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LIC Stock ends first trading day at Rs 872/share on BSE, down 8% from issue price

MUMBAI, May 17: Despite the reduction in the pre-IPO valuation of LIC, the scrip has still listed at a discount on the bourses which is in tandem with the diminution in insurance companies’ valuation and softness in the markets due to macro-economic constraints.

However, given the attractive fundamentals, stability in operating metrics and expected recovery in the markets, we can potentially see some buying interest from investors'

India's biggest-ever IPO, LIC finally listed its shares at a discounted rate of over 8% i.e., Rs 77 on the BSE and the NSE. This discount reduces the break-even prices for employees and retailers which stand at Rs 904 and policyholders at Rs 889.

Centre relaxes ban on wheat shipments awaiting customs clearance

NEW DELHI, May 17: The Central Government on Tuesday announced some relaxation to its order dated 13 May on restricting wheat exports. It said that wherever wheat consignments have been handed over to Customs for examination and registered into their systems on or before May 13, such consignments would be allowed for export.

“It has been decided that wherever wheat consignments have been handed over to Customs for examination and have been registered into their systems on or prior to 13.5.2022, such consignments would be allowed to be exported," the Ministry of Commerce & Industry said in a statement.

The Centre has also allowed a wheat consignment headed for Egypt, which was already under loading at the Kandla port. This followed a request by the Egyptian government to permit the wheat cargo being loaded at the Kandla port.

“M/s Mera International India Pvt. Ltd., the company engaged for export of the wheat to Egypt, had also given a representation for completion of loading of 61,500 MT of wheat of which 44,340 MT of wheat had already been loaded and only 17,160 MT was left to be loaded. The government decided to permit the full consignment of 61,500 MT and allowed it to sail from Kandla to Egypt," the statement read.

India, the world's second-largest producer of wheat, had earlier announced it would ban exports without special authorisation from the government in the face of falling production caused primarily by an extreme heatwave.

New Delhi, which had previously pledged to supply wheat to countries once dependent on exports from Ukraine, said it wanted to ensure "food security" for the country's 1.4 billion people.

According to this order, this restriction would not apply in cases where prior commitments have been made by private trade through Letter of Credit as well as in situations where permission is granted by the Government of India to other countries to meet their food security needs and on the requests of their governments.

The government said the order served three main purposes: ensure India’s food security and check inflation, it helps other countries facing food deficit, and it maintains India’s reliability as a supplier.

Zomato sinks to a new low

MUMBAI, May 10: Zomato Ltd on May 10 sank to a new low as it closed at Rs 52.45 on BSE, down 7.6 percent from the previous day.

The downward spiral has pushed the stock more than 30 percent down from the issue price of Rs 76. Zomato listed on the bourses on July 23, 2021.

The share hit a record high of Rs 169.10 on BSE on November 16, 2021 but has since tanked more than 70 percent, with investors losing nearly Rs 1 trillion in market value.

The food delivery platform is trading below its last private valuation of $5.4 billion in early 2021. Swiggy, Zomato's rival, was last valued at $10.7 billion.
Investors are keenly awaiting its March quarter earnings, the date for which is yet to be announced.

According to six analysts polled by Bloomberg, revenue is likely to be at Rs 1,256 crore, while the loss for the March quarter will be at Rs 372 crore

Despite the continuous fall, Zomato has 15 buy ratings, three hold and one sell rating, Bloomberg said.

Here are the key reasons why Zomato has taken a beating:

1 Volatile market: Analysts say this can be partly attributed to global factors including rising interest yields, the Russia-Ukraine war, surging inflation and the company's reluctance to host analyst/investor interactions (while selectively sharing data/comments on Twitter), an equal, if not greater, contributory factor is investor concerns related to the operating business.

2 ESOP expenses: Investors are not happy after many newly edged firms, including Zomato, reported high ESOP expenses, limited disclosures with respect to the actual vesting period and the impact on profitability. Investors are concerned that these companies may continue to roll out large ESOP schemes every three-five 5 years under the guise of retaining talent.

"While we concur that ESOP roll-out is likely to be a recurring and necessary exercise, we believe some sanity will kick in on the quantum as the impact of the on-going schemes wanes,” JM Financial said in a March 2 report.

3 Investments in loss-making firms: Zomato's investment in Blinkit, Shiprocket and Magicpin, where Managing Director Deepinder Goyal has had personal interest or involvement, does raise questions of conflict of interest.

"We also fail to understand the apparent oversight from the Street in raising these concerns during the IPO process as it was fairly known at that time also, at least in the case of Blinkit.

“We would expect the company/management to build investor confidence by being more forthcoming and upfront about such strategic initiatives (as the core business itself is far from mature) through regular analyst/investor calls instead of selective commentary on Twitter,” JM Financial report added

4 NBFC licence: Zomato recently announced plans to extend short-term credit to delivery partners, customers, and restaurant partners, claiming it would add value and improve experience for its partners.

"We await more disclosures as lending from own/subsidiary books may end up affecting the balance sheet and may not be perceived favourably by the investors as it will be a non-core investment,” analysts said.

LIC IPO gets 67 per cent subscrition on day one of subscription

MUMBAI, May 4: The blockbuster IPO of Life Insurance Corporation of India (LIC) got 67 percent subscription on day one of the opening of the offer, with strong demand coming from the policyholders, employees and retail investors.

LIC policyholders led the bout as they lapped up twice (1.99 times) their portion of the offer. The portion allocated to the employees also got fully subscribed (1.17 times) on day one itself while the retail investors closed on 60 percent of their allocated portion.

The portion set aside for non-institutional investors was subscribed 0.27 times while qualified institutional buyers lapped up 33 percent of their allocated portion on day one.

A total of 10,86,45,360 shares received the bids as against the offered 16,20,78,067 equity shares (excluding shares offered to anchor investors), by 7:00 pm on the stock exchanges. The IPO is an offer-for-sale of up to 221,374,920 equity shares of face value of Rs 10 each wherein the Government of India is aiming to garner Rs 21,000 crore against the sale of 3.5 percent of its stake.

The corporation had already raised Rs 5,627 crore from anchor investors on May 2, who were allotted 5,92,96,853 equity shares at the upper price band of Rs 949 per share.

The brokerages have given a thumbs-up to the IPO recommending investors to ‘subscribe’ to the issue. They believe that LIC’s dominance in the market is well-positioned to capture India's underpenetrated life insurance market.

It is the largest life insurer in India across the parameters of GWP (gross written premium), NBP (new business premium), number of individual policies issued, and number of group policies issued. It has a market share of 61.4 percent in NBP (individual and group) as compared to the next largest competitor which had a market share of 9.16 percent basis NBP (individual and group).

It is ranked fifth globally by life insurance GWP and 10th globally in terms of total assets. As of December 31, 2021, LIC had 2,048 branch offices and 1,559 satellite offices in India, covering 91 percent of all districts in India.

In light of LIC’s market positioning and expected product launches, the company is poised to benefit to a great extent and at the upper price band of Rs 949, the issue is valued at 1.1x EV (September 2021) which is at a significant discount to private sector valuations

LIC had a market share of 61.6 percent in terms of premiums or GWP, 61.4 percent in terms of New Business Premium (or NBP), 71.8 percent in terms of number of individual policies issued, and 88.8 percent in terms of number of group policies issued, for the nine months ended December 31, 2021

Data shows that the protection gap in India is 83 percent (as of 2019), the highest among APAC countries. Given the opportunity, experts feel that India's life insurance NBP is expected to grow at 14-16 percent CAGR over the next decade.

As of December 31, 2021, the corporation covered 91 percent of all districts in India and had the largest individual agency network among life insurance entities in India, comprising approximately 1.33 million individual agents.

RBI Hikes Key Lending Rate To 4.40%, First Time In 4 Years Over Surging Inflation

NEW DELHI, May 4: The RBI on Wednesday raised its key lending rate by 40 basis points to 4.40 per cent with immediate effect. The central bank also hiked the cash reserve ratio by 50 basis points. The decision was taken by the monetary policy committee (MPC) in an off-cycle meeting with the central board held May 2-4.

RBI Governor Shaktikanta Das said the decision was taken in view of rising inflation, geo-political tensions, high crude oil prices and shortage of commodities globally, which have impacted Indian economy.

The RBI cautioned that the economy faces global spillovers risks from geopolitical tensions, elevated commodity prices and moderating external demand.

“The decision today to raise repo rate may be seen as reversal of rate action of May 2020. Last month, we had set out a stance of withdrawal of accommodation. Today's action needs to be seen in line with that action,” Das said.

“I would like to emphasise that the monetary policy action is aimed at containing inflation spike and re-anchoring inflation expectation,” he said, adding that "high inflation is known as detrimental to growth".

This was the first hike in policy rate since August 2018, which would increase the cost of borrowing for corporates as well as individuals. The latest surprise hike completely reverses the Covid-support off-cycle rate cut in May 2020.

RBI also decided to remain accommodative while focussing on withdrawal of accommodation to ensure inflation remains within target going forward.

In his address, the RBI Governor noted that food Inflation is expected to remain high as spillovers from global wheat shortages are impacting domestic wheat prices, even though domestic supplies remain comfortable.

Due to the Russia-Ukraine war, edible oil prices may firm up as major producing countries have imposed export restrictions, he said.

Retail inflation hit nearly 7 per cent in March and held above the upper end of the RBI's target band of 2-4 per cent for the third month in a row.

The RBI's off-cycle move also comes ahead of a widely-expected 50 basis points hike by US Federal Reserve later on Wednesday.

Merchandise exports decline to $38 billion in April, trade deficit widens to $20 billion

NEW DELHI, May 3: India's merchandise exports stood at $38.19 billion in April, down from $42.22 billion a month back, according to preliminary data released by the commerce ministry on May 3.

Imports, however, did not fall by the same magnitude, coming in at $58.26 billion as against $60.74 billion in March. As such, the merchandise trade deficit widened to $20.07 billion from $18.51 billion during the period.

On a year-on-year basis, the growth in exports and imports remained robust. While exports were up 24.2 percent in April compared to last year, imports were 26.6 percent higher.

The trade deficit was 31.2 percent greater compared to April 2021.

Petroleum imports continued to drive imports higher. Import of petroleum and crude products accounted for 33.5 percent of imports in April. In value terms, $19.51 billion of these products were imported last month, registering a growth of 81.2 percent on a year-on-year basis.

India's GDP to hit $5 trillion in FY29, rupee at 94 a dollar, suggests IMF data
Higher global energy prices were also reflected in the value of coal imported. Coal, coke, and briquettes worth $4.74 billion were imported in April, up 136.4 percent from the same month last year.

Gold imports, however, declined 73 percent to $1.69 billion.

On the export front, engineering goods worth $9.20 billion were sent overseas, 15.4 percent higher from April 2021. The higher energy prices also helped India's petroleum products exports, which were 113.2 percent higher at $7.73 billion.

Final trade data for April will be released mid-May.

At Rs 1.68 lakh crore, GST collection scales to all-time high in April 2022

NEW DELHI, May 1: The monthly collection under the Goods and Services Tax (GST) has peaked to an all-time high of Rs 1.68 lakh crore in April 2022, according to a statement by the Finance Ministry.

The gross GST collection has crossed the Rs 1.5 lakh crore-mark for the first time in April 2022 and Rs 1 lakh crore-mark for the tenth month in a row.

The gross GST revenue collected April 2022 is Rs 1,67,540 crore, out of which CGST is Rs 33,159 crore, SGST is Rs 41,793 crore, IGST is Rs 81,939 crore (including Rs 36,705 crore collected on import of goods), and cess is Rs 10,649 crore (including Rs 857 crore collected on import of goods).

The gross GST collection in April marks a consecutive month-on-month (MoM) surge as a record-high amount of Rs 1.42 lakh crore was collected in March. GST collection in April was Rs 25,000 crore more than the collection in March.

For FY22 as a whole, total GST collections amounted to Rs 14.83 lakh crore, up 30 percent from Rs 11.37 lakh crore in FY21.

 

 

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