Ant Group-backed fintech firm Paytm said it has allocated shares worth ₹82.35 billion ($1.11 billion) to more than 100 institutional investors,including the government of Singapore, ahead of what is expected to be India’s largest stock market listing.
Paytm’s offer of up to ₹183 billion, which was increased last month from ₹166 billion, garnered interest from 122 institutional investors who bought more than 38.3 million shares for ₹2,150 apiece, according to a regulatory document dated November 3.
BlackRock Global Funds, Canada Pension Plan Investment Board and Abu Dhabi Investment Authority were among the investors.
Launched a decade ago as a platform for mobile recharging, Paytm grew quickly after ride-hailing firm Uber listed it as a quick payment option. Its use swelled further in 2016 when a ban on high-value currency bank notes in India boosted digital payments.
Paytm has since branched out into services including insurance and gold sales, movie and flight ticketing, and bank deposits and remittances.
The company’s offering will open on Monday and top investor Ant Financial, with a 27.9% stake in Paytm, plans to sell shares worth ₹47.04 billion.
Several companies including Paytm have tapped capital markets this year in a fund-raising frenzy on the back of record highs hit by the Indian stock market, which has outperformed Asian peers so far this year.
In India, 157 companies including TPG-backed Nykaa, Oyo Hotels and Rooms and online insurance aggregator Policybazaar have raised $17.22 billion via IPOs this year as of October 31,compared with $8.54 billion raised by 49 companies in the same period last year, according to Refinitiv data.
Paytm’s IPO is likely to be the biggest in the country’s corporate history, breaking a record held by Coal India Ltd, which raised ₹150 billion more than a decade earlier
Among the PSU banks, Motilal Oswal is bullish on the stocks of State Bank of India and Canara Bank.
According to the Bulls & Bears (November 2021): India Valuations Handbook, PSU Banks are trading at P/B of 0.9x, near the historical average of 0.8 times.
“Overall, we believe the earnings of PSU banks are set to rebound strongly. Along with improving asset quality trends, this would enable healthy CAGRs in ABVs over FY21-24E – compared with muted growth, or even decline, witnessed in many of them in prior years. We estimate PSU banks to deliver early double-digit RoE by FY23, while valuations remain undemanding (except for State Bank of India).
SBI remains top pick in the sector. We resume coverage on Canara Bank with a BUY rating,” the report says.
Stocks to buy from the technology sector
From the technology sector, Motilal Oswal likes the stocks of HCL Tech and Infosys, Zenstar Technologies, L&T Technology and Cyient.
“We believe largecap companies are better placed to absorb the supply pressure given their capabilities in training employees in newer skills. Among the Tier I players, we like INFO and HCL Technology on the expectation of industry-leading growth. From the Tier II pack, we prefer LTTS, CYL, and ZENT given their attractive and industry-relevant portfolios,” the brokerage has said.
Earning season broadly in line
According to Bulls & Bears (November 2021): India Valuations Handbook, the 2QFY22 earnings season has thus far been above estimates, benefitting from a) strong growth in the Technology sector, b) steady recovery in loan growth as well as recovery and an upgrade in the asset quality of most private sector banks, c) higher commodity prices and volume growth in the Energy and Metals sectors, and d) the economic unlock driving growth in Consumer and Retail.
“Nifty profits for the 34 companies that have posted their results have grown 22% YoY (v/s exp. of 13% growth). On the other hand, for the 127 companies in our Motilal Oswal Financial Services Universe, profit growth stands at 26% YoY (v/s exp. of 19% growth),” the report said.
Disclaimer
The above stocks are picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
Acting as whistleblowers, several people, including a group of senior employees of the IndusInd Bank arm, Bharat Financial Inclusion (BFIL), have alerted the Reserve Bank of India (RBI) and the board of the private sector lender about lapses in governance and accounting norms to allegedly ‘evergreen’ loans running into thousands of crores since the outbreak of Covid-19.
According to them, if the IndusInd management is unable to quickly correct the practice of “adjusting new loan money with overdues from earlier loans”, the subsidiary BFIL would eat into the financials of the parent. These alleged transactions to dress-up the books have damaged the micro-lending business built over the years and could even trigger political backlash, the group warned in at least two emails to IndusInd’s Bank CEO Sumant Kathpalia, some independent directors and RBI officials between October 17 and 24.
IndusInd took over the micro-finance lender BFIL – formerly SKS Microfinance – in a stock deal in March 2019.
Kathpalia did not respond to queries from ET. An official of a PR agency hired by the bank said, “The bank has received complaint from anonymous person(s). The bank has a well established policy to deal with such matters and the veracity of the allegations/complaints are being assessed. While management review is in progress, the bank has yet not come across any material findings that warrant immediate action on any count (sic).”
Two persons familiar with the developments said that on October 14, there was a separate whistleblower complaint from an ‘outsider’ to RBI, saying that suggestions to set up risk management and audit committees for BFIL were ignored as the unlisted micro-lending subsidiary of IndusInd was not required to meet Clause 49 conditions of the listing agreement. It also talked about “process lapses” in extension of loan contracts, cash disbursement and accounting practices.
BFIL’s Former Non-Exec Chair Raised Red Flags Micro-lending companies disburse loans through banking channels but collect cash while recovering loans. Cash collection for most micro-finance companies dropped due to the pandemic, particularly during the second wave.
Significantly, a month before the October 14th whistleblower complaint, non-executive chairman of BFIL M R Rao stepped down. In his September 15th resignation letter to board members, Rao, who had been the CEO of BFIL (SKS), said, “…I am aware that RBI has raised issues with respect to BFIL particularly the 80,000 loans given in May 2021, without customer consent. This is a point on which I expressed deep concern in the board and in fact demanded a third-party audit too. To me it appears to be not a process lapse but a deliberate act to shore up repayment rates. I had warned the board too about the serious consequences…”
Rao did not respond to ET’s queries and declined to confirm whether he was among the whistleblowers. S Dilliraj, former president of the company who has worked with Rao for years, also declined to comment. Rao has asked the board to cancel the non-compete agreement he has with the company.
A person who identifies and declares himself as a ‘whistleblower’ before RBI expects a degree of legal protection. Also, the regulator does not disclose the identity of the whistleblower.
While an IndusInd Bank official said that the bank had stepped up provisioning on its portfolio of micro loans, one of the whistleblower emails alleged that two senior officials of BFIL, who were primarily responsible for hiding non-performing loans, have been threatening employees and tracking their call records to restrain them from talking about the matter. Another email said that the government’s ECLGS scheme, which was intended to provide emergency line of credit in the wake of the pandemic, was used to “adjust arrears instead of giving credit to customers.”
SBI Chairman Dinesh Kumar Khara sees significant improvement in India Inc’s capacity utilisation by the next quarter saying that major additions are expected in sectors like iron, steel, oil and metals.
“There is a clear availability of demand. Demand (is) coming in and capacity augmentation is happening. And I hope by the end of the current quarter or next quarter, there should be significant improvement in capacity utilisation…The major (capacity addition) is in the iron and steel sector. Oil companies might also start availing working capital limits, and the metal sector is also seeing an uptick, so capacity addition is expected in that sector,” said Dinesh Khara, Chairman SBI in a virtual press conference following SBI’s Q2 financial results.
Khara shared that the lender has currently unutilised term loans to the corporate to the extent of 27 per cent,and while working capital limits in large corporates is unutilised to the extent of 50 per cent. Khara said it is not possible to articulate when corporate book growth will come back but he added he expects unutilised capacity to reduce to roughly 30 per cent in the subsequent quarters.
SBI Chairman also said the lender is not losing any such business to mutual funds due to prevailing excess liquidity in the system, indicating corporates in the present low interest rate environment would prefer banks when scaling up their investments.
Mumbai: SBI chairman Dinesh Khara has said that the bank has full confidence in the judiciary and that former SBI chairman Pratip Chaudhury would be released unconditionally soon. He also said that the banking community, through the Indian Banks’ Association, has taken up the matter with the government.
“The arrest of Mr Chaudhury is extremely unfortunate. There have been several reactions in the public space of the banking community as well as previous chairmen. It appears that an opportunity was not given to him to be heard before the arrest. We have utmost faith in the country’s judicial system and are confident that he will be released unconditionally at the earliest,” Khara told reporters here on Wednesday.
Banking sources said that the complainant in the same case had filed a false FIR against the resolution professional (RP) who had been appointed to take charge at the defaulting company. This had resulted in a landmark judgment that said a case against the RP can be filed only with the Insolvency and Bankruptcy Board of India (IBBI).
Khara denied that there were any irregularities in the sale of the loan by SBI. “As far as SBI is concerned, we adhere to the best practices in corporate governance and there has been no irregularities in the instant case and the prescribed rules and process were followed by the bank in dealing with this account.” Khara indicated that the decision on the sale of the NPA was unlikely to have been taken by Chaudhury. “Issues of this magnitude are invariably dealt with at a local level and the top management of the bank, including the chairman, are not involved in decision making. We have got the structure in place and we are confident that people across the hierarchy can take decisions in such matters,” Khara said.
Banking sources said that the complainant in this case was politically connected. They said that it appeared to be a premeditated case as most of the higher courts are on vacation for Diwali.
Meanwhile, SBI sources said that the valuations mentioned in the order are irrelevant as the properties were not sold by the bank. They said that the bank had sanctioned a term loan of Rs 24 crore and a cash credit limit of Rs 1 crore was sanctioned in 2008 and the loan had to be restructured within a year itself. Despite restructuring, the loan turned into a non-performing asset in 2010. This prompted the bank to send a recall notice for Rs 34 crore in 2012 and a suit was filed in the debt recovery tribunal in 2013 for Rs 40 crore.
As the bank was not successful in attaching the property under the Securitisation Act, the loan was sold to Alchemist Asset Reconstruction Company (ARC) for Rs 25 crore in 2014. The ARC too could not recover the loan and finally invoked the IBC.
The promoters had filed an FIR against the RP, who was arrested. It was in this case that the landmark order was passed requiring complaints against the RP to be filed only with the IBBI. Banking sources said that both NCLAT and the Supreme Court have passed strictures against the promoters.
Jaipur, Former SBI chairmanPratip Chaudhary, jailed in the loan scam, has been admitted to Jawahar Hospital after he complained of restlessness, officials said on Thursday morning.
“He was brought to Jawahar Hospital on Wednesday evening after he complained of restlessness and hypertension in jail,” they added.
Chaudhary was jailed on Monday evening after the CJM Court of Jaisalmer ordered him to be sent to judicial custody for 14 days in the loan scam case.
Jawahar Hospital’s Principal Medical Officer JR Panwar said that Chaudhary is suffering from hypertension and undergoing treatment.
The former SBI chairman has been accused of misusing his position to sell Jaisalmer’s Hotel Fort Rajwada against the rules.
The CJM Court of Jaisalmer issued an arrest warrant against him.
On Sunday, the Jaisalmer Police nabbed him from Delhi and brought him to Jaisalmer.
The following day, the court ordered to send him to judicial custody for 14 days.
Mumbai (Maharashtra) [India], November 4 (ANI): The special session of Muhurat Trading ended with the key indices including the auto sector and consumer discretionary goods and services gaining substantially.
The special trading window marks the beginning of Samvat 2078. It is the Hindu calendar that starts on Diwali.
At the closing bell, the BSE S&P Sensex was up by 295.70 points or 0.49 per cent, while the Nifty 50 gained by 87.60 points or 0.49 per cent.
In BSE Sensex all the sectors gained. The sectors that saw maximum gain were the auto sector that was up by 1.54 per cent, the telecom sector that was up by 1.19 per cent, the capital goods that was up by 1.16 and industrials was up by 1.13 per cent.
Among stocks, the top contributor was Mahindra and Mahindra, which surged 2.87 per cent to Rs 872.95 per share, followed by ITC which surged 1.82 per cent to Rs 226.55 per share. Bajaj Auto, Larsen and Kotak Mahindra too traded with a positive bias.
However, ICICI Bank cracked by 0.43 per cent, followed by Ultra TechCement by 0.34 per cent and Asian Paints by 0.13 per cent.
The stock market will remain closed on November 5 due to Diwali Balipratipada.
Actor Bhagyashree rang the opening bell along with the Managing Director and Chief Executive Officer of the BSE Ashish Chauhan.
“Bollywood Actress Bhagyashree with Ashish Chauhan, MD & CEO BSE India and others Ringing the Opening Bell to mark the Deepavali Muhurat Trading,” BSE India tweeted.
Before the opening, a Laxmi puja was also performed here in Mumbai.
Ashish Chauhan performed the puja along with his family members at BSE office located at Dalal Street in Mumbai’s Kala Ghoda. Bhagyashree was also present during the puja and offered prayers to Goddess Laxmi.
With the completion of this Puja, the special one-hour long Mahurat Trading session commences in BSE. The market closed at 7.15 pm. (ANI)
-Anushka SenguptaDebaditya Ghosh, a senior software developer at Deloitte, affirmed that he will not use BNPL again. Yes, the ‘Buy Now Pay Later’ credit option has its benefits, such as no hidden charges, but millennials like Ghosh said they are not able to control their expenditures.
“I don’t think I will use it again in the near future. The reason behind it being the purchase limit set by the e-commerce entity. For Amazon the limit is Rs 7,500-10,000. I purchased a product worth Rs 16,000, and I got tempted by the no interest rate policy, so I opted for the BNPL option. However, this wasn’t necessary and I wasn’t planning to spend the additional Rs 6,000. But temptations are quite high, which in turn makes you overspend. You start using it even for small purchases and, at the end, you are burdened by a lot of debt,” Ghosh said.
For those who are known to spend their earnings lavishly, and have fallen short in making full payment at the time of purchase, BNPL can be a great option, but it can increase their already-fragile financial burden.
“I always prefer buying using debit or credit because I can opt for deferment of high value purchases by staggered payments, when needed,” said Shreyashi Haldar, final year MBA student of NIBM Pune.
However, the less conservative millennials – the ones who are spend thrift – believe that BNPL is better than EMI, because of the 0% interest rate. BNPL companies offer an interest rate of 0-24%, depending on the transaction amount, and give the option of digital KYC.
“I purchased an item using Amazon’s BNPL facility, even though it had the EMI option. For EMI, I was being charged 13-15% interest, but with Amazon’s BNPL option, I could purchase the item at 0% interest,” said Asmita Sengupta, senior analyst at PWC India.
For EMIs, one has to pay a percent of interest, some charges, and some paperwork is also required.
Although millennials are in two minds about which is better – one thing is for sure – they believe that BNPL will not replace EMIs or credit cards, in line with what the industry believes. One of the main reasons for this is because the purchase limit is higher in EMIs, compared with BNPL.
“From what I have noticed, BNPL facility of e-commerce platforms are available for customers on that platform only. For example, I had purchased some items using Flipkart’s BNPL facility, but I could only buy it from Flipkart. But with my EMI card, I do not face this issue,” Haldar said.
Since BNPL is relatively new, BNPL is yet to garner a greater reach, like that of EMI and credit cards. Though millennials seem to be in two minds about this new and emerging credit option, the industry believes that the demand for it will likely rise in the future – especially after its robust performance this festive season.
Nearly 30% of young investors, aged between 18-30 years, are planning to invest more than usual this festive season, according to a survey by investment platform Groww.
Young investors were seen drawn towards stocks and mutual funds, witnessing the biggest spike at 87% and 58%, respectively, among other investment options like fixed deposits and foreign stocks, the survey added.
The survey was conducted with investors aged 18 and above to understand if the festive season impacts their investment decisions. Millions of young Indians have opted for stock trading during and post pandemic, raising hopes that the appetite for Indian equities is finally growing, the survey said.
Technology, including the rise of cheap trading apps and social media influencers has attracted hordes of day traders into the domestic markets.
Nearly 76% of the respondents are first-time investors, and 69% of respondents have been investing for less than a year. Seasoned investors who’ve been in the market for more than five years account for only 5.7%. Of the total survey respondents, Gen Z (18-24 years) and Gen Y (25-30 years) lead the chart as first-time investors, with 39% and 34% respectively, the survey has found.
The top two driving factors for investments were generating long-term wealth and general savings.
Retirement planning is one of the top investment priorities for investors aged 40 years and above, while 3% are considering to move their investments in the tax-savings asset class options this festive season, it added.
Out of the total respondents, 35% of investors aged between 31-40 years and 34% of investors aged between 25-30 years will plan to invest less than usual.
This is primarily because 45% of respondents are planning smaller purchases (shopping), while 19% plan to get their homes renovated and 18% are planning bigger purchases such as a car, gadgets and others.
Groww, itself, witnessed a 94.53% growth in the number of first-time investors in August, compared with the year ago period. Its investor base has grown rapidly and has already crossed over 15 million customers, indicating positive investment sentiment.
The PNB management attributed the drop in NII to the one-off impact of a judicial embargo on bad-loan recognition during the September quarter of FY21.
As loan growth in the corporate segment slowed and low interest rates put a lid on margins, most large banks saw their net interest incomes (NII) growing slower during the first half of FY22. Some public sector banks (PSBs) even saw their NIIs fall on a year-on-year (y-o-y) basis during Q2FY22.
Deposit rate cuts have been less frequent so far this year and with lending rates continuing to trend down, NIIs have come under pressure, bankers said.
Punjab National Bank (PNB), Yes Bank, Indian Bank and Canara Bank were among the lenders who saw their NIIs fall during the September quarter. PNB’s NII was down 25% y-o-y, with the net interest margin (NIM) falling 30 basis points (bps) sequentially and 80 bps y-o-y.
The PNB management attributed the drop in NII to the one-off impact of a judicial embargo on bad-loan recognition during the September quarter of FY21. Also, the Delhi-based bank said it had to price loans in the corporate and micro, small and medium enterprises (MSME) segments downwards.
SS Mallikarjuna Rao, MD & CEO, PNB, told investors that the lender has reduced the pricing in the MSME segment aggressively from August onwards. “So two months of an impact was roughly around Rs 150 crore in action. Then there was an aggressive repricing in the short-term corporate book where people take WCDL (working capital demand loans). So that book is more than `50,000 crore, where repricing aggressively has taken place,” Rao said.
Private banks put up a relatively better show on the core income front without bucking the overall downward trend. Axis Bank’s NII grew 7.8% y-o-y in Q2FY22, as against 20% in Q2FY21 and 11% in Q1FY22.
HDFC Bank, which saw its NII growth improve to 12% y-o-y in Q2FY22 from 9% in the previous quarter, still undershot its year-ago growth rate of nearly 17%. The largest private lender’s management said the change in its loan mix in favour of a larger wholesale book was responsible for the muted NII growth.
Srinivasan Vaidyanathan, chief financial officer and group head – finance, HDFC Bank, said that certain segments where the bank grew over the last 18 months were low-risk segments. “That means with a lower price that comes with it,” he said, adding that the contribution of retail loans is now on the rise. “…even in this quarter while we have had the retail growth coming up, …[it] will take a couple of quarters for the average to catch up with the overall base,” he said.
Kotak Mahindra Bank registered an NII growth of 3.2%, slower than 5.8% a quarter ago and 16.8% a year ago, as the lender saw loan growth picking up only around the end of the July-September quarter. “While at the period-end, you see the loan growth happening, a large part of it is seen around the end of the quarter. So it doesn’t really bring me NIIs for this period,” said Jaimin Bhatt, president & group CFO, Kotak Mahindra Bank.
Moreover, a lot of the incremental credit growth during the last year has happened in home loans and other secured loan segments, where yields are lower. “If you look at the higher-yielding loans, like unsecured personal loans or credit cards or some of the agri loans, they’ve actually de-grown. So some of the mix change has also impacted the NII,” Bhatt said.
As the busy season progresses in the second half of FY22, banks expect their core earnings to improve. Both PNB and Kotak Mahindra Bank said that their NII performance will be better in the next quarter as earnings from festive-season business start to flow in. The central bank’s liquidity withdrawal exercise could also help banks price credit better.
“I’m expecting improvement in the next quarter because … as the liquidity is slowly being removed by the RBI and I’m expecting them to bring it down from Rs nine lakh crore to Rs 2.5 lakh crore by December second week,” PNB’s Rao said. “So our pricing will be moving in a better manner in Q3 and Q4,” he added.
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