QBiz: Stock Results Leak on WhatsApp, Ambani Richest in Asia
A round-up of top Business stories of the day.
1. Prescient Messages About Indian Companies Circulate in WhatsApp Groups
Three days before Dr Reddy’s Laboratories Ltd announced quarterly results this summer, a message circulated on a private WhatsApp group saying the Indian drugmaker would not post good numbers.
The message proved prescient: On 27 July, Dr Reddy’s reported a loss of Rs 587 million – a result its chief executive said was “below expectations”, sending shares down as much as 4.4 percent.
The post that circulated in the WhatsApp group three days earlier had predicted a loss of more than Rs 500 million.
Reuters has documented at least 12 cases of prescient messages about major Indian companies, including Dr Reddy‘s, being posted in private WhatsApp groups.
2. As Shares Of Reliance Communications Fall, Lenders Face Tough Choices
Shares of Reliance Communications Ltd have been spiralling lower. On Wednesday, the stock fell to below Rs 10 per share, hitting a lifetime low. Year to date, shares of the Anil Ambani led telecommunication firm have fallen 37 percent.
The most recent decline in the company’s share price followed a confirmation that it had defaulted on its dollar debt. This was not unexpected since the company has stated that as per a ‘standstill’ agreement with domestic lenders, it would not pay dues on any debt till December 2018. Though whether the standstill applies to the foreign bondholders is unclear.
The stock has fallen well below the conversion price of Rs 24.71 per share.
Lenders, as many as 27 domestic banks, financial institutions and foreign banks, now face two options. Convert at Rs 24.71 per share and take a material mark-to-market loss immediately upon conversion. Or allow the SDR agreement to lapse, which, in all probability, will result in the account becoming a non-performing asset.
3. RBI Gets Ready to Train Its Guns on 50 Stressed Accounts
The Reserve Bank of India is likely to come up with a fresh list of around 50 loan accounts that are either under stress or close to being classified as non-performing assets. The regulator may set a 31 March deadline for banks to find a resolution on these or commence bankruptcy proceedings against the borrowers, a finance ministry official said.
These accounts are in addition to the 41 that the central bank has already identified, including several against which banks have now started bankruptcy proceedings.
(Source: Economic Times)
4. Cabinet Clears Setting up of GST Anti-Profiteering Authority
The Union Cabinet on 16 November approved setting up of a National Anti-profiteering Authority under the GST, as it seeks to ensure that consumers get the benefit of reduced prices under the new indirect tax regime.
Union Minister Ravi Shankar Prasad said currently there are only 50 items which attract the highest tax of 28 percent under the Goods and Services Tax (GST) regime and rates on many items have been cut to five percent as well.
"The National Anti-Profiteering Authority is an assurance to consumers of India. If any consumer feels that the benefit of tax rate cut is not being passed on, then he can file a complaint to the authority," Prasad
5. Indian Market Must Fall 20% To Hit Fair Value, Says UBS’ Geoffrey Dennis
A significant amount of foreign investor flows have already left the Indian market which is now holding up largely thanks to domestic investors, said Geoffrey Dennis, head of global emerging market strategy at UBS.
He remains optimistic on India in the long term despite current uncertainties. “India is the best growth story in long term in the emerging markets and we will retain overweight in the equity market for the long term,” he told BloombergQuint in an interview.
On Indian equity valuations though, Dennis is far more circumspect. According to him, only a 20 percent decline would provide a comfortable entry point into the Indian market. But such a correction is hardly “a realistic expectation”, he clarified.
6. Ambanis Top Forbes List of Asia's Richest Families
Mukesh Ambani family is the richest in Asia as its net worth rose $19 billion to $44.8 billion, toppling the Lees of the Samsung empire, to claim the numero uno position, Forbes said.
Despite dropping to the second spot, Korea's Lee family still saw its wealth soar by $11.2 billion to $40.8 billion in 2017 as shares of Samsung Electronics moved up 75 percent over the past year.
The Ambanis are the only Indian family on the top 10 richest families list in Asia.
7. RIL to Raise $1.8 Billion to Reduce Dependence on High-Cost Debt
Reliance Industries, the country’s most valuable company, is set to raise up to $1.8 billion through a combination of offshore bonds and syndicated loans, with the business run by Asia’s second-richest man seeking to reduce its high-cost debt.
Reliance, which tops India’s market capitalisation leader-board, would pare borrowing costs with a new series of overseas papers that would be of 10-year maturity, unlike the perpetual bonds it had sold five years ago, multiple sources with direct knowledge of the matter were quoted by ET.
Reliance is raising $800 million through a dollar-bond issue, and another $1 billion through syndicated commercial loans from a group of international lenders at a cost lower than that for the existing loans.
(Source: Economic Times)
8. Comcast, Verizon Approached 21st Century Fox to Buy Some Assets
Comcast Corp and Verizon Communications Inc have both approached 21st Century Fox Inc to express interest in buying Fox assets that were the subject of recent talks between Fox and Walt Disney Co, two people familiar with the situation told Reuters on Thursday.
News of the approaches came the same day the US Federal Communications Commission voted to end a 42-year-old restriction on ownership of multiple TV stations in a major market, removing a major roadblock to media company mergers.
It is unclear whether Fox’s broadcast assets are part of any of the conversations.
9. Petronet to Build Small Plants to Tap Isolated Gas Fields
India’s biggest natural gas importer is going to some of the most isolated parts of the nation to fight the pollution choking its cities.
Petronet LNG Ltd plans to build small plants that will liquefy natural gas from fields with little access to pipeline infrastructure, and then sell it to trucks and buses, chief executive officer Prabhat Singh said. Besides being cleaner, the fuel can be as much as 30% cheaper than diesel to power transportation, he said.
More than 70% of India’s vehicles run on diesel, which is seen as a key source of vehicular emissions in a country that’s home to 14 of the world’s 30 most-polluted cities. Tapping isolated gas fields will also help bring deposits to the market and aid Prime Minister Narendra Modi’s drive to cut the nation’s import bill. Economic rival China is currently driving growth in small-scale liquefaction plants as Xi Jinping’s administration has vowed to combat pollution.
10. Cash Holding by Mutual Funds in Equity Portfolio Drops to Lowest Level Since June
Mutual funds’ cash holding as a percentage of their total equity portfolio fell to the lowest in four months in October, as fund managers pumped money into a spate of public offerings.
According to data from Morningstar, mutual fund cash holding at 5.5 percent in October is the lowest since 5.2 percent in June.
This compares with 5.7, 6 and 5.6 percent in September, August and July, respectively.
In absolute terms, at Rs 38,597 crore, this was the second-highest monthly cash holding.
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