Business News at 10:00 am on 22th January, 2024

Let’s begin. The financial crunch at Vodafone Idea, which has so far been unable to raise funds from investors, is showing as the company’s dues to the government towards quarterly statutory dues like licence fee and spectrum usage charge, have risen by Rs 702 crore, as it has not been able to make payment for the October-December quarter of the current fiscal. With this the telecom operator’s total dues to the government has gone up to over Rs 1,000 crore. According to sources, the company has been able to cleLet’s begin – The country’s natural gas industry has sought greater emphasis on the implementation of reforms aimed at promoting consumption of the fuel in the upcoming interim Budget. The industry expects the government to make use of natural gas mandatory for areas where the infrastructure is ready and gas is flowing to help the country achieve the target of increasing gas share in the energy mix to 15% from the current 6% by 2030. The industry is also hopeful of the long-standing demand of natural gas being categorized under the infrastructure sector to avail improved financing and credit opportunities. The government has been emphasizing on making the country a gas-based economy.

Next up – With runaway loan growth, banks have been somewhat short on deposits this past year. On average, credit has been clocking a growth of 15-16%, led by personal loans and loans to shadow lenders, whereas deposits have been growing at about 12-13%. Most banks have been wooing savers by raising the interest rate on deposits, but credit deposit ratios are hitting new highs. In the December 2023 quarter, for instance, HDFC Bank reported a sharp 62% y-o-y increase in advances, while deposits went up by just 28% y-o-y. Moreover, with savers parking more money in term deposits, lenders are losing cheaper current accounts and savings accounts.

Meanwhile – DLF, the country’s largest listed property developer, recently sold over 1,100 apartments worth Rs7,200 crore in Gurugram within three days of project’s pre-launch. A quarter of the total apartments were bought by non-resident Indians. This follows another such project in Gurugram seeing an inflow of Rs 8,000 crore from buyers in quick time last year.“Such a volume of sales doesn’t happen in two or three days if the interest is only from those buying to stay in the apartment. This shows investors are coming back in good numbers,” said a senior property consultant who did not want to be named. Developers, consultants say investor interest in the real estate market has picked up in the last few quarters.

In other news- The earnings season has kicked off on a modest note, with the profit numbers from early birds showing a slower yearly increase in Q3FY24 than in recent quarters. Shorn of banks and financials, net sales have risen just 4.5% year-on-year and net profits just 7.3% y-o-y for a sample of 107 companies. This is despite a 109 bps fall in input costs and a 22% y-o-y jump in other income. Consumer-oriented businesses are seeing weaker demand for their products, especially in rural markets. Moreover, the competitive intensity remains high. At Hindustan Unilever, which tuned in poor numbers, volumes grew by just 2% y-o-y while revenues were flat.

Moving forward – Ahead of the Ram Mandir consecration, telecom operators have enhanced network connectivity in Ayodhya to ensure high-speed data transfers, uninterrupted voice calls and seamless video connectivity. Besides deploying additional sites and base transceiver stations to cover the Mandir and its adjoining areas, operators have improved their network infrastructure and covered important locations, including airport, railway station, bus stops and hotels. In a press note on Sunday, Airtel said, “The company has deployed additional network sites, placed CoWs and laid optic fibre cable to cover the entire city with uninterrupted voice and data services.” The telecom operator has also deputed additional manpower for uninterrupted service. Vodafone Idea, too, has upgraded its existing sites across important areas.

Moving ahead – India’s top 10 companies by retail shareholders added a total of 400,000 investors during three months ended December, with Yes Bank topping the charts for the fifth straight quarter. The number of firms having over 1 million retail shareholders rose to 26 from 24 on September 30, 2023, with fintech major Paytm and public sector unit NHPC crossing the milestone. Paytm had more than 1 million retail shareholders as of June 2023, but dipped below the mark in September. By December end, the total number of retail shareholders across 2,047 companies was at 163.8 million, a 2.8 rise on a quarter-on-quarter basis and a 9.1% surge on a year-on-year basis.

Lastly, With top IT companies seeing about 55%-65% of their employees working from office on a regular basis, companies have been ramping up their office space to accommodate the increased workforce, which grew further during Covid. As many of them gave up space during the pandemic, the existing office capacity for several of them got lesser than pre-Covid times. While their office capacity fell during those two years, their hiring was on record due to the secular shift towards digitalisation and cloud of enterprises during the pandemic. The top four IT companies, despite seeing a whopping 50,000 fall in their employee headcount in the last one year, still have about 150,000 employees more than their pre-pandemic level.ar only 10% or Rs 78 crore of the statutory dues for the quarter, adding that it has sought some additional time from DoT to clear the pending dues.
Meanwhile, Reserve Bank of India governor Shaktikanta Das on Thursday said he does not see any risks to the banking system from the sharper rise in loan portfolios of lenders and the slower increase in the liability franchises. Speaking to CNBC TV18 on the sidelines of the World Economic Summit at Davos, Das, however, cautioned banks, asking them to avoid “exuberance in lending and ensure that there is some correlation between deposit base and credit growth”. The governor said that the deposit growth has been 12-13% while credit has grown at about 15%, but at the moment they don’t see any risks. He, however, said the RBI hasn’t mandated any number for the credit-deposit ratio, nor does it propose to do.
In some more economy news, Retail inflation in pulses may remain elevated till at least May, before easing up on account of the setting in of a high-base effect, trade source say. While there are concerns about the production of pulses in rabi season due to 5% annual fall in area, the supplies are expected to improve with kharif harvest, and liberal imports. A bad monsoon could however upset the calculations, and keep prices high for longer period, the sources said. Officials said that the government is keeping a close watch on pulses prices. It is aiming to protect farmers as well as consumer interests through retail interventions as well as direct purchase of pulses from farmers at market prices.
Moving on. The government may make a slew of announcements in the upcoming interim Budget giving a new dimension to the ongoing efforts to improve “ease of doing business” in the country. The move follows the World Bank’s plan to replace its two-decades-old “doing business” report with a new comprehensive gauge – business-ready – to be unveiled in the next three-four months. According to official sources, the new steps to be unveiled would mostly be linked to delivery of government services to businesses through digital means. India has been almost steadily improving its ranking in the World Bank’s annual DB assessments of countries, which it discontinued in 2020 following a row over “data manipulation.” The government is keen the upward mobility is accelerated.
In other news, the Reserve Bank of India in its monthly bulletin released on Thursday said that India should aim to secure at least 7% real GDP growth in FY25 in an environment of “macroeconomic stability”. The RBI in the State of the Economy report said that in India, potential output is picking up with actual output running above it, although the gap is moderate. Stating that the recent assaults on commercial vessels in the Red Sea trade route have placed significant strain on global supply chains, the report said on Thursday that, the situation imparted “considerable uncertainty to the near-term outlook for India’s merchandise trade.” Slowdown in exports has emerged as a drag on growth, but “the outlook is lighting up at new frontiers.”
On to technology. Smartphone makers’ shipments to retail outlets or carriers fell 2% to 148.6 million units in 2023, data from market research firm Canalys showed. Analysts said that the reason for fall in shipments can be attributed to weakness in demand and higher inventory with the dealers. In the later half, however, the shipments picked up pace owing to increase in demand during the festive season, which in a way restricted the yearly fall in exports and drove the market towards stability. In the October-December quarter, smartphone shipments rose 20% year-on-year to 38.9 million units, according to Canalys.
Lastly, the stocks you need to watch out today. These include RIL, SBI, Lupin, Bandhan Bank, Wipro, IndusInd Bank, Paytm, REC, and JSW Infra. According to Motilal Oswal Financial Services’ estimates, Reliance Industries Limited is expected to register a 10.6% YoY increase in net sales and an 11.6% YoY rise in adjusted PAT for Q3FY24. The brokerage firm suggests that RIL’s consolidated EBITDA might remain unchanged QoQ, standing at Rs 41,100 crore. On the other hand, Renewable Energy Corporation has been designated as the key implementation agency for the Ministry of Renewable Energy’s rooftop solar initiative.