Business News at 09:30 am on 6th November 2023

Let’s begin. The ministry of electronics and information technology on Sunday issued orders to block 22 illegal betting apps and websites including Mahadev Book Online and Reddyannaprestopro. These orders were issued under Section 69A of the IT Act, following investigations conducted by the Enforcement Directorate into an illegal betting app syndicate. Recently, ED conducted raids on Mahadev Book in Chhattisgarh, uncovering the app’s illicit operations. The agency also alleged that the promoters of the Mahadev Book App had made regular payments of approximately Rs 508 crore to Chhattisgarh Chief Minister Bhupesh Baghel. The Congress party, however, dismissed these allegations as a malicious attempt to tarnish Baghel’s image.
Meanwhile, There is an interesting trend showing up within fast-moving consumer goods companies. While volume growth, especially, rural volume growth, has been sluggish, earnings before interest tax depreciation and amortisation margins, which is a measure of profitability for companies, remains strong. This has been on account of a moderation in commodity prices as well as strict cost-control measures initiated by firms. While companies claim they are investing in their brands to shore up volume growth, the numbers tell a different story. In the last one year, rural volume growth for the domestic FMCG market has inched up from a decline of 3.6% in the September 2022 quarter to 7% in the September quarter this year, according to Nielsen data sourced from the industry.
Moving on. Indian carriers will induct one aircraft every alternate day in the remaining months of the year to boost capacity in anticipation of record demand in the upcoming travel season. The expansion plan of each airline, without being fully subjected to availability of pilots to fly the aircraft, is to double down the efforts for aircraft procurement even if it includes paying steeper lease rentals. At least 60 aircraft by five airlines are set to be inducted and pressed into service between now and end of FY24, which will not only bring in incremental capacity, but will take care of fresh cases of aircraft groundings and to fill up the void created by Go First.
ON to banking. State Bank of India expects to disburse Rs 1.4 trillion worth of corporate loans in the next two-three quarters. SBI chairman Dinesh Khara told analysts that proposals which are awaiting sanctions are of around Rs 3.3 trillion. Khara in an earnings call told analysts, quote, “We have approximately Rs 1.4 trillion worth of proposals pending for disbursement, we expect them to get disbursed in the next two-three quarters,” unquote. The bank’s loan book rose 12% year-on-year to Rs 34.11 trillion as on September 30, 2023. Corporate loans grew 7% YoY to Rs 9.77 trillion. The bank is witnessing a pick-up in demand for working capital and term loans from corporates.
Over to industry. Consumer electronics startup Boult Audio is expecting to end the current financial year with a top-line growth of 60% to Rs 800 crore, banking on the growth in its smartwatch segment and higher sales of its premium products, co-founder Tarun Gupta told FE in an interaction. In FY22, the company reported a profit after tax of Rs 9 crore on a topline of Rs 187.7 crore, according to its RoC filings sourced from Private Circle. In the last financial year, its topline came at about Rs 500 crore. Known for its audio products, Boult entered the smartwatch segment last year in July and so far has captured a market share of about 5%, following home-grown peers such as boAt and Noise.
In some more industry news, IT firms like Wipro, Tech Mahindra, and LTIMindtree, are reducing their exposure by giving up low-value clients in the Asia-Pacific region, which falls under the RoW, which means, rest of the world, geographical segment for them. Instead these firms are concentrating on deals in the North America region. Though this region is witnessing a slowdown in tech spending, whatever deals are coming through offers higher margins than other regions. Analysts at Kotak Institutional Equities recently wrote, quote, “Tech Mahindra has businesses where margins are structurally low. We suspect such low or negligible margin business may be as high as 10% of revenue,” unquote.
Lastly, let’s have a look at the stocks in focus today. These include State Bank of India, Bank of Baroda, Vedanta, NTPC, and IOC among others. For those unaware, State Bank of India posted profit for the fiscal second quarter of FY24 at Rs 16,383.18 crore, up 9.1% as against Rs 15,017.18 crore during the corresponding period of last year, surpassing estimates. On the other hand, the net profit of Bank of Baroda rose 28.4% year-on-year in the second quarter of FY24 due to growth in its advances. The state-owned bank posted a bottomline of Rs 4,253 crore in the quarter under review, up 4.5% on a sequential basis.