Business News at 10:00 am on 9th August, 2024

Let’s begin… Reserve Bank of India governor Shaktikanta Das on Thursday cautioned banks that the wide gap between the deposits and credit growth could create structural liquidity issues. “The divergence between deposits and loans could potentially create liquidity management issues for lenders,” Das said while presenting the monetary policy statement. The governor exhorted banks to come up with innovative products and leverage their extensive branch networks to garner deposits. The growth in deposits has been trailing the growth in loans, and this has resulted in elevated credit-deposit ratios for some lenders. Das was speaking in the context of banks finding it hard to mop up deposits with alternative investment avenues, including mutual fund schemes, turning more attractive for individuals.

Up next, India’s top three business families — Ambani, Bajaj and Kumar Mangalam Birla — have a combined net worth of over $460 billion, which is nearly equivalent to Singapore’s GDP, stated the 2024 Barclays Private Clients Hurun India Most Valuable Family Businesses report. According to the report, the Ambani family, leading with Reliance Industries valued at a staggering Rs 25.75 trillion, primarily thriving in the energy and telecom sector. Following them is the Bajaj family, which has interests in the automobile, finance, and auto components industries through the Bajaj Group, with a valuation of Rs 7.12 trillion. The Aditya Birla Group, managed by the Kumar Mangalam Birla family and with interests in metals and mining, holds the third spot with a valuation of Rs 5.38 trillion.

In other news, Tata Power is going the whole hog on renewable energy (RE) despite recently saying that the company is considering thermal projects also. Tata Power would be incurring a major part of its capital expenditure for FY25 on RE. It has plans to incur a capex of Rs 20,000 crore in FY25 with 60% allocated to renewable, 30% transmission and 10% to new areas like pumped hydro. The company has an installed capacity of 6.1 GW in RE as of Q1FY25, accounting for 41% of the capacity, with another 5.3 GW under execution. It is aiming to increase the portfolio to over 11 GW, accounting for 56% of the total capacity, within the next 12 – 24 months .

Elsewhere, Bharat Forge reported a 13.5% year-on-year decline in net profit to Rs 269.42 crore for the June quarter, despite a 9.9% increase in revenue to Rs 2,338 crore. Margins expanded by 200 basis points to 28.1%. On Thursday, BFL’s board approved a fundraise of Rs 2,000 crore. Amit Kalyani, vice-chairman and joint managing director of Bharat Forge, stated that these funds would be used to expand the company’s manufacturing footprint in India, through both greenfield and organic expansion. Kalyani, during the company’s investor call, said that the capital raised would support the growth of both domestic and global businesses. He noted that the last time the company raised capital was in 2010-11, following the financial crisis, and there has been no capital raised since.

Furthermore, Even as the Reserve Bank of India (RBI) has stuck to its projection of GDP growth of 7.2% for FY25, most economists, who FE spoke to, feel the growth may be well below 7%, largely due to a milder momentum in manufacturing activity. “We maintain that growth is sub-par in India and do not subscribe to the RBI’s estimate of FY25 growth at 7.2%,” said Madhavi Arora, lead economist, Emkay Global. Arora sees GDP growing at merely 6.5% this fiscal year. Vivek Kumar, economist, QuantEco Research expects GDP to grow at 6.8% in FY25, mainly due to lower gross-value-added (GVA) growth seen in the manufacturing sector. “This would be due to the lagged effect of monetary and fiscal tightening and a swing in input cost inflation,” he said.

Next up, Households expect inflation to rise in the next three months to one year driven mainly by food prices, housing and cost of services, according to a survey by the Reserve Bank of India. Households see inflation in India rising by 20 basis points each over the next three months and year, according to the households’ inflation expectations survey released by the RBI on its website Thursday. The RBI’s July 2024 round of bi-monthly inflation expectations survey of households in 19 major cities, captures responses from 6,091 urban households. Households’ median perception of current inflation rose by 20 basis points (bps) to 8.2% in the latest survey round. A larger share of households expects higher general prices and inflation as compared to the May 2024 survey round.

Lastly, Stocks to watch include Eicher Motors, LIC, Cochin Shipyard, Biocon, Oil India, SJVN, Grasim, Alkem Lab and OLA Electric Mobility. Furthermore, Life Insurance Corporation of India reported a 10% increase in its net profit, reaching Rs 10,461 crore for the June 2024 quarter, compared to Rs 9,544 crore in the same period last year. The company’s total income also saw a rise, climbing to Rs 2,10,910 crore, up from Rs 1,88,749 crore in the June 2023 quarter. Eicher Motors reported a 20% year-on-year increase in net profit, reaching Rs 1,101.5 crore for the first quarter ending June 30, 2024, compared to Rs 918 crore in the same period last year.