Month: May 2021

Metal Stocks Are Soaring, Here Are 2 Solid Picks

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Jindal Steel and Power

Broking firm Motilal Oswal has placed a “buy” on the shares of Jindal Steel and Power with an upside of 20% from the current levels. The broking firm has set a target of Rs 550 on the stock from the current market price of Rs 457.

According to Motilal Oswal , Jindal Steel and Power achieved its highest ever Steel EBITDA/PAT of INR48.8b/INR27.7b in 4QFY21, supported by a strong pricing environment. Consolidated net debt fell further by INR34.7b QoQ to INR224b, implying a net debt/EBITDA of 1.53 times.

The broking firms has noted that the company has announced an INR180b capex at Angul to expand its Steel capacity by 85% to 15.9mtpa by FY25, at a very competitive cost of USD390/t.

Jindal Steel and Power: Margins to stay strong

Jindal Steel and Power: Margins to stay strong

Supported by higher prices, Motilal Oswal expects Steel margin to be strong in the near term after exhaustion of Sarda iron ore inventory.

“The announced 85% expansion in Steel capacity to 15.9mtpa in phases by FY25, at a competitive cost of USD390/t, should be RoCE accretive and improves the growth outlook of the business. Our target price of INR550/share is based on 5x FY23E EV/EBITDA for the Steel business and announced deal valuation for the Power business. At the CMP, the stock trades at an attractive 4.2x FY23E EV/EBITDA for the Steel business,” the broking firm has said.

Hindalco: A 20% upside target

Hindalco: A 20% upside target

Hindalco is another stock that Motilal Oswal has set a 20% upside target. The brokerage has set an upside target of Rs 480 from the current market price of Rs 399.

The 4QFY21 result of Hindalco (HNDL)’s subsidiary Novelis highlights the inherent strength in the business as its margin continues to record new high every quarter. Adj. EBITDA grew 43% YoY to USD505m (7% above est.), driven by the highest ever margin of USD514/t (est. USD493/t). Novelis should see mix improvement in FY22 as share of auto volumes should increase on strong demand as well as capacity addition.

“We raise our consolidated FY22E/FY23E EBITDA by 17%/10%, factoring in improved margin for Novelis, and higher aluminum price assumption (+15%/5% to USD2,250/2,100 per ton for FY22/FY23). Reiterate buy,” Motilal Oswal has said.

Disclaimer

Disclaimer

Goodreturns.in has taken utmost care in compilation of data for its website. The views and investment tips expressed by authors or employees of Greynium Information Technologies, should not be construed as investment advise to buy or sell stocks, gold, currency or other commodities, mentioned either in this article or elsewhere on the website.

The above article is informational in nature. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. Please do consult a professional advisor.



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Auto-debit EMI failures set to rise in May as Covid hits incomes, BFSI News, ET BFSI

Banking & Finance

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The financial distress due to the Covid pandemic is leading to borrowers defaulting on monthly retail payments.

The rise in cheque bounce cases, which was first reported by HDFC Bank during its fourth-quarter results, is now seen at other payment avenues.

More borrowers missed equated monthly instalments (EMIs) in April, according to the data from the National Payments Corp. of India (NPCI).

In April, about 34.1% of auto-debit transactions on the National Automated Clearing House (NACH) failed, mainly due to insufficient funds.

The percentage of failure was 32.8% in March, when the second wave of Covid hit.

While in the value terms, 27.9% of transactions were unsuccessful in April against 27.5% in the previous month, the rise in the number of failures has alarmed experts, who see more drop in retail payments this month due to the spread of lockdowns to many other states.

This data is only for inter-bank mandates, which means a transaction between a bank and a non-bank lender.

HDFC Bank

HDFC Bank, the top private sector bank in India, first saw a spurt in cheque bounce cases in April, coinciding with the second lethal Covid wave in the country.

Check bounce rates for HDFC Bank were improving up to March 2021. However, bounce rates increased in April, returning to January 2021 levels. Maharashtra, Madhya Pradesh, Punjab, and Telangana were seeing higher check bounce rates.

With the resurgence of Covid cases, the bank continues to make additional contingent provisions to further strengthen the balance sheet. Although, overall asset quality remains stable, with total restructuring at 0.6% of loans and net NPA at 0.4%.

Moratorium demand rises

While the RBI has announced loan recast measures, demand is rising for loan moratorium due to renewed financial stress.

Transporters’ apex body AIMTC has requested the government for a blanket loan moratorium for the sector till August 31, 2021, in the prevailing scenario to help in maintaining business continuity.

In a statement, the All India Motor Transport Congress (AIMTC) pointed out that around 70 per cent of the country is under lockdown and more than 85 per cent of the transporters are small operators having one to five vehicles (both cargo and passenger segment).

“We have requested the government for blanket loan moratorium in the prevailing scenario to help in maintaining business continuity and tackling stressed sectors like the transport sector and help in the survival of crores of these hapless Indian citizens associated with the road transport sector,” it said.



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Have IPL ads led to a fresh clampdown on Indian crypto exchanges?, BFSI News, ET BFSI

Banking & Finance

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When dogecoin turned to be the new sensation on the crypto street, many Indian investors could just marvel at the image of the dog on the coin, but not buy it.

The reason was their purchases are not going through as some banks have directed payment gateways not to process cryptocurrency­related transactions.

Since early this month, leading banks, notably private sector lenders ICICI Bank and IndusInd Bank, have asked payment gateway partners to stop processing such transactions.

Axis Bank, Kotak Mahindra Bank, Citibank, and others are limiting their exposure to the cryptocurrency market.

Banks, the industry sources said, have stopped issuing merchant IDs to payment gateways, and have asked these intermediaries to tighten scrutiny while dealing with cryptocurrency exchanges in India.

The issue started in late February and according to experts, the recent surge in the market, dogecoin frenzy and advertisements by crypto exchanges during IPL led to a fresh clampdown on the cryptocurrency.

The aggressive marketing push by crypto exchanges on TV during the IPL, OTT channels and through social media influencers has caused the regulator to clamp down as the industry is not licensed in India.

Dogecoin trading volumes from India have more than trebled since April and platforms have witnessed record-breaking transaction volumes.

Regulator against it

According to reports, the Reserve Bank of India, is informally urging lenders to cut ties with cryptocurrency exchanges and traders as the highly speculative market booms, despite a Supreme Court ruling that banks can work with the industry.

The guidance comes as the Indian government is drafting a law to ban cryptocurrencies and penalise anyone dealing in them, which would be among the most sweeping crackdowns on the new investing fad in the world. But with the COVID-19 crisis engulfing the country, no one is sure when such a bill may be passed, adding to investors` confusion.

The Reserve Bank of India (RBI) in 2018 had forbidden banks from dealing in all transactions related to bitcoin and other such assets. That diktat was challenged by the crypto exchanges and in March 2020, India`s top court overturned the RBI ban and allowed lenders to extend banking facilities to them.

With investors continuing to rush into the hot new asset class, however, regulators appear to be gearing up for another try.

Earlier this year, RBI Governor Shaktikanta Das said that they have “major concerns (around crypto) from the financial stability angle.”.

Growing frenzy

Thousands of new users are piling into the system every day at a time when the prices of major digital currencies have been on the rise. There are over 10 million crypto investors in India with total holdings of over Rs 10,000 crore, according to industry estimates. No official data is available.

Crypto platforms, for their part, are in the process of sending a communication to all major banks about the Supreme Court ruling of February 2020 that revoked the banking ban and declared that the central bank cannot issue any formal guidelines or directly regulate these exchanges.



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Dogecoin surges on Elon Musk tweet as crypto rollercoaster continues, BFSI News, ET BFSI

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By Yakob Peterseil

Dogecoin jumped on renewed support from Elon Musk, adding to a volatile week for digital currencies that’s been whipped up largely by the Tesla Inc. chief executive officer himself.

After Musk tweeted on Thursday that he is working with Dogecoin developers to “improve system transaction efficiency,” the Shiba-Inu-themed token with no practical uses surged from about 43 cents to 51 cents in a matter of minutes. It’s up by about 30% in the past 24 hours, according to Coinmarketcap.com.

Bitcoin fluctuated on Friday, and was trading at around $50,700 as of 10 a.m. in New York. The largest digital token is on course for a weekly slump of more than 10%.

Tweets from the billionaire electric car CEO have roiled crypto markets this week and raised questions about his motives. Musk started the week calling Dogecoin “a hustle” and continued with a series of tweets criticizing crypto mining, which at one point sent Bitcoin down as much as 15%.

Dogecoin, which tumbled after Musk’s Saturday Night Live appearance, has now clawed its way back to being the fourth-largest cryptocurrency with a market cap of $67 billion, according to Coinmarketcap.com. Sentiment was also boosted by news that Coinbase Global Inc., the largest U.S. crypto exchange, plans to offer Dogecoin on its trading platform in six to eight weeks.

Around the same time as his Dogecoin tweet, the Tesla CEO lobbed more criticism at crypto mining following a decision to suspend Tesla car purchases using Bitcoin. Musk said that he worries about a “massive increase” in coal and other carbon-intensive energy to generate electricity needed to mine digital currency.



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JP Morgan earmarks $3.8 mn for India staff; offers $10 mn more in phases, BFSI News, ET BFSI

Banking & Finance

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Global investment banking major JP Morgan Chase has increased its COVID-19 support to the country manifold, taking the total planned aid to close to USD 16 million, of which USD 3.8 million is for supporting its over 35,000 employees in India.

The head of the Wall Street major Jamie Dimon had on April 30 had committed an upfront USD 2 million financial aid along with an appeal to its over 2.5 lakh employees globally to chip in which would be matched by an equal amount by the company.

In an internal communication on Thursday, which PTI has seen, Filippo Gori, the chief executive of JP Morgan Asia Pacific, said the bank has set aside USD 3.8 million for the care of its over 35,000 India employees, and an additional USD 10 million is being earmarked in phases to support the needy in their pandemic recovery phase.

We’ve committed an additional USD 3.8 million to support our colleagues in India in their fight against the virus in 2021. This money will be used for medical insurance, 24×7 ambulance service, partnerships with our clinical service providers and hospitals for hotel and in-home quarantine, doctor-on-call service; and vaccination reimbursement support, Gori said in the mail.

The bank is also working towards increasing access to vaccines, subject to availability and government regulations, he added.

This is excluding the already-committed USD 2 million in immediate India-wide coronavirus relief efforts such as providing support to the public health system to improve the capacity of small hospitals, enabling them to provide treatment for greater numbers of affected patients and also providing food and essential items to low-income communities.

Besides this, the bank has also committed an additional USD10 million to help the larger already-disadvantaged communities tide over the long-term consequences of the pandemic often those.

This is part of JP Morgan’s annual USD 32 million philanthropic commitment to building economic resiliencies for these communities, Gori said.

This community support and outreach will include support to microbusinesses, particularly those owned by women; helping youth pursue promising careers; and help support inclusive fintech solutions for the post-crisis environment ensuring access to financial tools that will help them weather any future crisis, he said.

JP Morgan is also a member of the recently-announced global taskforce on the pandemic response, a public-private partnership providing 1,000 ventilators and a further 25,000 oxygen concentrators to India.

Gori said so far, their employees have contributed USD 1.5 lakh towards India aid, and the company will equally match that number.

In an email to all the employees on April 30, Dimon committed USD 2 million to Indian non-profits which are in the forefront of the pandemic fight, along with an appeal to its employees to donate with an additional commitment to match their contributions with an equal amount by the company.

The total aid, including medical supplies and medical equipments, from the US is reportedly nearing USD 500 million.



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Company posts highest-ever quarterly net profit of Rs 375 cr, BFSI News, ET BFSI

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Aditya Birla Capital on Friday said it has reported the highest-ever quarterly net profit of Rs 375 crore for the fourth quarter ended March 2021.

It had posted a net profit of Rs 144 crore in the year-ago period.

The non-banking financial company said it posted strong growth across businesses leading to delivery of the highest ever consolidated profit, despite a COVID-hit year.

The highest ever quarterly net profit at Rs 375 crore grew by 2.6 times year-on-year.

Revenue during the fourth quarter of the financial year 2020-21 rose by 16 per cent to Rs 5,917 crore as against Rs 5,085 crore in the year-ago period.

For the full year 2020-21, the company’s net profit grew by 22 per cent to Rs 1,127 crore as against Rs 920 crore in the previous financial year.

Revenue during the year rose by 14 per cent to Rs 20,447 crore from Rs 17,927 crore, ABCL said.

The active customer base grew by 22 per cent to 2.4 crore aided by the focus on granular retail growth across businesses.

The company’s AUM (assets under management) across asset management, life insurance, and health insurance businesses rose 10 per cent year on year, to over Rs 3,35,000 crore.

Overall lending book (NBFC and housing finance) grew by 2 per cent, nearly at Rs 60,000 crore.

Gross premium (life and health) grew by 25 per cent to Rs 11,076 crore, with the retail mix at 72 per cent, reflecting the scale in insurance, ABCL said.

The stock of the company closed at Rs 121.35 apiece on BSE, up 1.68 per cent from the previous close.



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Sovereign Gold Bond Scheme 2021-22 Series I; Check Subscription, Price Details

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Planning

oi-Sneha Kulkarni

|

There are now ways to own gold without the risks that come with it. The Government of India and the Reserve Bank of India offer Sovereign Gold Bonds as one such option. The RBI-issued Sovereign Gold Bonds, according to experts, are one of the best investment instruments in the cherished precious metal. You can buy gold in the form of a certificate here.

SGBs are government-issued securities that are thought to be safe. Their worth is measured in multiples of gold grams. SGBs have seen a significant increase in investors, as they are seen as a viable alternative to physical gold.

Sovereign Gold Bond Scheme 2021-22 Series I; Check Subscription, Price Details

The Sovereign Gold Bond Scheme 2021-22 – Series I Details

The Sovereign Gold Bond Scheme 2021-22 – Series I will be open for subscription for the period from May 17, 2021, to May 21, 2021.

Subscription details

The bond’s nominal value, calculated using the simple average closing price for gold of 999 purity on the last three business days of the week preceding the subscription period, i.e. May 11, May 12, and May 14, 2021 (May 13, 2021 being a holiday), is Rs 4,777/- per gram.

SGB Discount

The Government of India, in consultation with the Reserve Bank of India, has decided to offer a discount of Rs 50 per gram below the nominal value to those investors who apply online and pay for their application using digital means.

The issue price of a Gold Bond for such investors will be Rs 4,727/- per gram of gold.

Who can issue SGB?

Banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognized stock exchanges, such as the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited, will sell the bonds.

SGB tenor

The bond will have an 8-year tenor, with an exit option after the fifth year that can be exercised on the next interest payment dates.

SGB minimum and maximum amount

The minimum amount of gold that can be invested is one gram. Individuals have a maximum subscription limit of 4 kg, HUFs have a maximum subscription limit of 4 kg, and trusts and similar entities have a maximum subscription limit of 20 kg per fiscal year (April-March).

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Protect bank staff, prioritise vax, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: The finance ministry has again written to state governments asking them to put in place a dispensation for vaccinating bank and other financial sector employees. It has also asked the states to protect financial sector employees after incidents of bank staff being manhandles by police enforcing a lockdown came to light.

Debasish Panda, secretary in the department of financial services at the finance ministry, said in a letter to all states’ chief secretaries that the home ministry has categorised the banking industry as a provider of essential services. Since bank employees have to necessarily commute from their homes to offices, and offices must remain physically open, the chief secretaries have been asked to communicate to all district magistrates and police chiefs not to hinder or impede their functioning or movement.

“This letter is very pertinent, and the messaging will help in boosting the morale of bank employees,” said Rajkiran Rai, chairman of the Indian Banks’ Association (IBA). “It sends out a message to everyone that bank employees should be treated with respect,” he added. Earlier this week, videos of police caning a bank employee on his way to work had gone viral and had caused outrage.

In March, the IBA had sought frontline worker status for bank staff. At that time, the association had pointed out that there were around 600 casualties due to Covid among bank employees. Since then, the number of casualties has doubled with the maximum deaths during the last six weeks when the country saw a surge of cases in the second wave.

Although the finance ministry has made requests to states for vaccination of bank employees, some senior executives feel that the communication for priority in vaccination needs to come from the home ministry for states to take cognisance.



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IDBI Bank settles loan with Aircel owner’s company, BFSI News, ET BFSI

Banking & Finance

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CHENNAI: IDBI Bank has said that it has accepted the one-time settlement offer by Siva Industries’s promoters — a part of Aircel owner C Sivasankaran’s group — as it would lose more money otherwise.

IDBI Bank had initiated bankruptcy proceedings against Siva Industries in 2019. The loans were availed by a group company that later merged with Siva Industries. Sivasankaran is facing investigations by the authorities for causing a loss to banks.

According to banking sources, IDBI Bank has already written to the CBI, whichhas confirmed that commercial dealings will not affect the criminal investigation process. “Recovery for the bank through one-time settlement will be higher vis-a-vis recovery through NCLT liquidation based on the valuation of assets available as security.

This OTS (one-time settlement) and exit from NCLT does not prejudice the CBI complaint. The case with CBI continues,” IDBI Bank said.

Lenders led by IDBI Bank, with claims of over ₹5,000 crore, had initiated bankruptcy proceedings against the company. International Asset Reconstruction Company held 22% of the admitted debt followed by IDBI Bank (17%) and Union Bank of India (12%). LIC, SBI, Yes Bank and Bank of India were the other lenders.

According to a report in ET, a Mauritius-based investor Royal Partners had complained that its bid for the company was deliberately ignored.

However, IDBI Bank has said that the OTS offers it a better deal.

While the insolvency process does not allow defaulting promoters to acquire their company, bankers can do a one-time settlement with lenders if enough of them agree.

IDBI Bank responded to allegations in a statement on social media where it said that although Siva Industries was referred to NCLT by lenders in July 2019, there was no successful resolution applicant.



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At 8.10% Interest This Tax Free Bond Is A Great Investment

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Investment

oi-Sunil Fernandes

|

If you are looking for a shorter term duration for returns, the N3 Series Tax Free Bond from HUCDO is a great bet. We are emphasizing the fact that these are short term bonds and you can make solid tax free returns in the next 10 months. Let’s get into some of the details.

How you can make solid tax free returns?

The HUDCO N3 Tax Free Bonds are listed on the NSE and will expire in the month of March 2022. The interest rate offered on these bonds is 8.10%. So, if you buy these bonds at the current market price of Rs 1,020 and hold for just 10 months you would get solid tax free returns.

Now, let us explain this with an example. If you spend a sum of Rs 1 lakh and buy these bonds that have a face value of Rs 1,000, you would receive as much as 98 bonds. On this, you would receive an interest rate of Rs 81 per bond (8.1%) annual interest, which is Rs 7938.

We advocate that you buy the bonds close to the Rs 1,020 levels to get decent post tax yields of around 6%. This is because you are paying Rs 20 extra for the bonds, which have a face value of Rs 1,000, so your yields drop.

Given that bank fixed deposits are now offering an interest rate of only 5.5% per annum, that too the interest fully taxable, this would not be a bad bet. However, you should look to buy the bonds at that Rs 1,020 rates and not above.

What happens to these bonds after March 2022?

In March 2022 the bond holders names, bank account number etc., would be taken from their demat account and they would receive the interest as well as the principal amount. So, you would receive that amount in the month of March.

Investors should look to invest in some of the bonds that are listed, including REC, IRFC, HUDCO, PFC etc. There could be some opportunity here to increase your post tax returns. These bonds are generally advised for investors who are in the highest tax bracket.

At 8.10% Interest This Tax Free Bond Is A Great Investment

However, the key to buying these bonds is at a correct rate, so your post tax yields do not drop. Some of these bonds were issued by the larger government owned corporation and have a different expiry. They are largely secure since all of them were allowed to be issue by government owned entities. If you are looking at even longer term tenures that go beyond 2030, they are available to buy. A good amount of research work has to be done though.

Disclaimer

Goodreturns.in has taken utmost care in compilation of data for this article. The views and investment tips expressed by authors or employees of Greynium Information Technologies, should not be construed as investment advise to buy Fds mentioned in the article. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. Please do consult a professional advisor.



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