1. Your Provident Fund Money Now in Stocks - TOI
The Employees’ Provident Fund Organisation (EPFO), the entity that manages the country’s pension fund, on Thursday started investing in the stock market for the first time in its 64-year history, putting token amounts in two index-based exchange-traded funds (ETFs) run by SBI Mutual Fund.
Although the EPFO is allowed to invest up to 15% of its incremental inflows in stocks, Bandaru Dattatreya, minister of state for labour and employment, said that to begin with it would put in only 5% of its incremental flows, or about Rs 400 crore per month, reflecting a cautious approach by a first-time equity investor.
ETFs are those funds whose portfolio exactly replicate the composition of an index and, hence, their returns too. Currently, EPFO manages assets worth about Rs 8.5 lakh crore, which is equivalent to about 12% of BSE’s market capitalisation.
2. Cos’ Capex to Pick up Only in FY17: Crisil - TOI
India Inc is holding on to cash when it comes to making capital investments as utilisation rates in 10 out of the 12 large industrial sectors are wallowing at five-year lows, causing new project announcements to dry up. This further delays the meaningful recovery in capital investments to 2017 fiscal as corporates wait and watch for demand to pick up.
Capital investments across 22 large sectors show that a slide in investments continues and is further expected to decline 2% in the current fiscal, according to a Crisil Research note. What’s more worrying is that private investments on skid row since the last couple of years are expected to decline by another 8% this fiscal, it added.
Fresh investments in projects announced and awarded in the last one year are expected to account for a mere 20% of total investments, says Crisil Research, forecasting a meaningful recovery of 7% in capital investments to pick up only from fiscal 2017.
3. Rs 573 cr Injection Values Practo at Rs 3,348 cr - ET
Chinese online giant Tencent has made its debut in India by leading a Rs 573-crore ($90-million) investment round in Practo, an Internet-based service to schedule appointments with doctors. Belgium’s Sofina and US-based investment firm Altimeter Capital joined in as new investors. The deal, which sources said values Practo at $525 million (Rs 3,348 crore), has also seen participation from existing investors Sequoia Capital, Matrix Partners as well as Sequoia Capital Global Equities, Google Capital and Russian billionaire and DST Global founder Yuri Milner.
The physicist-turned-investor has backed the seven-year-old company with around $5 million, making this one of his biggest personal investments. “This is the largest fundraise by a health tech company in the world,” said Shashank ND, 27-year-old CEO of Practo, which has so far raised a total of $125 million. “Seven years ago, we started with the crazy idea of having a health account for all. Now, we’re inching close to that.”
Tencent is the second major Chinese company to back an Indian startup after consumer Internet group Alibaba bought a stake in Paytm.
4. ICICI Bank at Higher Risk of Bad Loans: Ambit Capital - ET
At ICICI Bank, the amount of loans that were falling behind in payments but still classified as standard loans, nearly doubled last fiscal year, increasing the risk of higher bad loans in the future, said Ambit Capital, a securities firm.
Concentration risk for the bank is also rising – with 32.8% of its capital funds exposure to a single corporate group with the same management, up from 29.1% a year earlier, the firm said – citing regulatory filing.
“The delinquency breakup of the standard loan book suggests that early delinquencies (31-90 day due) have almost doubled from 3.6% of loans as at FY14 to 6.4% of loans as at FY15,” Ambit said, citing ICICI Bank’s filing with the Securities Exchange Commission (SEC) of the US. “In absolute terms, the exposure to the biggest corporate group increased 18% YoY in FY15. The name of this corporate group is not known, but if it is one of those highly levered and stressed corporates, this does not bode well for the bank.”
5. Airtel Launches 4G Services Nationally Ahead of Jio - BE
Bharti Group Chairman Sunil Mittal has taken an early-mover advantage in the fourth-generation (4G) segment, with Bharti Airtel on Thursday announcing a commercial launch of these services in 296 towns, ahead of the planned December launch of Mukesh Ambani’s Reliance Jio.
Airtel had in 2012 launched a 4G network in Kolkata and was currently running trials in 51 towns. As the company rolls out the services across India over the next few weeks, the stage is set for another face-off between the leading lights of the Indian industry, 13 years after Ambani took on the GSM operators led by Mittal with his CDMA offering.
6. With Rs 10,800 cr, Russian Yuri Milner Eyes India Start-Ups - BS
Yuri Milner, the Russian billionaire investor, on Thursday announced he’d taken a small stake in Practo, a rapidly expanding start-up based here that helps patients and doctors digitise their engagements.
The money was from his personal account. But, with a war chest of $1.7 billion (Rs 10,831 crore), Milner, who rose to fame as a deft investor in information technology (he’d invested in high-growth global entities such as Facebook and Airbnb), is keen to expand in India.
He has already made investments in India in both his personal capacity and through DST Global, his venture firm. These have been in online marketplace Flipkart, cab aggregator Ola, real estate discovery platform Housing.com, and Swiggy, a food delivery start-up.
7. Gold Crashes Below Rs 25,000 to Hit Over 4-Year Lows - PTI
Continuing its slide for the fourth consecutive day, gold prices today dipped below Rs 25,000 by losing Rs 40 to trade at over four-year lows of Rs 24,980 per 10 grams at the domestic bullion market.
Moreover, the precious metal was trading at five-year lows in the global market. Besides, there was an easing demand from jewellers as retailers deferred their buying plans on hopes of further dip in the yellow metal prices.
On the other hand, silver managed to recover some ground on the back of scattered demand from consuming industries and rose by Rs 100 to Rs 33,800 per kg. Bullion traders saw a weak trend in gold where it traded at nearly five-year lows in global markets in anticipation of a possible rate hike by the US Federal Reserve in coming months.
8. India Inc’s FY15 Interest Cost Growth Slowest in 5 Years - FE
Amidst mounting expectations from RBI to reduce benchmark rates at a higher pace – even as there has been negligible transmission of the 75 basis points repo rate cut so far this year – India Inc’s interest cost has already started showing signs of abatement.
In a tepid economic environment depicted by a demand slow-down, lower capacity utilisation and lower revenue growth, the interest cost for Indian companies in fiscal 2014-15 reported its slowest growth in the last five years. For a clutch of 947 listed companies excluding those from IT, finance, trading, capital goods and pharma space, the aggregate interest cost for the year grew at 10.25% to R1.79 lakh crore. This is the slowest growth for the cost parameter in the last five financial years.
However, due to moderate growth in net sales of this universe, the interest outgo as a proportion of the top line moved up by 33 basis points to 4.79%, its highest since FY08. Moreover, interest cost was still the only financial parameter that reported the highest annual growth, compared to others including employee cost, raw material expense, operating profit and net profit.
9. Tata Power Eyes Stressed Assets for Growth: Mistry - PTI
Tata Power is looking at acquiring stressed assets across the country as lack of fuel linkages is posing challenges to organic growth, the company chairman Cyrus P Mistry has said.
From being the largest private power utility for decades, Tata Power, with 8,726 MW installed capacity at the end of March, had lost the top slot last year to Adani Power, which has 10,440 MW capacity. At the peak of project delays during the previous regime, due to lack of fuel linkages and green clearances, Tata Power had gone public.
“Due to the current financial stress in the power sector, there are assets across the country which may be available for acquisition. We are evaluating and will continue to evaluate opportunities to acquire projects in various stages of development across the country,” Mr. Mistry said in the 96th annual report of the company.
The acquisitions, if materialised, will leverage the company’s business in the power value chain, he said. The power sector was one of the most active sectors in the domestic M&A space in recent past with Lanco and JP Associates exiting many of their stressed projects last fiscal.
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