango, former MD at home finance company Can Fin Homes.

With a focus on backing professional entrepreneurs, IIFL Asset Management had launched its new fund — IIFL India Private Equity Fund — in May with a target of around Rs 2,000 crore. Under the AIF business, the IIFL AMC currently manages capital commitments of Rs 20,000 crore. IIFL Asset Management has an AUM of about $5 billion as on March 31, 2018.

Established in 2008, IIFL AMC operates in areas of mutual funds, alternative investment funds, venture capital funds, fixed income securities, and real estate. Ilango confirmed the development, but refused to disclose details.

An IIFL spokesperson, on the other hand, said: “We have done our due diligence with a couple of professional entrepreneurs and their companies and are awaiting approval from regulatory authorities. At this point in time, we would not be in a position to comment on any investment until they are consummated.” During Ilango’s CEO tenure at Can Fin Homes, the loan book expanded five times to Rs 11,000 crore, while profit surged about four times to Rs 157 crore, said one of the persons cited above.

PE investors are increasingly tying up with industry veterans to set up growth platforms in India.

https://economictimes.indiatimes.com/news/company/deals/iifl-buys-controlling-stake-in-kadaieshwar-housing-finance-for-rs-100-crore/articleshow/66210331.cms

SpiceJet hits new high, IndiGo nears record high on ATF prices cut

SpiceJet hit an all-time high of Rs 157, up 8%, while InterGlobe Aviation, the operator of IndiGo, was up 2% at Rs 1,712, trading close to its all-time high level of Rs 1,716 touched on May 8, 2019.

Shares of aviation companies were in focus after they rallied up to nearly 8 per cent on the BSE during the early morning trade on Monday. Heavy volumes of shares were being traded at the bourses after Indian Oil Corporation slashed Aviation Turbine Fuel (ATF) price, which makes up 40 per cent of an airline’s cost structure, for the first time in the past five months.

Following the price cut, SpiceJet hit an all-time high of Rs 157 pe share, up 8 per cent, while InterGlobe Aviation, the operator of IndiGo, gained 2 per cent to trade at Rs 1,712 apiece. The latter was close to its all-time high level of Rs 1,716 touched on May 28, 2019 in intra-day trade.

SpiceJet counter saw huge trading volumes with 3.69 million shares already changing hands till 10:13 am, as compared to an average 3.66 million shares being traded daily in the past two weeks on the BSE.

The domestic brokerages remained bullish on SpiceJet with 12-month target price in the range of Rs 172 to Rs 211 per share.

“Over half of Jet Airways’ domestic slots along with its entire international slots are yet to be allocated. If Jet shuts down, SpiceJet will be the prime beneficiary given complementary fleet portfolio. This will lead to further upside to our estimates. We expect SpiceJet to turn profitable in FY20 as yields expand while fuel costs moderate,” analysts at Edelweiss Securities said in a result update with target price of Rs 179 per share.

Analysts at Prabhudas Lilladher also remained positive on SpiceJet on the back of massive fleet expansion plan, strong yield environment post Jet’s suspended operations, prime slots at key airports, strong regional operations, codeshare with Emirates and likely return of Boeing 737 Max in July/August.

“All this will lead to ASK/Revenue & EBITDAR CAGR of 47 per cent/51 per cent & 72 per cent respectively,” they said.

The brokerage firm maintains ‘buy’ rating on the stock with target price of Rs 211 per share. Abnormal increase in crude oil prices & irrational yield environment remain a key risk, it added.

https://www.business-standard.com/article/markets/spicejet-hits-new-high-indigo-nears-record-high-on-atf-prices-cut-119060300232_1.html

Metals, chemicals: Sectors that stand to benefit from US – China trade war

The unanticipated trade tensions that cropped up between two major economies in the world-the US and China- have since spooked the global markets

Global shares lost ground during the early morning trade on Monday reacting sharply to China’s decision to tariff hike on $60 billion worth of US imports, which came into effect on Saturday, June 1.

While China’s Shanghai composite index was trading 17.23 points or 0.59 per cent lower, Japan’s Nikkei slipped 239 points, hovering close to its lowest levels in four months.

Indices on the Wall Street plummeted over a per cent after the tariff decision came into effect. The Dow Jones fell 355 points during the overnight trade on Friday to close at 24,815 while the S&P500 lost 37 points to end at 2,752 levels. The Nasdaq too lost 114 points to end the session at 7,453 levels.

China’s retaliatory move was in response to United States’ decision to hike import tariffs on $200 billion worth of Chinese goods. Last week, while the US President hiked import tariffs on all imports from Mexico, he also ended India’s tariff-free access to the US market under the Generalised System of Preferences (GSP) scheme.

The unanticipated trade tensions that cropped up between two major economies in the world—the US and China— and spilled over other countires thereafter have since spooked the global capital markets.

Between May 5 and May 15, since the day Trump tweeted about his views on China till exit poll outcomes in India, the benchmark S&P BSE Sensex and the broader Nifty50 had lost 4 per cent with the indices seeing their worst ever selling streak of nine consecutive days.

However, between May 5 and May 30, the S&P BSE Sensex gained 3.1 per cent, while the Nifty50 moved up 3 per cent ignoring global cues. The rally was on account expectation of the National Democratic Alliance (NDA) securing a second consecutive term post the general elections that ended on May 19.

BENEFIT INDIA?

While a possible trade war has been averted for the time being, discussions on how India might benefit from this situation have already begun. Analysts suggest that India might not be able to “fill the gap” created by China as the country doesn’t have the required capacity.

“India isn’t a big trade partner to the US to be able to reap benefit from this trade war. Our exports have grown only recently and we don’t have traditional advantage as an exporting country,” says AK Prabhakar, head of research at IDBI Capital.

According to a report by UBS, the US imports of tariff goods from China comprised nearly 47 per cent of China’s goods’ export basket and 39 per cent of India’s goods’ exports basket, as of 2017.

“In this situation, India as a country won’t have much of an impact. Firstly, we are a consumption driven economy, and secondly, after the first trade war concerns surfaced last year, our indices-including Bank Nifty- touched all-time high,” says Gaurang Shah, head of research at Geojit BNP Paribas. Thus, India has already discounted a trade war.

“In the long term, however, if there is a slowdown in China, it will definitely benefit India as an emerging nation in terms of investment and foreign direct investment (FDIs),” he says.

INVESTMENT STRATEGY

The top beneficiaries, according to analysts, would be the overlapping sectors between Indian export basket and items included in hiked tariff. These, they say, include industrials, chemicals, clothing/footwear, plastics, machinery and electrical/electronic products.

According to Shah of Geojit, the chemical sector, especially agro-chemicals and specialty chemicals, would benefit in the long-run.

For Prabhakar, chemicals and soda companies including Vinati, Tata Chemicals and Gujarat Alkelies could be profitable bets. “On the other hand, electronics could be an area of worry due to dumping of such goods in India. Anti-dumping should be in place for phone, laptop,” he suggests.

According to Shah, electronics could only be affected indirectly as there aren’t many Indian players established in the country. That said, analysts believe, sectors such as steel, rubber, aluminium and plastics might need protection may need protection from unreasonable dumping by China.

Analysts are also placing bets on auto-ancillary, metals, information technology (IT) – likely sanctions on Huawei, hospitality and agriculture-related stocks. The indirect spill-overs, some analysts say, could also benefit allied sectors, such as consumption and financials.

“Textiles could have benefitted but Africa, Bangladesh and other Asian countries are at better position than India,” Prabhakar adds.

https://www.business-standard.com/article/markets/metals-chemicals-sectors-that-stand-to-benefit-from-us-china-trade-war-119060300202_1.html

Bajaj Auto sales rise 3% in May to 4.19 lakh units

Motorcycle sales increased 7 per cent to 3,65,068 units in the previous month as against 3,42,595 units in May 2018, the company said in a statement.

Bajaj AutoNSE 3.72 % on Monday reported 3 per cent increase in total sales in May at 4,19, 235 units as against 4,07,044 units in the same month previous year.

Motorcycle sales increased 7 per cent to 3,65,068 units in the previous month as against 3,42,595 units in May 2018, the company said in a statement.

Commercial vehicles sales declined by 16 per cent to 54,167 units during the month compared to64, 449 units in the year-ago period, it added.

Exports stood at 1,83,411 units in the previous month as against 1,82,419 units in the same month of 2018, an increase of one per cent, as per the statement.

https://economictimes.indiatimes.com/two-wheelers/bajaj-auto-sales-rise-3-in-may-to-4-19-lakh-units/articleshow/69629819.cms