18th January 2024

NewsWala aaya, taaza khabre laya! Good morning!
 

MARKETS

Markets: Indian stock indices ended in the red for the second consecutive day due to negative global signals. HDFC Bank's disappointing quarterly results weighed heavily on the market.

BUSINESS

India Anticipates $48 Billion Food and Fertiliser Subsidies

What happened

Hold onto your calculators, folks! India is gearing up for a fiscal rollercoaster as it contemplates a whopping $48 billion for food and fertilizer subsidies in the next fiscal year.
In the current fiscal year, set to conclude on March 31, India's total budget spending is a staggering $560 billion. Now, get this – roughly one-ninth of that colossal sum is attributed to subsidies on food and fertilizers.

Why it matters

The decision to allocate such a substantial amount for subsidies indicates a strategic move by the government ahead of the 2024 Lok Sabha elections.

• The Ministry of Consumer Affairs is projecting a cost of $26.52 billion for food subsidies in the upcoming fiscal year. 

• Fertiliser subsidies for the next fiscal year are anticipated to be $21.10 billion. 

• While subsidies play a crucial role in supporting farmers and ensuring food security for millions, the sheer scale of the allocation poses challenges in fiscal management. 

• A subsidy surge may trigger inflationary pressures, particularly if not managed carefully.

Union Finance Minister Nirmala Sitharaman is set to unveil the interim budget 2024-25 on February 1, and all eyes are on the figures.

Zoom out

Maintaining subsidies at their current levels would be a political tightrope walk for the Modi government, facing a national election in a few months. With a fiscal deficit target of 5.9% of GDP this year, the government aims to slash it further by at least 50 basis points in the fiscal year 2024-25.

BIG MONEY MOVES

Adani Group increases stake in IANS India

Adani Group's media arm, AMG Media Networks, has upped its stake in IANS India by investing $601,801, boosting its ownership to 76% with voting rights and nearly all non-voting shares. This move follows Adani's recent media ventures, including a 65% stake in NDTV in December 2022 and the acquisition of Quintillion Business Media earlier that year.

Nazara Technologies wins approval to raise ₹250

Nazara Technologies has secured board approval to raise ₹250 crore from investors, including Nikhil Kamath of Zerodha, Plutus Wealth, and ICICI Prudential Mutual Fund. This completes their targeted fundraising of Rs 750 crore. The gaming and sports media company aims to use the funds for potential acquisitions. Additionally, Nazara is acquiring a 10.77% stake in Kofluence for up to Rs 32.41 crore, with plans to launch an influencer-driven game discovery platform.

BUSINESS

Juniper Hotels Targets Growth with Strategic Shift Toward Luxury Hospitality 

What happened

Juniper Hotels, readying itself for a late January or early February IPO, is shaking up the hospitality sector with a strategic shift. The company, led by CMD Arun K. Saraf, has decided to shift its focus from the mid-market segment, which it considers less lucrative and increasingly competitive. Instead, Juniper is setting its sights on developing large-scale luxury hotels in major metro cities such as Delhi, Mumbai, and Bengaluru.

With a projected minimal increase in the supply of new luxury hotels over the next five years, Juniper anticipates robust growth prospects. The IPO-bound company is also eyeing expansion in Goa and Hyderabad, particularly with large convention facilities.

Why it matters

Juniper's strategic pivot aligns with the pursuit of maximizing returns in a market marked by heightened competition. 

• Since 2014, the company has shifted away from mid-market inventory hotels, concentrating solely on asset ownership and development. 

• Seeking fresh capital of ₹1,800 crore through the IPO, Juniper aims to deleverage and fuel future growth, with ₹1,500 crore earmarked for this purpose.

• The company's unique business model extends beyond hotels, incorporating the development of commercial areas, serviced apartments, and even office spaces. 

• Crucially, Juniper's IPO is set to infuse fresh capital without altering ownership structures. 

    

Zoom out

As Juniper gears up for its IPO, eyes are on its transformative journey within the hospitality landscape, driven by a commitment to EBITDA and capital appreciation. The stakes are high, and Juniper Hotels is rolling the dice in a bid for strategic dominance.

BIG PICTURE

📱 Google gears up for global expansion in digital payments

Google India Digital Services and NPCI International Payments Ltd (NIPL) have inked a deal to expand UPI payments beyond India. This memorandum of understanding (MoU) aims to empower Indian travellers to use Google Pay (GPay) for transactions in other countries, eliminating the need for cash or international payment gateways. The agreement focuses on broadening UPI usage for travellers, establishing UPI-like systems globally, and simplifying cross-border financial exchanges.

🍔 Burger King's owner to acquire Carrols in $1 billion deal

Restaurant Brands International, owner of Burger King, is set to acquire full control of Carrols, the largest U.S. Burger King franchisee, in an all-cash deal valued at about $1.0 billion. The agreement, at $9.44 per share, offers a 13.4% premium to Carrols' Jan. 12 closing price. Expected to close in Q2, the move aims to enhance sales growth and franchisee profitability, with plans to remodel 600 non-modernized Burger King eateries.

BUSINESS

Jio Financial Services Adjusts Strategy in Response to RBI's Action

What happened

Jio Financial Services Ltd (JFSL) is shaking things up in response to recent restrictions on unsecured consumer loans by the Reserve Bank of India (RBI). In a savvy move revealed during its post-earnings call, the NBFC, backed by Mukesh Ambani, has decided to pivot its lending strategy. Originally eyeing unsecured loans, Jio FS is now steering towards the safer waters of secured loans, including leasing.

The company disclosed its foray into secured products with the introduction of "DaaS" (device-as-a-service). This entails leasing airfibers, phones, and laptops, coupled with supply chain financing, loans against shares, and home loans. 

Why it matters

Jio's shift to secured lending comes amidst a noticeable market reaction to unsecured lending, prompting the company to adopt a more cautious stance. 

• The company believes the DaaS model offers lower risk due to asset ownership and provides opportunities for cross-selling. 

• Jio FS is not just stopping there; it's also set to unveil supply chain financing solutions to address the working capital needs of suppliers.

• Additionally, the company is making strategic moves, filing for conversion from an NBFC to a core investment company (CIC), essentially stepping into the shoes of a holding company. This shift aligns with Reliance Industries' broader vision to challenge established financiers like Bajaj Finance through the launch of Jio Financial Services.

  
  

Zoom out

In the competitive arena of financial services, Jio Financial Services is adapting to regulatory changes and market dynamics by focusing on secured lending and innovative models like DaaS, the company aims to navigate the evolving landscape. The move to become a core investment company further underscores a strategic play in the financial sector.

MIRCH MASALA

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