Business News at 10:00 am on 6th May, 2024

Let’s begin. To make health insurance more affordable and attractive, the Centre may push for a lower GST tax rate to 12%, compared to 18% now, on health insurance premiums up to Rs 30,000. Going by the current market rates, a premium up to Rs 30,000 could buy health insurance sum insured around Rs 10 lakh/annum for a family of four members, depending upon various factors such as type of coverage, age of insured, and so on. A reduction in the tax rate could lead to a lowering of premium rates or offering additional health cover options, depending on the requirements of people, an official said.

Meanwhile, Hinduja Group firm IndusInd International Holdings expects the valuation of its banking, financial services and insurance business to nearly triple to $50 billion by 2030, according to chairman Ashok P Hinduja. The group is looking to raise its stake in IndusInd Bank to 26% in tranches from15% at present, while a consortium of lenders has offered to fund the takeover of debt-laden Reliance Capital. IIHL’s BFSI business, which includes IndusInd Bank and Invesco Mutual Fund, would grow from about $17 billion at present to $30 billion in three years and then to $50 billion by 2030, Hinduja said. The major share would come from the bank and RCap following the conclusion of the bankruptcy process.

Moving on. The season of down rounds in the startup space is getting longer. Nearly 20% of the large venture capital deals in 2023 and till April this year saw steep reduction in valuations. This is the highest since 2015, according to data sourced from Pitchbook. Prior to 2023, the highest share of down rounds was in 2017, when 17% of the VC deals were made with valuation cuts, after the funding exuberance seen in 2015-16. Analysts say the trend is likely to continue through the year. That’s bad news for startups ranging from large unicorns to growth and early-stage. Of the 20 venture capital deals that took place this year, primarily growth and late-stage rounds, four were made at a lower valuation.

Over to market. The SME IPO market is on fire. Sample this: The total fundraise in the first four months this year is already half of what was seen in the whole of 2023. Market participants say the number of issues and the overall fund activity this year are set to surpass 2023 levels by a long margin. As of April 30 this year, 73 companies got listed on SME platforms — BSE SME and NSE Emerge — raising Rs 2,323 crore, as per PRIME Database. In 2023, a total of 182 public issues raised a record Rs 4,686 crore through SME platforms. The data show that the average issue size has risen to around Rs 32 crore in 2024.

Next up, economy. Despite a record disbursal of the agricultural loans by banks to over Rs 24 trillion in FY24 against a target of Rs 20 trillion, regional disparity persists, according to latest data by Nabard. The commercial banks, cooperative banks and Regional Rural Banks have disbursed Rs 24.84 trillion in 2023-24 under term and crop loans, a rise of 15% compared to FY23. In the year, Rs 2.72 trillion of credit flow was to agri-allied sector – animal husbandry such as dairy, poultry, fisheries etc. Over Rs 12.5 trillion was disbursed to five southern states — Andhra Pradesh, Telangana, Karnataka, Tamil Nadu and Kerala while the region had only 17% of the gross cropped area of the country.

Over to money matters. Non-banking financial companies are increasing their fixed deposit rates to mop up funds that can make up for lower bank borrowings. Depositors seeking to invest in high-rated corporate bonds can opt for longer tenures. And those seeking to earn higher yield from low-rated issuers should opt for shorter tenures to contain the risk. For instance, Shriram Finance, an AA+ rated company, has hiked fixed deposit rates by up to 20 basis points on various maturity tenures. It offers interest rates ranging between 7.85% to 8.80% per annum for terms spanning one to five years. The effective yield on a cumulative deposit is 10.50% for a 5-year deposit.

Lastly, let’s have a look at the stocks which are in focus today. These include Titan, Britannia Industries, Inox Wind, HDFC Bank, Adani Green, Vodafone Idea, Aurobindo Pharma, and more. In the fourth quarter of FY24, Britannia Industries reported a marginal growth in revenue, reaching Rs 4,069 crore, a 1.14% increase from the previous period’s Rs 4,023 crore. However, EBITDA declined by 1.67% to Rs 787 crore compared to Rs 801 crore, leading to a 55 basis points reduction in margin to 19.35% from 19.9%. Titan in the fourth quarter of FY24 reported a 20.59% jump in revenue to Rs 12,494 crore, marking a substantial increase from the previous period’s Rs 10,360 crore.