Business News at 10:00 am on 24th January, 2024

Let’s begin. The government may go slow on sale of any extra stake in LIC and wait for investors who participated in the state-run insurer’s IPO to book a decent capital appreciation. It feels that an appropriately timed follow-on offer is crucial for keeping investor interests in the stock intact. Once original IPO investors are rewarded by the market, the government will initiate the sale of at least another 1.5% stake in LIC to make the stock eligible to be part of index funds to attract a larger long-term investor pool. An official said that the original investors will see real gain when they make good returns.

Meanwhile, Bharti Airtel on Tuesday said it has prepaid Rs 8,325 crore to the department of telecommunications towards part payment for the spectrum acquired in 2015. The same has been done to save on interest costs as the spectrum dues installments carried a higher interest rate of 10 per cent, it said in an exchange filing. This is the second time in the current financial year that Airtel prepaid its high-cost deferred liabilities ahead of the payment schedule. In total, the company has so far paid DoT about Rs 32,997 crore towards 2015 spectrum dues, including the interest amount. Earlier, Airtel had prepaid Rs 15,519 crore for spectrum acquired upto 2014 auctions.

Moving on. The consolidated net profit of L&T Finance Holdings rose 41 per cent year-on-year in the October-December quarter owing to a growth in retail loans. The company posted a bottom line of Rs 640 crore for the quarter under review. It had posted a net profit of Rs 595 crore in the July-September period. In line with the company’s retail focus, the retail book grew 31% y-o-y to Rs 74,759 crore as on December 31. Retail disbursements rose 25% y-o-y to Rs 14,531 crore in the December quarter. The retail book includes personal loans, home loans, loan against property and two-wheeler finance. The total loan book fell 8% y-o-y to Rs 81,780 crore as on December 31.

On to banking. After about 15 years, ICICI Bank has become more valuable than HDFC Bank. As on January 21, the HDFC Bank stock commanded a price/book value multiple of 2.7 times for FY25 while ICICI Bank was trading at a price/book value of 2.8 times. For FY26 too, the price/book value was higher for ICICI Bank at 2.5 versus 2.4 for HDFC Bank. These estimates have been put out by Kotak Institutional Equities. Suresh Ganapathy, who tracks the banking space at Macquarie, wrote early Tuesday that ICICI Bank is at a 15% premium to HDFC Bank. Ganpathy said on a core price/book value , ICICI is at 2.3 times FY25E price/book value and HDFC Bank at 2.0 times FY25E price/book value.

Over to economy. The finance ministry has raised import duties on gold to 15% from 10%. The higher tariffs, which took effect on Monday, are aimed at curbing the surge in imports of the yellow metal. Gold imports spiked 95% to USD 7.2 billion in October, causing the merchandise trade deficit to rise to an all-time-high monthly figure of USD 31.46 billion. Though imports of the metal moderated in November, there was again a 156% increase to USD 3.03 billion in December on a low base. In July last year, India banned imports of certain gold jewellery, in the wake of sudden rise in duty-free imports of these items from Indonesia, under the India-Asean FTA.

Next up, the budget. The Centre’ capital expenditure growth may slow down to 12% in FY25 from 37.4% pegged in Budget for FY24, India Ratings and Research said in a report. This is mainly due to the pickup in private capex in few sectors, the forthcoming elections in April and the fiscal consolidation target of 4.5% by FY26. The agency also sees FY25 gross market borrowing to marginally decline to Rs 15.1 trillion from 15.4 trillion in FY24 BE, and net market borrowing to fall to Rs 11.4 trillion from Rs 11.8 trillion. According to rating agency, the Centre’s net tax revenue buoyancy is expected to come in at 1.2 in FY25.

Lastly, let’s look at the stocks in focus. These include REC, MakeMyTrip, Pidilite, JSW Energy, and Havells among others. Rural Electrification Corporation’s net profit for the quarter grew by 14% from last year to Rs 3,269.3 crore. The company reported an 18% increase in its net interest income to Rs 4,159 crore for the quarter ending December. ON the other hand, MakeMyTrip said its operating margin grew 105.6% to $29.4 million in the December quarter against $14.3 million in the same period last fiscal. Au Small Finance Bank has received the nod from the CCI to merge Fincare Small Finance Bank in itself. But, the merger is still pending to be approved by RBI.