Ashok Leyland to buy out Nissan’s stake in Hinduja Tech

Ashok Leyland to buy out Nissan’s stake in Hinduja Tech

Hinduja group flagship Ashok Leyland (ALL) on Thursday announced it has entered into a share purchase agreement with Nissan International Holding to acquire the latter’s 38% stake in Hinduja Tech (HTL) for a consideration of Rs 70.20 crore.
Following the acquisition, HTL will become a wholly-owned subsidiary of the Chennai-based commercial vehicle manufacturer.

The company owns 62% in the paid-up share capital of HTL and the remaining was held by Nissan International Holding.
HTL works in the IT & ITeS space.
In 2019-20, the company reported a profit of Rs 15.95 crore as against Rs 14.30 crore in the year ago period. The company’s revenue stood at Rs 226.16 crore in 2019-210 as compared to Rs 210.19 crore in the corresponding period of the last year.
Nissan International Holdings, a Dutch investment arm of Japanese automaker Nissan, came as the strategic investor on Hinduja Tech in 2014.

Founded in 2009, Hinduja Tech provides engineering, manufacturing and enterprise (EME) services and solutions for automotive, aerospace, defence, industrial and general manufacturing industries.
ALL and Nissan had decided to part away in 2016 out of their light commercial vehicle (LCV) JV, which was formed in 2007 and other related joint ventures. ALL decided to buy its partners stake in the JVs, which were floated by the two partners.

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Eveready Industries: A fresh guard

Eveready Industries: A fresh guard

Shares of Eveready Industries surged after media reports emerged that the Burman family may become joint promoters of the company along with the Khaitan family.
The shareholding of the Khaitan family plunged to just 4.5% from 44.1% over the past two years as lenders sold shares of Eveready pledged with them after the promoter group defaulted on payments.
The promoter group pledged their holdings in Eveready and tea producer McLeod Russel India Ltd to avail of loans and repay debts of McNally Bharat Engineering.

Last August, Eveready’s shares, held by Williamson Magor (an Eveready promoter entity), were pledged with IndusInd Bank for securing the outstanding dues of Seajuli Developers and Finance Ltd, the borrower company. The bank invoked the pledge held in the Eveready shares for the recovery of its dues from Seajuli.
The dramatic decline in the promoter holdings in Eveready opened the dry-cell battery maker to the risk of a hostile takeover. As lenders invoked pledges, the Burman family, which runs Dabur Ltd, stepped in as a white knight to buy out the shares from the open market to avert such a possibility.

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Rising Covid-19 cases likely to delay biz recovery of PVR, Inox Leisure

Rising Covid-19 cases likely to delay biz recovery of PVR, Inox Leisure

Shares of multiplex chain operators PVR and Inox Leisure have corrected 9-10% from their recent highs as rising Covid-19 cases and continuous threat from rapid growth of over the top (OTT) platforms raise concerns over the pace of business recovery.
After consistent reduction in new Covid cases in the last few months, states such as Maharashtra, Punjab, Kerala, Chhattisgarh and Madhya Pradesh have started to see a resurgence in new cases.
More covid cases would mean normalcy gets delayed.

After a lull of three months, Maharashtra, which has the highest number of coronavirus cases in the country, reported over 6,000 daily cases last Friday. On Sunday, the state recorded 6,971 cases and 35 deaths. Mumbai, the state capital, logged 921 infections.
On Monday, Amravati district in Maharashtra was placed under lockdown for a week amid rising cases of COVID-19 in the state.

The announcement for the lockdown in Amravati came hours after the district administration in Pune shut down schools and coaching centres till February 28.
Investors also start to worry about the effect of OTT platforms and delay in movie releases.

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Maruti Suzuki’s wholesale dispatches rise 9.9% in February

Maruti Suzuki’s wholesale dispatches rise 9.9% in February

Maruti Suzuki India on Monday reported a 9.9% year-on-year (y-o-y) growth in domestic wholesale to 147,483 units in February. The automaker also replenished inventory at dealerships after improved sales during the October to December period.
The sales growth was aided by a sustained recovery in demand for entry-level cars, hatchbacks and utility vehicles.
The growth in wholesales though comes on a very low base, with the company reducing production due to falling demand for vehicles and transition to Bharat Stage-VI emission norms in the corresponding period. In FY20 the company reported 17% decline in sales. Hatchback and compact car sales grew by 7.3% y-o-y to 104,476 units during the month, while those of utility vehicles rose 18.9% to 26,884 units.

Maruti’s exports also increased by 11.9% y-o-y to 11,486 units during the month. Despite a decent recovery in retail sales, auto makers like Maruti Suzuki and others are concerned about the negative impact of rising fuel prices and Covid infections in certain states on vehicle demand.
The company though reported its highest ever production of vehicles in October expecting robust demand during the festive season. Demand for Maruti’s compact vehicles has continued to grow beyond the festive season as customers are preferring personal mobility to avoid Covid infections. Maruti’s total sales during the month increased by 11.8% y-o-y to 164,469 units, one of the highest for the company.

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Bajaj Auto sales up 6% in February

Bajaj Auto sales up 6% in February

Bajaj Auto reported 6% rise in total sales at 3,75,017 units in February, as against 3,54,913 units in the same month last year.
Total domestic sales declined by 2% to 1,64,811 units last month, as compared to 1,68,747 units sold in February 2020.
Total two-wheeler sales were up 7% to 3,32,563 units, as compared to 3,10,222 units in the year-ago month.
Overall commercial vehicles sales declined by 5% at 42,454 units last month, as compared to 44,691 units in the year-ago period.

Total exports last month rose 13% to 2,10,206 units, as compared to 1,86,166 units in February 2020.
The commercial vehicle area saw a sales decline at Bajaj last month as the brand sold 15,877 units of CVs compared to 21,871 units sold during the same period last year.
Combining the figures for CVs, the company sold a total of 42,454 units last month as against 44,691 units that went on sale during the same period last year and hence, the commercial vehicle area for Bajaj reported a sales decline of 5%.

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BPCL: Gaining momentum

BPCL: Gaining momentum

Shares of privatisation-bound BPCL climbed nearly 6% after it exited Numaligarh refinery in Assam by selling its entire stake to a consortium of Oil India and Engineers India for Rs 9,876 crore.
The Numaligarh stake sale is an important and necessary step towards completing the privatisation process by July-August, which should keep the excitement high in the stock in the coming months.
The Board of BPCL approved the sale of its 61.25% stake in the Assam-based Numaligarh Refinery ahead of the divestment of the state-run refiner-retailer.

Accordingly, BPCL will be selling 45,35,45,998 equity shares of Rs 10 each (constituting 61.65% of the total equity capital of NRL), a material subsidiary company of BPCL to a consortium of Oil India, Engineers India; and to Govt of Assam, or only to the said consortium in case Govt of Assam does not participate in the purchase of said shares, in such proportion and on such terms and conditions as approved by the board.
The transaction is subject to approval from shareholders of BPCL and will get completed within a month from obtaining all requisite approvals.

Meanwhile, the deal implies a valuation of Rs 16,020 crore for the refinery as a whole. With Rs 3,000-4,000 crore of average annual Ebitda and Rs 1,280 crore of net cash equivalent, the deal implies 5.5-7.9 times PE and 3.6-4.7 times EV/Ebitda, which is lower than the ballpark rate of 8-10 times and 5-7 times, respectively.

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SCI: Sailing uncharted water

SCI: Sailing uncharted water

Shipping Corporation of India (SCI) share price surged over 19% after Department of Investment and Public Asset Management (DIPAM) Secretary said multiple expressions of interest were received for privatisation of the company and the said transaction will now move to the second stage.
DIPAM, in December, had invited expressions of interest (EoI) for strategic disinvestment of its entire stake of 63.75% in Shipping Corp of India, along with the transfer of management. The last date for submitting the bids was February 13, which was later extended to March 1.

SCI has received multiple Expressions of Interest and the transaction will now move to the second stage.
London-based shipping firm Foresight Group is among the multiple bidders who have put in preliminary bids for buying the government’s entire stake in SCI.
Essar Group, as well as Adani Group, have not bid for Shipping Corp privatisation, the sources added, according to the report.

In November last year, the Cabinet had given in-principle approval for strategic divestment of Shipping Corp and Container Corp of India. However, the plans were delayed due to the pandemic.
In her Budget Speech 2021-22, Finance Minister Nirmala Sitharaman had said, “a number of transactions namely Bharat Petroleum Corp, Air India, Shipping Corp of India, Container Corp of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam, among others, would be completed in 2021-22.”

For 2021-22, the government has set a disinvestment target of Rs 1.75 lakh crore, over five times what it is aiming to raise in the current financial year. In the revised estimates, the target has been set at Rs 32,000 crore for the current financial year.

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Tata Motors reports highest PV sales in 9 years

Tata Motors reports highest PV sales in 9 years

Indian auto-manufacturers reported a mixed bag of sales in February as the slowing demand and supply chain constraints continued to keep two-wheeler sales under pressure.
Tata Motors reported a 54% year-on-year increase in total domestic sales led by strong demand for its passenger car and a revival of the commercial vehicle segment. The company said the car sales were the highest ever in at least 9 years.

The country’s largest carmaker Maruti Suzuki India reported a 11.8% increase in wholesales to 1.64 lakh units in February.
Although the company’s entry-level cars, Alto and S-Presso, declined by 12.9% compared to the same month last year — Sales of compact segment vehicles, including models Swift, Celerio, Ignis, Baleno and Dzire, increased by 15.3% year-on-year.

The Hinduja group flagship firm Ashok Leyland reported an increase of 19% in total vehicle sales in February as the commercial vehicles segment showed positive signs after recovering from the coronavirus slowdown.
The medium and heavy commercial vehicles (M&HCV) sales in the domestic market were up 5%, and the light commercial vehicle (LCV) sales in the domestic market were up 46%.

The Tractor sales continued marching in a positive trajectory, with M&M posting double-digit growth in February. The farm equipment segment recorded 19.8% growth leading to the overall growth of 3.3%.
TVS Motors reported 18% year-on-year growth in February-led by strong growth in the two-wheeler segment. The company which sells Apache and Jupiter saw its sales jump nearly 21% in the segment.

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This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.

Telecom stocks: Spectrum shopping spree

Telecom stocks: Spectrum shopping spree

Share price of Bharti Airtel and Mukesh Ambani’s Reliance Industries surged on Wednesday, a day after the telecom companies revealed their telecom spectrum shopping list. Reliance Industries shares surged 1% to hit an intra-day high of Rs 2,133 per share, while Bharti Airtel was among the top gainers on Sensex, up 1.5% to hit a high of Rs 549.5 apiece. Both Bharti Airtel and Reliance Industries-owned Jio strengthened their network infrastructure, purchasing Rs 18,700 crore and Rs 57,000 crore worth of spectrum, respectively. Meanwhile the third private telco, Vodafone Idea was down nearly 2% after making a meagre spectrum purchase worth Rs 1,990 crore.
Bharti Airtel acquired 355.45 MHz of spectrum in 19 out of 22 circles, while Jio acquired 488.35 MHz of spectrum across all 22 circles. On the other hand, Vodafone Idea acquired just 11.8 MHz of spectrum to cover minor gaps in five circles.

Bharti and Jio picked up a significant share of the spectrum on offer across key bands to cover up for the bandwidth expiring later this year, while also preparing to expand their coverage as well as capacity across the country. On the other hand, VIL increased its holding marginally on an already large spectrum portfolio.
Reliance Jio and Bharti Airtel’s purchase could be owing to the renewal of existing spectrum, investment in lower bands to deepen coverage, and investment in capacity bands to de-bottleneck networks and prepare for a seamless switch to 5G in the future.

Interestingly, the debt-laden Vodafone Idea’s purchase was 76% lower than what it was required to shell out for renewal of spectrum.
Prior to the spectrum auction, Reliance Industries-owned Jio, announced its new 4G feature phone, offering plans with 12 and 24 months of recharge and monthly data allowance of 2GB, worth Rs 1,499 and Rs 1,999.

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This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.

India’s services growth at one-year high

India’s services growth at one-year high

India’s dominant services activity grew at its fastest pace in a year last month, driven by an extended robust recovery in domestic demand through input costs rose at the quickest rate in eight years, a private survey showed.
Asia’s third-largest economy came out of a technical recession and expanded 0.4% annually last quarter and the recovery is widely expected to gather pace in the year ahead amid hopes a successful vaccine rollout will boost business activity.

The Nikkei/IHS Markit Services Purchasing Managers’ Index rose to 55.3 last month from 52.8 in January, its highest since February 2020, just before the coronavirus pandemic hit the economy.
It has stayed above the 50-level mark separating growth from contraction for the fifth straight month as a sub-index tracking new business orders hit a year high. The positive impulse came despite a persistent contraction in foreign demand, albeit the pace of the downturn was the slowest since March 2020.
The economic rebound and the solid recovery in manufacturing activity helped boost the composite PMI to a four-month high of 57.3 in February.
Still, services firms reduced headcount at the sharpest pace in three months, signalling the bruised labour market will take more time to fully recover.

Firms faced the strongest increase in input costs in eight years but were unable to transfer it on to customers as they tried to maintain their market share and stimulate new orders.
That along with a recent spike in oil prices – a key component of headline inflation – mean overall price pressures are likely to intensify, making it difficult for the Reserve Bank of India to remain so accommodative.
Going forward, the continuation of strong demand, passing off the cost burden to clients and most importantly RBI maintaining its accommodative stance will be key factors to watch.

India’s services growth at one-year high