17 nov

Author

Shubhada Mandavi
November 17, 2023

NewsWala aaya, taaza khabre laya! Good morning!
 

Today, Your NewsWala Delivers:

  • ONGC buys out PTC

  • RBI tightens its grip

  • SoftBank bows out of Delhivery

And do not forget to check what Mr. Musk has to say about video games! 🎮️ 

Chalo chalein!
 
The reading time is 6 minutes.


 

MARKETS

Nifty 50 19,765+0.46%
Down Sensex 65,982+ 0.47%
Down NIFTY Bank 44,161-0.09%
Down BTC 30,36,421-3.65%
Bosch 20,589+4.39%


Markets: Key stock market indices bounced back, closing Thursday's session strong, propelled by gains in Information Technology (IT) and power stocks. Not to forget, BankNifty took a dramatic nosedive today after a strong start, doing its best rollercoaster impression.

BUSINESS

ONGC powers PTC's debt-free future


What happened

In a strategic move, PTC India, the power trading solutions provider, is set to achieve a debt-free status with the divestment of its subsidiary, PTC Energy, to ONGC. The successful bid by ONGC for a 100% stake in PTC Energy comes at an enterprise value of Rs 2,021 crore
PTC India Chairman, Rajib Mishra, highlighted that the enterprise value encompasses ONGC's Rs 925 crore bid and a debt component exceeding Rs 1,100 crore. 

Why it matters

  • The divestment of PTC Energy is not only a strategic exit from non-core business but a pivotal step towards PTC India's ambition to become an asset-light firm. 

  • The company's shift away from taking loans for working capital needs showcased a remarkable reduction in outstanding dues, largely attributed to the Late Payment Surcharge scheme.

As part of its renewed focus, PTC India aims to improve its core margin per unit, moving away from merely increasing trade volumes. The data reflects this shift, with the per unit margin witnessing a notable increase from 6.07 paise per unit in the first half of the previous fiscal year to 7.38 paise per unit in the same period this year, marking a 22% rise.

Zoom out
As PTC India navigates its divestment strategy and focuses on core business strengths, the ONGC deal emerges as a game-changer. The enterprise value of Rs 2,021 crore not only ensures a debt-free future but positions PTC India as a lean and agile player in the power trading landscape.

 

BIG MONEY MOVES

Vedanta's copper ambition takes flight in Saudi Arabia

In a strategic move, Vedanta's subsidiary, Malco Energy Ltd, has inaugurated a new unit in Saudi Arabia for its copper business. The investment, totalling 1,00,000 Saudi riyals (Rs 22.19 lakh), marks Vedanta's entry into fresh geographies. This development aligns with Vedanta's broader plan to demerge key businesses, including aluminium, oil and gas, and steel, into separate entities, emphasizing a streamlined, asset-owner business model for enhanced shareholder value.

SoftBank plans $150 Million stake sale in Delhivery
Multinational investment firm SoftBank is reportedly considering a $150 million stake sale in logistics company Delhivery through a fresh block deal. The Japanese conglomerate is said to be offloading a 4% stake in Delhivery. SoftBank currently holds a 14.5% stake in Delhivery, with its subsidiary SvF Doorbell (Cayman).

BUSINESS

RBI tightens the grip


What happened

In a bold move aimed at fortifying the financial sector, RBI announced a 25% increase in the risk weight on consumer credit exposure for both commercial banks and non-banking finance companies (NBFCs). The revision sees consumer credit, once pegged at a 100% risk weight, now elevated to 125%.

Well, risk weight on consumer credit exposure is a percentage that shows how risky loans are for banks and finance companies.

This strategic shift follows RBI Governor S. Das's cautionary notes in the October monetary policy, where he highlighted the rapid surge in certain facets of consumer credit.

Why it matters?

The increased risk weight on consumer credit exposure is likely to have a notable impact on both the market and banks.

  •  For banks, it means they will need to set aside more capital as a buffer for potential losses associated with consumer loans. This could limit their capacity to lend and might lead to a reevaluation of lending strategies.

  • In the market, the adjustment could result in a slowdown in the availability of consumer credit as banks become more cautious. Consumers might experience tightened loan approval criteria and potentially higher interest rates. 


Zoom out

This move by the RBI signals a proactive stance toward risk management in the financial sector. As market players grapple with heightened risk weights, it underscores the imperative for banks and NBFCs to reevaluate their sectoral exposure limits for consumer credit. With the increased risk weights, the RBI aims to instill a sense of prudence, urging financial institutions to keep their risk management strategies in check.

NewsWala secretly watching RBI flexing power

 

BIG PICTURE


🏍️ TVS Motors Accelerates into Europe 

TVS Motors takes a bold step into the European market, sealing a deal with Zurich-based Emil Frey for the import and distribution of two-wheelers. Emil Frey, a major player in European automobile imports, will spearhead TVS product distribution in select countries, marking TVS Motors' strategic entry into the region. Leveraging Emil Frey's extensive network, TVS aims to launch its range in France from January 2024, with both Internal Combustion Engine (ICE) and Electric Vehicle (EV) models.

📈 ValueAct Capital eyes Disney's magical doubling in Stock Value

ValueAct Capital, based in San Francisco, has reportedly amassed a significant stake in Walt Disney, foreseeing the potential for the media giant's stock price to nearly double. Known for its collaborative approach, ValueAct has cultivated a decade-long relationship with Disney's team and has engaged with management as it built its stake over recent months. Although the exact stake size remains undisclosed, ValueAct is optimistic about Disney's potential for renewed strength in the market.

 

BUSINESS

Ashok Leyland's electric revolution scores 10K orders


What happened

Ashok Leyland, the renowned commercial vehicle manufacturer, is riding the electric wave with its IeV series of electric light commercial vehicles (e-LCVs). Just over two months since their unveiling, the company has already amassed an impressive 10,000 bookings for these battery-driven light trucks, signalling a robust demand for eco-friendly solutions in the transportation sector.

Dheeraj Hinduja, the Executive Chairman of Ashok Leyland, shared the company's optimism, announcing plans to launch their electric LCVs in the fourth quarter of this financial year. The twin brothers, IeV 3 and IeV 4, are designed for last-mile transportation needs and boast a 330 V high voltage EV architecture in the 2-3.5 ton commercial vehicle category.

Why it matters

The surge in bookings for Ashok Leyland's electric LCVs highlights a growing appetite for sustainable alternatives in the market. With a substantial order book, the company positions itself at the forefront of the electric vehicle (EV) revolution in India.

  • Their strategic investment of Rs 1,200 crore in its EV arm, Switch Mobility, emphasizes their commitment to capital expenditure, research and development, and meeting operational requirements.

Contrary to concerns about the impact of electric three-wheelers (E3Ws) on internal combustion engine (ICE) powered LCVs, Hinduja reassured that the shift toward electric mobility depends on the customer's application requirements. He emphasized that the sales growth of E3Ws has not replaced the utility of ICE-powered LCVs, particularly in the segment where Ashok Leyland operates.

Zoom out
Ashok Leyland's foray into electric commercial vehicles, backed by a robust order book and significant investment, signifies a pivotal moment in India's transition to e-mobility. With an anticipated 20% penetration of electric buses by the end of the decade, the company positions itself as a key player in shaping the future of sustainable transportation in the country.

 

MIRCH MASALA