Business News at 10:00 am on 1st August, 2024

Let’s begin…The Centre’s fiscal deficit shrunk to 8.1% of the annual target in the first quarter of the current financial year compared with 25.3% in the year-ago period, due to a sharp compression in capital expenditure and buoyant revenue receipts. Due to a slowdown in government programmes on account of general elections, the Centre’s capex halved by two-thirds to Rs 37,426 crore in Q1FY25. While revenue expenditure fell a third on-year to Rs 2.33 trillion during the month. In April-June of FY25, the Centre’s capex declined by 35% annually to Rs 1.81 trillion. During Q1FY25, revenue expenditure rose by a modest 2% on year to Rs 7.89 trillion. The Centre’s net tax revenues rose by a robust 26.8% on the year.
Next up, The capital expenditure by the Centre and central public sector enterprises (CPSEs) declined by 35% and 39% respectively in the first quarter of the current financial year on an annual basis, indicating challenges ahead to meet their respective targets for FY25. The decline, primarily caused by the general elections, has also raised the possibility of the economic growth in Q1 to come in significantly below the Reserve Bank of India’s estimate of 7.3%. Given the Centre’s policy of public capex-led economic growth revival in recent years, the pace of capex would, however, pick up from the second quarter of FY25 as general elections, new government formation and full budget presentation have been completed, analysts said.
In other news, Adani Power posted a 55% decline in its net profit at Rs 3,913 crore for the Q1FY25 as compared to Rs 8,759 crore in corresponding quarter of previous financial year. The net profit declined to higher expenses. The company’s revenues went up 36% at Rs 14,956 crore in Q1FY25 as compared to Rs 11,006 crore in Q1FY24. Total expenses went up 14% on a year-on-year (y-o-y) basis in Q1FY25. The company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 76.3% to Rs 6,194 crore. During Q1 FY 2024-25, higher volumes were contributed by almost all plants led by Mundra and Mahan in addition to Godda, the second 800 MW unit of which was commissioned on June 26, 2023.
Up next, Beating the street estimates, Godrej Properties posted over four-fold jump in net profit at Rs 520 crore in Q1FY25 as compared to Rs 125 crore in corresponding quarter of previous financial year. The jump in profit was aided by lower taxes and expenses. As per a Bloomberg poll, analysts estimated a profit of 377 crore. The company said it had the highest-ever net profit for it. However, the company’s revenue from operations fell 21% to Rs 739 crore in Q1FY25 as compared to Rs 936 crore in Q1FY24. Analysts expected revenues of Rs 1,338 crore. Tax expenses more than halved to Rs 30 crore in Q1FY25 and total expenses fell 18% to Rs 921 crore.
In another development, India’s crude oil imports from Russia fell by 6.5% in July to 1.81 million barrels per day from 1.94 million barrels per day in June as Russian refineries ramped up runs to meet the country’s own summer demand, data sourced from Vortexa showed. Serena Huang, Head of APAC Analysis at Vortexa said, quote, ‘Russia remained as the top crude supplier to India in July, although import volumes were down month-on-month. Higher supplies from Saudi Arabia and Mexico partially offset declines from Russia, Iraq and Nigeria, leading to a marginal decline in the country’s total crude imports.’ end quote. Saudi Arabia and Iraq remained the other top suppliers of crude oil to India last month.
Moving on, The European Union (EU) suggestion that India can impose carbon tax locally to avoid or reduce the levy that will be imposed under Carbon Border Adjustment Mechanism (CBAM) would not be of much help as payout by exporters will still be high, according to a report. The EU’s CBAM regulation offers a reduction in the tax payable to the EU if a product has already been taxed for its carbon emissions in its home country. The EU has suggested that Indian exports could potentially avoid or reduce the CBAM taxes if India implements a carbon tax system, charging exporters for their carbon emissions domestically.
Lastly, Bank of Baroda (BoB) on Wednesday reported a 10% year-on-year (YoY) rise in its net profit to Rs 4,458 crore for the quarter ended June, led by a stable asset quality. The profit after tax (PAT) was largely in line with the Bloomberg consensus estimate of Rs 4,547 crore. The gross and net non-performing asset ratios improved by 63 bps and 9 bps YoY to 2.88% and 0.69%, respectively. Credit cost stood at 0.47% in Q1FY25, against 0.70% a year ago, and the bank has guided for below 0.5% credit cost of the full fiscal. Net interest income grew 6% YoY to Rs 11,600 crore while the net interest margin was lower 9 bps at 3.18%.