Business News at 05:30 pm on 7th December 2023

Let’s begin. India’s central bank will likely stick to its hawkish policy stance as strong economic growth and a state election victory for PM Modi gives policymakers little reason to consider interest rate cuts just yet. The RBI’s six-member monetary policy committee is expected to keep the repurchase rate unchanged at 6.5% on Friday for a fifth consecutive meeting, according to all but one of the 44 economists surveyed by Bloomberg. It’s also likely to retain its policy stance as “withdrawal of accommodation,” indicating rates would remain higher for longer. RBI Governor had in October said that he wants to see inflation settle near the 4% target on a sustainable basis, but rising food prices means that’s unlikely to happen until late next year.
Over to market. Shares of Tata Power soared 9.55% to hit a fresh 52-week high of Rs 322.25 today, reaching a record high after brokerage firm JM Financial upgraded their rating for the scrip to ‘Buy,’ from ‘Hold’ setting a 24% upside target price of Rs 350. The brokerage report said, quote, “Tata Power’s recalibrated strategy involves tapping high-margin group captive RE opportunities, exiting low-value businesses, venturing into brownfield pumped hydro storage, and expanding the transmission business beyond distribution,” unquote. The report further pointed out that, the company has recalibrated its strategy, emphasising higher-margin group captive opportunities and redirecting focus from low-value solar-powered irrigation pumps to more lucrative prospects.
In some more market news, The aggregate market capitalisation of India’s PSUs has surpassed ₹50 lakh crore, marking an unprecedented milestone driven by the robust performance of state-owned firms across various sectors. The PSUs’ exceptional performance is reflected in the stock prices of 23 companies, with their values soaring over two-fold in the year 2023.cLeading the pack are REC, Power Finance Corp, Mazagon Dock Shipbuilders, Rail Vikas Nigam , IRFC, BHEL, Hindustan Aeronautics, and others. Particularly noteworthy is the three-fold surge in the stock prices of REC and Power Finance Corp in 2023, while companies like Engineers India, Hindustan Aeronautics, BHEL, IRFC, Cochin Shipyard, Rail Vikas Nigam, and IRCON International have witnessed gains ranging from 100% to 190% between January and the present.
Meanwhile, Jeffries sees 6% upside potential in Hindustan Unilever and assigned Hold rating with an upside target of Rs 2,720. “In our base case, we forecast c.7% annual growth in revenues over FY23-26E with 140bps EBITDA margin expansion. Input inflation is abating, albeit HUL is seeing only a gradual volume growth recovery. We forecast EPS to rise at a 10% CAGR over FY23-26E. We value HUL at 52x Sep-25 earnings, slightly below the 5-yr average, to arrive at a price target of Rs 2,720, said Jefferies in its report. Jeffries highlighted the organisational changes within the company, as Hindustan Unilever split its BPC segment into two, namely Beauty & Well-being and Personal Care, to further sharpen focus and align with global Unilever segments.
Over to economy. Finance Minister Nirmala Sitharaman on Thursday said the budget to be presented on February 1, 2024 would not have any “spectacular announcement” as it would be a vote on account in run up to the general elections. She said, quote, “It is a matter of truth that February 1, 2024 budget that will be announced will just be a vote on account because we will be in an election mode. So the budget that the government presents will just be to meet the expenditure of the government till a new government comes to play,” unquote. Speaking at the CII Global Economic Policy Forum, Sitharaman said the country would be preparing for the Lok Sabha elections which are due in the summer of 2024.
Moving on. IDFC FIRST Bank said that its Executive Director Madhivanan Balakrishnan has tendered his resignation, with effect from December 06, 2023. In addition, it added, Madhivanan Balakrishnan will cease to be SMP of the Bank w.e.f. December 15, 2023. The bank in a regulatory filing said, quote, “The Nomination & Remuneration Committee and the Board of Directors of the Bank at their respective meetings held today has accepted the said resignation and shall relieve him from his duties in the capacity of Executive Director with immediate effect from the close of business hours on December 06, 2023. He continues to serve the Bank for necessary handovers until December 15, 2023,” unquote.
Lastly, the share market. Benchmark indices broke seven-day winning streak and ended lower in the volatile session on December 7. Top losers on the Nifty were Bharti Airtel, HUL, ONGC, Apollo Hospitals and Tata Steel, while gainers included Power Grid Corporation, Adani Ports, UltraTech Cement, Cipla and Grasim Industries. A mixed trend was seen on the sectoral front with auto, healthcare up 0.5 percent each, oil & gas index up 1 percent and power index rose nearly 3 percent, while FMCG and Metal indices down 0.5 percent each.