QBiz: RIL Benefits From Oil Slump, Uber May up India Investment

Here’s The Quint’s wrap of the top business this morning.

4 min read
Reliance Industries KG-D6’s control and raiser platform is seen off the Bay of Bengal in this undated handout photo. (Photo: Reuters)

1. Reliance Industries, Mukesh Ambani See Record Gains From Crude Oil Slump: Livemint

Reliance Industries (RIL) reported a record quarterly profit, beating analysts’ estimates, as margins in its core refining business expanded to the highest in seven years because of a slump in crude oil prices.

Net profit rose 39 percent to Rs 7,290 crore for the three months ended 31 December from Rs 5,256 crore a year earlier. That compares with the Rs.7,100.4 crore median profit estimate of four brokers by Bloomberg.

RIL’s refining business has benefited from a sharp drop in oil prices, with Brent crude falling more than 70 percent over the past one-and-a-half years.

Shares of the company controlled by billionaire Mukesh Ambani have risen in anticipation of improved earnings. On Tuesday, the shares surged 2.51 percent.

Read the Livemint report here and The Quint’s report here.

2. IDFC Bank Negotiating to Purchase RBS’ Corporate Banking Portfolio in Rs 3K-Cr Deal: ET

IDFC Bank is in advanced negotiations to purchase Royal Bank of Scotland’s corporate banking portfolio in a deal pegged at up to Rs 3,000 crore, two people with direct knowledge of the plan were quoted in this Economic Times report.

A successful acquisition will allow IDFC, which recently started operations as a universal bank, to widen its branch network in India’s biggest cities, add more customers and acquire a stronger corporate loan book.

3. HCL Tech: A Disconnect Between New Deals and Growth? Livemint

HCL Technologies reportedly topped the IT services league with sequential growth of 1.4 percent in the December quarter. But investors were not impressed. HCL Tech’s shares fell as much as 5 percent intraday on Tuesday, and although most of these losses were recovered, they still closed in the red.

Unlike the preceding three quarters’ results, when analysts were forced to cut earnings estimates, the December quarter was more or less in line with expectations. Still, they reaffirm the fact that growth has decelerated, and that HCL Tech’s impressive deal wins aren’t translating into commensurate revenues.

Read the Livemint report here and the The Quint’s report here.

4. India Ready to Beat its Drum at WEF, But is Anyone Listening? ET

The World Economic Forum meetings in Davos are taking place against an ominous backdrop. The global equity and currency market selloffs have not just wiped out billions in value but also severely questioned the assumptions behind a growth model built on massive central bank stimulus and surging commodity prices.

Emerging markets and India are caught in yet another vicious cycle of worry, fear and stagnant growth caused by political failures and the slow decline of support from China’s crumbling economy.

India has another big problem on hand. The warm afterglow of the Modi victory has now completely disappeared to be replaced by worries over the pace of reforms, stagnant earnings growth and the government’s ability to push through its legislative agenda. The International Monetary Fund has pointed out that India is really one of the bright spots in the global economy.

But is that message getting lost? India is a big beneficiary of the commodity price down-cycle, but investors don’t seem to be bothered as they stampede for the exit.

Read the Economic Times report here and The Quint’s report here.

5. Govt May Allow Some PSBs to Skip Dividends Amidst Increased Burden of Sticky Loans: ET

The government may exempt some state-run lenders from paying dividends due to increase in their bad loans according to an Economic Times report. In the previous financial year too about 10 banks, including IDBI Bank, Indian Overseas Bank and United Bank of India did not pay any dividend to the government.

In this fiscal, the government has set a target of Rs 10,277 crore through dividend income from banks and financial institutions. In 2014-15, it collected Rs 4,000 crore as dividends from banks.

6. IBM Revenue Falls for 15th Straight Quarter: ET

International Business Machines Corp reported a 8.5 percent fall in quarterly revenue as a strong dollar and tepid IT spending weighed on the Big Blue’s results, reports the Economic Times.

Revenue dropped to $22.06 billion in the quarter ended 31 December, from $24.11 billion. Revenue adjusted for currency fell 2 percent. Net income fell to $4.46 billion, or $4.59 per share, from $5.48 billion, or $5.51 per share a year earlier.

7. Narayana Murthy Panel Bats for Tax Benefit to Alternative Investment Funds: HBL

The 21-member Narayana Murthy Committee set up to advise SEBI on issues related to the development of alternative investment and the startup ecosystem is expected to recommend a relaxed tax structure and revamp of the alternative investment funds (AIF) norms.

While SEBI has played its part when it came to rules for PE and VC funds to invest in India, the panel’s proposals will be tax related, according to sources quoted in the Hindu Business Line report.

8. Uber CEO Talks up Doubling India Investment If Returns Are Good: Livemint

Uber could double its current committed investment of $1 billion in India if it sees more than five times the return, said co-founder and chief executive Travis Kalanick.

If we see five times the return on our spending, we would spend $2 billion instead of $1 billion that we have committed to spending on the India business

The economy in India has really been flourishing in a big way in the last decade. I expect so much of big growth ahead, and at a scale. By 2020 there will be 1 billion smartphone users here, and I’m excited about that.

Travis Kalanick, Co-Founder & Chief Executive Officer, Uber

Read more here.

9. RBI and FinMin Working on Solution to NPAs Held by Banks: ET

The finance ministry and the Reserve Bank of India are working in tandem on a comprehensive solution to the stressed assets held by banks through asset-quality reviews followed by specific solutions.

According to an Economic Times report, the stressed assets fund being set up under National Infrastructure Investment Fund (NIIF) is expected to play a key role in the process, making available equity to troubled companies, minister of state for finance Jayant Sinha was quoted saying, acknowledging that bad loans posed a major economic risk for India.

Under governor Raghuram Rajan, the central bank has been seeking to determine the extent of stress in the system and working with the finance ministry on a potential solution.

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