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According to him, even if everything goes according to current growth projections by the RBI and IMF, Indian economy will be smaller for a considerable period of next year than it was in 2019.
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Under the offer for sale, Zuari Maroc Phosphates Pvt Ltd (ZMPPL) will offer up to 75,46,800 shares while the Government of India will offer 112,489,000 equity shares.
Currently, ZMPPL holds 80.45 per cent and the Government of India owns 19.55 per cent stake in the company.
Proceeds of fresh issue will be used to partly finance the acquisition of the fertiliser manufacturing facility in Goa, payment of debt and general corporate purposes.
Paradeep Phosphates is primarily engaged in manufacturing, trading, distribution and sales of a variety of complex fertilizers such as di-ammonium phosphate (DAP) and NPK fertilizers. Its fertilizers are marketed under some of the key brand names in the market ‘Jai Kisaan – Navratna’ and ‘Navratna.
Axis Capital, ICICI Securities, JM Financial and SBI Capital Markets are the lead managers to the issue.
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Presenting the budget for 2021-22 Finance Minister Palanivel Thiaga Rajan, taking a dig at the Central government said: “Although the Government of India announced establishment of Defence Industrial Corridors connecting Hosur, Salem, Tiruchirapalli and Coimbatore, the support of the Union Government has been limited.”
“The state government will take this project forward with the establishment of a defence component manufacturing park at Coimbatore over 500 acres at a cost of Rs 225 crore. This park is expected to attract investment of Rs 3,500 crore,” Rajan said.
According to him, an international furniture park will be set up at a cost of Rs 1,000 crore on 1,100 acres of land in Thoothukudi district, to attract investment of Rs 4,500 crore and enable employment of 3.5 lakh persons.
An electronic vehicle park at Maanallur in Tiruvallur district, a medical devices park at Oragadam in Kancheepuram district, leather product park at Panappkkam in Ranipet district and three food parks will be established at Manaparai, Theni and Tindivanam, Rajan said.
A 60 MLD Sea Water Desalination Plant at Thoothukudi for industrial units and 10 MLD TTRO plant for industries at Hosur will be established.
According to him, a Fintech policy will be released shortly. A separate ‘FinTech Cell’ will be formed in guidance to facilitate the establishment of Fintech companies in Tamil Nadu. A Fintech city in Chennai will be developed in two phases at Nandambakkam and Kavanur.
The first phase will be developed at Nandambakkam at an estimated cost of Rs 165 crore, Rajan said.
A new Policy for “Life Sciences – Research and Development and Manufacturing” will be released shortly to enable Tamil Nadu to strengthen its presence in these emerging sectors, he added.
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Investment
oi-Sunil Fernandes
Broking firm, Emkay Global has suggested to buy the stock of Page Industries for gains of up to 20%. The brokerage sees an upside on the stock to Rs 37,500 from the current market price of Rs 31,200.
| Current market price of Page Industries | Rs 31,200 |
| Target price of Page Industries | Rs 37,500 |
| Gains | 20% |
Page Industries is the exclusive licensee of Jockey International Inc. (USA) for manufacture, distribution and marketing of the Jockey brand in India, Sri Lanka, Bangladesh, Nepal, UAE, Oman and Qatar. Page Industries is also the exclusive licensee of Speedo International Ltd for the manufacture, marketing and distribution of the Speedo brand in India. According to Emkay Global, the Q1 performance was slightly better, with revenue recovery at 60% (10% ahead of estimates) and EBITDA margins at 6.8%.
Sales grew 76% yoy to Rs 5 billion on low comparables, but declined 43% qoq due to the Covid-induced restrictions.
Margins to recover to 21% levels
According to Emkay Global EBITDA margins of 6.8% were better than expected, supported by cost control and higher gross margins (up 1,000 basis points; ex-subcon expenses) on better manufacturing overhead absorption. “The commentary was strong with Page Industries indicating 21%+ margins on full recovery ahead. Page Industries has also been able to contain the impact of strong increase in raw material prices with better cost control – has effected only 4% price hike (cumulative 7-8%) vs 20% cumulative hike by peers that operate in the economy segment,” the brokerage has said.
Expect a strong recovery ahead and buy the stock of Page industries
According to Emkay Global with manufacturing operations normalized and the store network fully operational, it expect a strong recovery ahead. “Page Industries strong product expansion plans and fast scale-up of distribution network provide better visibility of mid-teens growth sustaining ahead. Valuations at 52x FY23E Earnings Per Share are at a discount to other high-growth peers. Maintain Buy with a revised target price of Rs 37,500 based on 55x Sep’23E EPS,” the brokerage has said.
Disclaimer
Investors should certainly not take any trading and investment decision based only on information discussed in this article. We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature, which is taken from the brokerage report of Emkay Global. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates, author and the brokerage house do not accept culpability for losses and/or damages arising based on information in the article.
Story first published: Sunday, August 15, 2021, 17:42 [IST]
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Investment
oi-Sunil Fernandes
Broking firm, Khambatta Securities has suggested buying the stocks of Sharda Cropchem and Subros Ltd. The firm sees gains of as much as 37% in the stock of Sharda Cropchem and around 17% in the stock of Subros Ltd. Investors are also advised caution, as the Sensex is now at a record of 55,000 points.
Buy Sharda Cropchem stock for an upside potential of 37%
Khambatta Securities sees as an upside in the stock of Sharda Cropchem to Rs 435, from the current market price of Rs 319.
Sharda Cropchem is a rapidly growing global agrochemicals company with a leadership position in generic crop protection chemicals comprising formulations and generic active ingredients in the fungicide, herbicide and insecticide segments.
“Backed by a strong applications pipeline, the key driver of business growth for Sharda Cropchem, its topline is expected to witness healthy growth in the next 2 years.
We have modelled lower EBITDA margin for FY22 to factor in higher raw material and shipping costs while increased D&A expenses arising from higher capitalised registration costs will result in lower net margins.
At current levels, the Sharda Cropchem stock trades at an attractive 11 times FY23E EPS. Assigning a target P/E multiple of 15 times FY23E EPS, we value Sharda Cropchem at Rs 435, informing a BUY rating with an upside of 36%,” the brokerage has said.
Buy Subros Ltd stock for a potential upside of 17%
The Subros Ltd stock, according to Khambatta Securities has a potential upside of 17% and can rally to Rs 371 from the current levels of Rs 321. Subros’s first quarter FY22 performance was affected by covid 2.0 and consequent lockdown in many states.
According to Khambatta Securities operations was suspended during May 21 as OEMs and dealers remained shut at several locations.
“The company’s current capacity utilisation is 90% as management looks to invest in capacity expansion in the next 2 to 3 years. Subros’ market share in the passenger vehicle, utility vehicle and truck segment is 42%/55%/45%.
The trend of trucks coming with air conditioned cabins is a positive market, consumer preference shift for Subros Ltd. The management has guided double-digit revenue growth for FY22. The Subros Ltd has appreciated 33% since we initiated coverage with a BUY rating on 17 September 2020.
We reiterate a buy rating on the stock of Subros Auto with a price target of Rs 371 (at 22.0 times FY23E EPS) with a 15% upside as we make marginal downward revision of estimates based on updated data-points and outlook,” Khambatta Securities has stated.
Disclaimer
Investors should certainly not take any trading and investment decision based only on information discussed in this article. We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature, which is taken from the brokerage report of Khambatta Securities. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates, author and the brokerage house do not accept culpability for losses and/or damages arising based on information in the article.
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Chunky industrial loans, which make up about 30% of non-food credit, have witnessed lukewarm demand so far in 2021, latest central bank data showed, underscoring a trend among companies to conserve cash, deleverage as much as possible, and leave under-utilised the respective loan limits sanctioned by lenders. Retail credit demand has expanded, however, through the period of episodic lockdowns and curbs on mobility.
Both analysts and bankers believe credit demand will now pick up as companies invest for the next cycle of growth. In a report published earlier this month, Japanese investment bank Nomura said growing optimism and abundant liquidity should boost loan demand.
“Banks expect an across-the-board improvement in demand through Q1 2022, with optimism levels the highest for retail loans, followed by manufacturing and services, while infrastructure loan demand lags,” Nomura said. “The simultaneous rise in loan demand and easing of loan supply conditions suggest that credit growth should eventually pick up.”
An uncertain business environment led to muted credit demand from traditionally asset-heavy industries, such as industrial metals, metal products, iron and steel, construction and cement. Instead of adding more debt to their balance sheets, several companies in these sectors sought to deleverage, harnessing cash flows to improve their debt profiles.
Incidentally, better profiles should now encourage many companies to add debt as expansion capital.
“We believe India Inc, after undergoing a phase of deleveraging over the past few years, is now better positioned … (for) re-leveraging. Indian financiers, too, have saddled themselves with ample liquidity or capital buffers to tap the emerging opportunity,” ICICI Securities said in a note. “Recovery in economic activity and the derivative effect of increased investments and corporate/government spending on consumption will sustain the momentum of 15%-plus growth over FY22-FY25.”
To be sure, cheaper rates in the local and overseas bond markets meant that companies looked to those sources for their short- and medium-term funding needs instead of banks.
Bankers believe that as companies embark on large projects, loan demand will rebound. For instance, Bank of Baroda reported a year-on-year fall of 10% in corporate loans as it shed low-yielding advances in the first quarter. But CEO Sanjiv Chadha said he expects loan growth to pick up this year, helping the bank expand its loan book by 7% to 10%. That would include a 5% to 7% expansion in corporate loans.
“Retail loans will still grow faster than corporate loans but we are seeing an uptick in demand from road projects, city gas projects and renewable energy projects, which will help the demand for loans,” Chadha said during the bank’s first-quarter earnings call.
Retail loans have expanded 12% on-year, helped by a low base and paced by demand for homes and vehicles. Credit card spending fell.
Home loans expanded 10% and vehicle loans 11% despite the lockdowns through April and May. But outstanding credit card loans fell 12% year-on-year as consumer sentiment was hit by localised lockdowns.
State Bank of India (SBI), which reported a 2.3% fall in corporate loans, also expects the situation to improve this fiscal. Chairman Dinesh Khara said he expects demand from companies to improve, boosting its loan margins, as both individual and industrial borrowers add more loans.
To be sure, demand from industry is crucial to prop up overall credit growth.
“We believe industry growth will have to emerge as a key driver to boost credit growth in coming years. While it may happen with some lag, revival in consumer demand and rise in government spending can be the potential triggers,” ICICI Securities said.
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Given the importance of the banking sector in generating demand and boosting consumption, sources said the meeting with the MD and CEOs of PSBs is considered important.
Recently, the Finance Minister said the government is ready to do everything required to revive and support economic growth hit by the COVID-19 pandemic.
“Growth will be given its importance. Growth will be pushed both by the Reserve Bank and by us…,” she had said.
Interestingly, this would be the first physical review meeting since the outbreak of the pandemic in March last year.
The meeting is expected to take stock of the banking sector, progress on restructuring 2.0 scheme announced by Reserve Bank of India (RBI), sources said, adding that banks may be nudged to push loan growth in productive sectors.
The revamped Rs 4.5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) would also be reviewed during the meeting likely to be held in Mumbai, sources said.
Besides, the Finance Minister is expected to take a stock of the bad loan or non-performing asset (NPA) situation, and discuss various recovery measures by banks, they said.
As a result of government’s strategy of recognition, resolution, recapitalisation and reforms, NPAs have since declined to Rs 7,39,541 crore on March 31, 2019, Rs 6,78,317 crore on March 31, 2020 and further to Rs 6,16,616 crore as on March 31, 2021 (provisional data).
At the same time comprehensive steps were taken to control and to effect recovery in NPAs, which enabled PSBs to recover Rs 5,01,479 crore over the last six financial years, the government informed Parliament recently.
As far as credit growth of scheduled commercial banks (SCBs) is concerned, it has remained positive for 2020-21 despite contraction in GDP (-7.3 per cent) due to the COVID-19 pandemic.
Gross loans and advances – outstanding of SCBs increased from Rs 109.19 lakh crore as of March 31, 2020 to Rs 113.99 lakh crore as of March 31, 2021. Agriculture and allied activities, micro, small and medium enterprises, housing and auto have witnessed a year-on-year growth of 12.3 per cent, 8.5 per cent, 9.1 per cent and 9.5 per cent, respectively, during the year.
Notwithstanding economic disruptions caused by the pandemic, PSBs have managed to raise a record Rs 58,700 crore from markets in 2020-21 through a mix of debt and equity to enhance capital base. As a result capital to risk weighted assets ratio rose to 14.04 per cent as of March 31, 2021, as against regulatory requirement of 10.875 per cent boosting the ability of PSBs to further increase lending.
As a result, PSBs in aggregate recorded a profit of Rs 31,816 crore, highest in five years, despite 7.3 per cent contraction in economy in 2020-21.
The primary reason for PSBs to post such a Rs 57,832-crore turnaround from a loss of Rs 26,015 crore in 2019-20 to a combined profit of Rs 31,816 crore was the end of their legacy bad loan problem.
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The Pune-headquartered lender recorded 14.46 per cent increase in gross advances at Rs 1,10,592 lakh crore in April-June period of 2021-22, as per the published data of BoM.
It was followed by Punjab & Sind Bank which posted 10.13 per cent growth in advances with aggregate loans at Rs 67,933 crore at the end of June 2021.
When it came to deposit mobilisation, BoM with nearly 14 per cent growth was a notch behind Punjab and Sind Bank, while the country’s largest lender State Bank of India recorded 8.82 per cent rise.
However, in absolute terms SBI’s deposit base was 21 times higher at Rs 37.20 lakh crore as against Rs 1.74 lakh crore of BoM.
Current Account Savings Account (CASA) for BoM saw 22 per cent rise, the highest among the public sector lenders, during the quarter.
As a result, CASA was 53 per cent or Rs 92,491 crore of the total liability of the bank.
Total business of BoM increased 14.17 per cent to Rs 2.85 lakh crore at the end of June 2021.
For the first quarter, BoM’s standalone net profit more than doubled to Rs 208 crore as against Rs 101 crore in the same period a year ago.
The bank’s asset quality improved significantly as the gross bad loans or gross non-performing assets (NPAs) dipped to 6.35 per cent of gross advances by the end of June 2021 as against 10.93 per cent by the end of first quarter of the previous fiscal.
In absolute terms, gross bad loans stood at Rs 7,022 crore at the end of June 2021, lower than Rs 10,558.53 crore recorded in the same period a year ago.
Net NPAs nearly halved to 2.22 per cent (Rs 2,352.75 crore) from 4.10 per cent (Rs 3,677.39 crore).
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If Covid-19 and the ensuing lockdowns have got you habituated to purchasing your essentials only online, there are specialised credit cards that can come handy. A few banks are issuing credit cards in partnership with popular e-commerce companies to attract more consumers especially in the post pandemic contactless world. The Amazon Pay ICICI Bank Credit Card and the Flipkart Axis Bank Credit Card are two such cards. These credit cards offer rewards on your online purchases in the form of cashbacks, discounts and reward points. E-commerce websites also provide extra offers to such cardholders on their select purchases. These are over and above the existing discounts, cashbacks, and reward points.
While your affinity to a select e-commerce platform might be a key criterion in deciding the credit card to opt for, there are also other parameters to consider. Here is a lowdown on a few of them.
A registered Amazon Pay user, despite not being an existing customer of ICICI Bank, can easily apply for an ICICI Bank co-branded credit card entirely online using the video KYC facility. They can do so either on the bank’s website or mobile application or through the Amazon.in website or mobile app.
However, for a Flipkart Axis Bank credit card, you must have a current or saving account with Axis Bank apart from being a registered Flipkart user. That apart, the Axis Bank credit card also entails a joining fee of ₹500, while the Amazon Pay ICICI Bank Credit Card is free of cost.
The Amazon pay ICICI Bank card is a free lifetime credit card with no joining or annual fees whereas the Flipkart Axis Bank credit card charges an annual fee of ₹500 after the first year. This is, however waived if the annual spends on the card exceed ₹2 lakh.
On the amount overdue, while ICICI Bank charges an interest of 42-45.6 per cent depending on customer profile, Axis Bank charges 49.36 per cent per annum for amounts overdue on retail purchases and cash transactions. See the table for a comparison on other charges.
The Flipkart Axis Bank credit card comes with a host of welcome benefits such as free vouchers, discounts and cashbacks on the first card transaction on Flipkart, Myntra, etc. and a free 15-month subscription to Gaana. There are no such benefits on enrolment in the case of the ICICI Bank credit card.
On the ICICI Bank card, customers earn 3 per cent reward points on card spends on Amazon (5 per cent for Amazon Prime users). Besides, one can earn 2 per cent reward points for spends on digital categories on Amazon.in such as bill payments, recharges, travel and movie bookings, and for payments to other Amazon Pay merchants such as Swiggy, Bookmyshow, and Yatra. For spends on any merchant location in the country where Visa cards are accepted, the card fetches you 1 per cent reward points.
Besides, the bank offers benefits mostly in the form of reward points. Each reward point is equal to one rupee and the reward earnings are credited directly to the Amazon pay monthly balance after the billing cycle.
The Axis bank card offers cashbacks that are directly credited in the credit card statement in the next billing cycle. The bank offers cashbacks such as 5 per cent of the spends on Flipkart, Myntra and 2GUD. On spends on other preferred merchants such as Swiggy, PVR and Uber, the bank offers 4 per cent cashback. On all other categories of merchant spends, the bank offers 1.5 per cent cashback.
While the ICICI Bank credit card offers 2 per cent reward points when you add money to your Amazon pay wallet, the Axis Bank card does not offer cashbacks for wallet loading transactions.
The banks also offer their existing customers other benefits such as discounts on dining in select restaurants. Besides, the Axis Bank credit card also gives its customers four free lounge accesses in select domestic airports every calendar year.
Both banks do not offer rewards points and cashbacks on fuel, EMI transactions (including purchases converted into EMI later) and gold purchases. However, the banks offer waivers on fuel surcharge – 1 per cent in the case of the Axis Bank credit card for transactions in the range of ₹400- 4,000 up to a maximum of ₹500 per month. In the case of the ICICI Bank credit card, only the existing bank customers get a waiver of 1 per cent on fuel surcharge payments on spends using the bank’s Amazon pay co-branded credit card.
(This is a free article from the BusinessLine premium Portfolio segment. For more such content, please subscribe to The Hindu BusinessLine online.)
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The outbreak of the pandemic along with the rising incidence of lifestyle-related illness has not only highlighted the importance of having health insurance but also having sufficient cover (amount).
Additionally, a health policy should not only cover hospitalisation expenses but also offer other benefits including OPD, daily cash benefit in case of hospitalisation, restoration of sum insured (SI) in case of claim and no claim bonus (NCB).
HDFC Ergo has recently introduced one such product, Optima Secure. Here is a review of the product features.
The SI under the Optima Secure policy starts from ₹5 lakh and goes up to ₹2 crore. It provides all basic covers like other health policies such as hospitalisation expenses including day care treatment expenses, AYUSH treatment, home healthcare (domiciliary hospitalisation), organ donor expenses, pre and post hospitalisation expenses, and cumulative bonus benefit.
The policy also covers the cost of preventive health check-up on each continuous renewal of the policy.
The highlight of Optima Secure is that it offers a cover of more than the base SI (cover amount) to all policyholders.
The ‘Secure’ benefit of the plan offers additional coverage amount equivalent to 100 per cent of the SI.It also offers a ‘Plus’ benefit, where on policy renewal, the policyholder receives 50 per cent of the base SI, irrespective of the number of claims made.
It also provides Cumulative Bonus benefit, where the base SI increases by 10 per cent for every claim-free year subject to a maximum of 100 per cent of the base SI.
Then there is an automatic Restore benefit. Under this, in the event of complete or partial utilisation of the base SI, the plan offers to restore it fully. This is irrespective of whether the secure or plus benefit or the cumulative bonus SI is utilised.
Let’s understand this with an example. Say Joe’s base SI is ₹10 lakh. As soon as he purchase the policy, he gets the Secure benefit. So his SI stands at ₹20 lakh (10 + 10). If the restore benefit is considered, then his total SI stands at ₹30 lakh during a policy year.
Additionally, Optima Secure also offers daily cash benefit for shared room (₹800 per day, maximum of ₹4,800), air ambulance service, and e-opinion for critical illness.
The policy also offers two add-on covers (riders) for additional premium – my: health critical illness cover up to ₹5 crore and my: health hospital cash benefit .
HDFC Ergo’s Optima Secure offers more than sufficient health cover for a policyholder and one can consider this plan only if you are looking for additional cover (amount) over and above the base SI.
The benefit of additional SI comes handy during medical emergencies and for those with existing medical conditions in the family.
Also, the plan doesn’t have any sub-limits or SI capping including for day care procedures, ICU or intensive cardiac care unit, road ambulance services and on modern treatments such as oral chemotherapy and stem cell therapy, unlike some health policies. For instance, HDFC Ergo’s Optima Restore plan has a sub-limit on road ambulance service of up to ₹2000 per hospitalisation.
But keep in mind a few points. One this Secure benefit is available only once in a policy year and does not carry forward to the next policy year. Even the automatic SI Restore feature is available only once during the policy year.
Two, though in most cases, the hospitalisation expense requirements are often met with the additional SI offered under Optima Secure, there are products in the market such as Max Bupa’s ReAssure plan and Care Plus plan from Care Health Insurance that offer restore benefit multiple times in a year.
Three, under Optima Secure, the NCB (cumulative bonus) benefit increases 10 per cent each claim-free year but there are products in the market which double the NCB or increase it 50 per cent for each claim-free year up to a maximum of 100 per cent of base SI.
The ReAssure plan from Max Bupa increases the same by 50 per cent for each claim-free year. Manipal Cigna’s Pro Health plan offers guaranteed increase in SI by 10 per cent up to 200 per cent (of base SI ) every year irrespective of the claims
And lastly, while Optima Secure offers comprehensive coverage, it may appear slightly expensive compared to other products in the market.
For instance, under Optima Secure, for a ₹10 lakh cover for a family (husband and wife; 30 years), the premium works out to ₹19,106 (including GST) per year.
Under Max Bupa’s ReAssure, the premium is around ₹11,321 (including GST) per year.
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