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The Reserve Bank of India will conduct a Variable Rate Reverse Repo auction on October 08, 2021, Friday, as under:
2. The operational guidelines for the auction as given in the Reserve Bank’s Press Release 2019-2020/1947 dated February 13, 2020 will remain the same. Ajit Prasad Press Release: 2021-2022/998 |
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In Q2FY22, Emkay Global expects aggregate revenue for Automobile firms to grow by only 6% YoY, as volume growth was hampered by chip shortages in PVs and a high base in 2-Wheelers/Tractors. CVs, on the other hand, had a strong volume performance. However, earnings are anticipated to be harmed due to temporary volume difficulties and cost pressures.
As a result of chip shortages, the brokerage believes that domestic PV industry volumes increased by only 2% year over year. We anticipate a 2% revenue increase for MSIL and 14% for the MM auto division (total revenue growth of 8% for MM). It also expects volume to improve in H2 as a result of the pending order book and increasing chip supplies.
| Auto company | Market price | Target price | Likely gains % |
|---|---|---|---|
| Ashok Leyland | Rs 130 | Rs 155 | 19% |
| Baja Auto | Rs 3,771 | Rs 4,420 | 17% |
| Hero MotoCorp | Rs 2,801 | Rs 3,790 | 35% |
| TVS Motor | Rs 544 | Rs 780 | 43% |
| Atul Auto | Rs 221 | Rs 300 | 36% |
| Maruti Suzuki | Rs 7,199 | Rs 8,600 | 19% |
| Tata Motors | Rs 336 | Rs 400 | 19% |
Ashok Leyland
Emkay Global has initiated a buy call on Ashok Leyland with a target price of Rs 155, implying a 19 percent upside potential. Ashok Leyland is currently trading at Rs 130.
According to brokerage, revenue is expected to expand considerably year over year, thanks to volume growth of 42 percent on a low base and realisation growth of 10 percent. Despite the increased scale, the EBITDA margin is likely to remain constant due to delays in commodity inflation pass-through.
Baja Auto
The brokerage believes that with a 9 percent year-over-year increase in volume and a 13 percent increase in realization, revenue growth could be strong. Despite a drop in the home market, volume increased due to a 28 percent increase in exports. Due to delays in the pass-through of commodity inflation, the EBITDA margin may fall.
Revenues are predicted to fall by 20% year over year due to fewer volumes. Due to price increases, realization is expected to increase by 6%. Due to lower scale and delays in commodity inflation pass-through, the EBITDA margin may fall.
Emkay Global has initiated a buy call on Hero MotoCorp with a target price of Rs 3,790, implying a 35 percent upside potential. It is currently trading at Rs 2801.
Emkay Global has initiated a buy call on TVS Motor with a target price of Rs 780, implying a 43 percent upside potential. TVS Motor is currently trading at Rs 544.
With volume up 6% year over year and realization up 11%, revenue growth should be strong. Despite a drop in the home market, volume increased because to a 46 percent increase in exports. Due to delays in the pass-through of commodity inflation, the EBITDA margin may fall.
Atul Auto
Emkay Global has initiated a buy call on Atul Auto with a target price of Rs 300, implying a 36 percent upside potential. It is currently trading at Rs 221.
A 10% year-over-year rise in volume could help sustain revenue growth. Due to delays in the pass-through of commodity inflation, the EBITDA margin may fall, according to the brokerage.
“JLR’s GBP revenue is likely to fall 13% yoy to GBP3.8bn, due to lower volumes (-15%). EBITDA margins should contract by 590bps to 5.2%, due to negative operating leverage and the absence of furlough benefits. Standalone revenue should grow strongly by 94% to Rs187.7bn, driven by higher volumes (55%) and realization (25%). EBITDA margin should expand 480bps to 5.9% on a better scale,” the brokerage has said.
Maruti Suzuki
Revenues should increase by a small amount, owing to higher realizations (6 percent yoy). Volumes fell 3% year over year. Due to lower scale and delays in commodity inflation pass-through, the EBITDA margin is expected to decline.
The above stocks are picked from Emkay Global Financial Services’ latest report on the auto sector. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies Pvt Ltd, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only.
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The subscribers of EPFO have been relieved as they would get their pension without delay. Notably as part of the EPFO launched “Nirbadh Sewa”- subscribers would be getting the pension payment order on the retirement date.
In the latest tweet dated October 6, 2021, the social security administering organisation via its official twitter handle said “”NIRBADH SEWA by EPFO – Subscribers to get Pension Payment Order (PPO) on the Date of Retirement.”
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Asian Paints, founded in 1945, is a Large Cap firm in the Building Materials industry with a market capitalization of Rs 308,118.31 crore. In the most recent quarter, the company generated a net profit after tax of Rs 576.82 crore.
The stock returned 169.1 percent over three years, compared to 70.85 percent for the Nifty 100. Asian paint’s robust distribution network of dealers and merchants is one of its greatest assets. It has aided the company in developing a balanced mix of urban and rural sales over the years. This network is at the heart of the home improvement industry’s expansion. More dealers signed up for multi-product distribution last quarter.
Asian Paint is one of India’s most popular paint brands. Asian Paints grew into a corporate force and India’s biggest paint firm over the course of 25 years. By size, Asian Paint is India’s largest paint company.
Asian Paints Ltd. has declared an equity dividend of Rs 17.85 per share in the last year. This translates to a dividend yield of 0.54 percent at the current share price of Rs 3296.30.
Only 1.73 percent of trading sessions in the last 16 years had intraday drops of more than 5%. The stock returned 206.49 percent over three years, compared to 72.05 percent for the Nifty 100 index. Berger Paints (India) Ltd., founded in 1923, is a Large Cap firm in the Building Materials industry with a market cap of Rs 79,753.04 crore.
Berger Paints (India) Ltd. has issued an equity dividend of Rs 2.80 per share in the last year. This translates to a dividend yield of 0.34 percent at the current share price of Rs 832.20.
Berger Paints India Limited is the country’s second-largest paint firm, with a track record of being one of the country’s fastest expanding. With over 3450 employees (excluding subsidiaries) and a nationwide distribution network of over 25,000 dealers.
Kansai Nerolac Paints Ltd., founded in 1920, is a Large Cap company in the Building Materials industry with a market cap of Rs 34,803.44 crore. The stock returned 63.29 percent over three years, compared to 72.05 percent for the Nifty 100 index. Only 2.03 percent of trading sessions in the last 16 years had intraday drops of more than 5%.
Kansai Nerolac Paints Ltd. has issued an equity dividend of Rs 5.25 per share in the last 12 months. This translates to a dividend yield of 0.82 percent at the current share price of Rs 640.00.
In 1986, GNPL inked a TAA in Osaka with Japan’s Kansai Paints Co. Ltd. for the manufacture of Cathodic Electrodeposition Primer and other advanced coatings for automotive applications. GNPL was the first company in India to implement this technology.
Only 1.49 percent of trading sessions in the last 16 years had intraday drops of more than 5%. The stock returned 43.84 percent over three years, compared to 90.24 percent for the Nifty Midcap 100. Akzo Nobel India Ltd., founded in 1954, is a Mid Cap business in the Building Materials category with a market capitalization of Rs 10,230.63 crore.
In 2012, three additional AkzoNobel Group firms operating in India were united under the AkzoNobel India Limited umbrella, making it India’s only integrated Paints and Coatings company with a relatively limited Chemicals portfolio. In 2018, the company’s chemicals division was spun off, leaving the company only focused on paints and coatings.
Akzo Nobel India Ltd. has declared an equity dividend of Rs 50.00 per share in the last 12 months. This equates to a dividend yield of 2.23 percent at the current share price of Rs 2240.00.
The company has enough cash on hand to cover its contingent liabilities. For the first time in five years, the company is debt-free. Indigo Paints Ltd., founded in the year 2000, is a Small Cap business in the Building Materials sector with a market capitalization of Rs 11,898.67 crore.
Indigo Paints changed its brand in response to changing times and trends, showing the company’s fresh way of thinking. It merged all of its many brands for different product categories into a single umbrella brand called “INDIGO” a few years ago.
Sales Turnover: Rs 723.32 Cr
India Nippon Electricals Ltd., founded in 1984, is a Small Worth business in the Auto Ancillaries sector with a market cap of Rs 822.51 crore. Nippon Paint, headquartered in Osaka, is the only paint solutions provider for all types of surfaces. In some criteria, Nippon Paint India is the best paint brand in India. Stock returned -13.43 percent over three years, compared to 88.19 percent for the Nifty Smallcap 100. Over a three-year period, the stock returned -13.43 percent, while the Nifty Auto delivered investors a 19.93 percent return.
India Nippon Electricals Ltd., founded in 1984, is a Small Worth business in the Auto Ancillaries sector with a market cap of Rs 822.51 crore. The number one paint company in Asia, as well as one of the world’s top paint manufacturers.
Shalimar Paints, founded in 1902, is a Small Cap business in the Building Materials sector with a market capitalization of Rs 527.53 crore. For the past three years, the company has posted a negative return on investment (ROI). The stock returned 18.25 percent over three years, compared to 88.19 percent for the Nifty Smallcap 100. 3.54 percent decrease in sales. The company suffered revenue contraction for the first time in recent 3 years.
| Paint Company Stock | Price | Market Cap | Sales Turnover in Cr (Yearly) | Dividend Yield |
| Asian Paints | 3,295.10 | 3.16LCr | Rs 18516.86 | 0.54%. |
| Berger Paints India | 832.90 | 80.89TCr | Rs 6021.41 | 0.34%. |
| Kansai Nerolac Paints | 640.50 | 34.52TCr | Rs 4690.00 | 0.82%. |
| Akzo Nobel India | 2,239.95 | 10.20TCr | Rs 2421.40 | 2.23%. |
| Indigo Paints | 2,517.40 | 11.98TCr | Rs 723.32 | – |
| Shalimar Paints | 97.70 | 531.33Cr | Rs 325.56 | – |
Investors must therefore exercise due caution. Greynium Information Technologies and the author are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only.
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The Bombay High Court on Thursday dismissed the petition by promoters of Srei Group challenging the move by the Reserve Bank of India to supersede the boards of Srei Infrastructure Finance (SIFL) and Srei Equipment Finance (SEFL)
The petition was filed by promoters of Srei Infrastructure Finance and Srei Equipment Finance to stay the insolvency proceedings initiated by the RBI. It was taken up for hearing by the Bombay High Court on Thursday and it said it is not inclined to entertain the matter after hearing both the sides.
Also read: Srei Infra and Equipment Finance have debt obligations of over ₹29,000 crore
The RBI had on October 4 superseded the boards of SIFL and SEFL, paving the way for their resolution.
It has also appointed Rajneesh Sharma, Ex- Chief General Manager, Bank of Baroda as the Administrator of the companies under Section 45-IE (2) of the RBI Act. The RBI can now move the National Company Law Tribunal to initiate proceedings against the two companies.
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Reserve Bank of India, Chandigarh invites e-Tender from eligible and willing firms for undertaking ‘Repair of the underground water storage tank at Bank’s residential premises at Sector 30A, Chandigarh.’ The work is estimated to cost ₹9.00 lakh. 2. This is an ‘Open E-tender’. Only those firms, who are registered on MSTC portal will be able to take part in the Tender process. The tender document is available on website www.rbi.org.in for download. 3. Tender shall be submitted online in two parts. Part-I of the tender will contain the Bank’s standard technical and commercial conditions for the proposed work, which must be agreed to by the tenderers. Part-II of the tender will contain Bank’s schedule of quantities and tenderer’s price bid to be submitted online. 4. The firms fulfilling the eligibility criteria and desirous of being considered for award of the work should upload all the required documents at www.mstcecommerce.com/eprochome/rbi on or before November 02, 2021 till 11:00 AM. 5. Part-I of the tender will be opened at November 02, 2021 at 11:30 AM on MSTC website. The timeline of the tender is as follow:
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Founded in 2009 by husband-wife duo Bipin Preet Singh and Upasana Taku, MobiKwik is waiting to get listed this year along with several other fintech giants including Paytm and PolicyBazaar. Ahead of the ₹1,900-crore IPO, MobiKwik’s co-founder, chairperson and COO Upasana Taku gaveBusinessLine a glimpse into what’s ahead for the payments company and its roadmap post the listing.
How do you plan to deploy the funds raised through the IPO?
We are planning to infuse it back into the company. We will be investing in user and merchant acquisition. We will also be investing more in brand marketing, which we were a bit shy about in the past. Given how large both payments and ‘buy now pay later’ (BNPL) opportunities are we will be investing there as well.
Do you plan to enter any other business streams in financial services?
We already have an insurance distribution licence from IRDAI. We have teams, capabilities and products in partnership with insurance companies on our platform. We have an investment advisory licence from Sebi and direct mutual fund investment products, liquid funds, deposits, gold on our platform. So, we are building insurtech and investment tech as smaller business streams, but they are still nascent. We expect them to grow in 2-3 years.
MobiKwik: Employee stock options to mint several millionaires post IPO
From a larger perspective, 70 per cent of the revenue growth today comes from consumer payments, 20 per cent from the BNPL business, and 10 per cent from the cross-sell business. After 2-3 years, BNPL and payments will bring 40 per cent and 50 per cent revenue, respectively, because the margins in consumer payments is 1.8 per cent while it is about 4.5 per cent for every cycle in the BNPL business. That’s why we expect the revenue share to grow faster in BNPL.
How big is the BNPL opportunity in India?
In India, especially, given that we have only 35 million credit card customers and 250-300 million digitally paying users, this gap is already big. In the next five years, we’ll have 700 million digitally paying users and still only 40-50 million credit card users. BNPL is a very large opportunity. Industry reports say it will be a $50-60-billion opportunity; I feel it will be a $100-billion opportunity in the next two years. We are focused on using our structural advantages to build the ‘buy now, pay later’ category.
Other sectors and traditional banks are also trying to sell digital financial services, especially BNPL. How will MobiKwik strategise differently?
It’s a big market and there will be many people trying to enter. There are some big contenders. Firstly banks and NBFCs, but I don’t see any major competition from them. Most of their distribution is via branches and direct sales agents. It’s completely physical in nature and their operating cost is very high, so they can’t do ₹3,000-5,000 credit products because they can’t make money, given the higher costs.
Digital payments to recover by year end: MobiKwik CEO
It’s not the same for MobiKwik; we are a payments platform with millions of users, and how they are spending the money is in our records. Also, as a wallet and a licensed entity, we have to do KYC [know-your-customer verification] too. We are well poised to leverage this trend of BNPL. Being fully digital we can make money even on a 500-rupee note, apart from having a robust user base.
What about the new-age fintechs?
Other younger and smaller fintech start-ups, much like us, have learned to use AI [artificial intelligence] and ML [machine learning] to track alternative and abstract data points but they have significant challenges when it comes to getting scale. We have 108 million registered users. They don’t have KYC-ed users while we have 45 million KYC-ed users. That’s going to take time and billions of dollars for them to reach. We also have 3.5 million merchants. We have a card through which users can pay anywhere, we have 75,000 e-commerce platforms and apps.
Currently, we have 23 million users for our ‘buy now, pay later’ product. Our end goal is to have a bigger active BNPL user base than any credit card company in India. The top ones have 12-13 million customers as of now. Though our pre-approved user base is already large, we want to convert that to active users quickly.
When do you see the company breaking even?
All our businesses are contribution-margin profitable over the last two years. In the coming few years, too, we plan to continue investing; in the short term the losses will go up, but on a fixed cost the contribution margin will still be profitable. Overall, EBITDA-level profitability is still a few years away.
It was alleged in March that MobiKwik data was breached. Why didn’t the company disclose this on its own before it became known through some ethical hacker?
Firstly, our public statement is out there on our social media profiles where we have denied any breach in the system and even appointed a forensic auditor, and they too didn’t find any breach.
In terms of long-term user security and platform strength and privacy, we have beefed up our teams and quarterly audit processes for all our technology infrastructure. I want to assure you that we have quarterly, semi-annual and annual audits because we are an RBI-regulated entity. We also have licences from IRDAI and Sebi, and have to regularly send reports. After becoming a listed company, of course, the scrutiny bar goes up and we are preparing for that.
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Investment
oi-Vipul Das
Karur Vysya Bank has revised interest rates on its domestic term deposit scheme which will be applicable from 08.10.2021. This private sector bank allows fixed deposits with regular interest payout options i.e. (Half-yearly / Quarterly / Monthly) and with a maturity tenure ranging from 15 days to 10 years. A fixed deposit account at Karur Vysya Bank can be opened by resident Indian individuals, HUF, Trusts, Partnership firms, Companies, Associations, etc with a minimum amount of Rs 100 with no upper limit. The term deposit scheme of the bank also allows nomination facility, loan against deposit facility, premature close facility, and so on. Now let’s check out the latest interest rates on fixed deposits of the said bank.
For a deposit amount of less than Rs 2 Cr, Karur Vysya Bank is now promising the below-mentioned rates on domestic deposits made by regular citizens.
| Time Bucket | Revised Rate (Less than Rs. 2 Crores) (w.e.f. 08.10.2021) |
|---|---|
| 7 Days to 14 days | 3.25% |
| 15 Days to 30 days | 3.25% |
| 31 Days to 45 days | 3.25% |
| 46 Days to 90 days | 3.25% |
| 91 Days to 120 Days | 3.50% |
| 121 Days to 180 Days | 3.75% |
| 181 Days to 270 days | 4.00% |
| 271 Days to less than 1 year | 4.25% |
| 1 year to less than 2 years | 5.15% |
| 2 years to less than 3 years | 5.25% |
| 3 years to less than 5 years | 5.25% |
| 5 years and above | 5.60% |
| KVB – Tax Shield | 5.75% |
| Source: Bank Website |
Senior citizens will continue to get an additional rate of interest of 0.50% on their deposits maturing in 1 year to less than 5 years. After the most recent adjustment made by the bank on fixed deposit interest rates, senior citizens will get an interest rate of 5.65% on deposits maturing in 1 year to less than 2 years and a 5.75% interest rate on deposits maturing in 2 years to less than 5 years.
| Time Bucket | Revised Rate (w.e.f. 08.10.2021) |
|---|---|
| 1 year to less than 2 years | 5.65% |
| 2 years to less than 3 years | 5.75% |
| 3 years to 5 years | 5.75% |
| KVB – Tax Shield Deposits | 5.75% |
| Source: Bank Website |
On Flexi term deposits the bank has also revised the applicable interest rate. With effect from 08.10.2021 Karur Vysya Bank is now promising an interest rate of 3.25% on Flexi term deposits maturing in 300 days. Under this deposit scheme, senior Citizen rates are not applicable to NRI and Senior Citizen deposits of up to Rs 3 Cr are allowed.
| Time Bucket | Revised Rate (w.e.f. 08.10.2021) |
|---|---|
| 300 days | 3.25% |
Story first published: Thursday, October 7, 2021, 14:06 [IST]
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Bank of Baroda (BoB) has announced a 25 basis points reduction in its home loan interest rates, with the minimum rate now starting at 6.50 per cent against 6.75 per cent earlier.
This special rate, which is effective from October 7, 2021, till December 31, 2021, is available for customers applying for fresh loans and those seeking loan transfer or refinancing their existing loans.
The public sector bank, in a statement, said it has reduced the home loan interest rate with the onset of festive season and to make home buying more affordable for customers.
“Nil processing fee on home loan was already on offer and has been extended till December-end 2021,” the Bank said.
HT Solanki, GM- Mortgages & Other Retail Assets, BoB, said with this reduced rate of interest, BoB’s home loans are now available at competitive rates across categories for a limited period.
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Bankers will have to make an immediate provision of over Rs 5,000 crore, according to the rules.
According to the Reserve Bank of India’s (RBI’s) norms, Srei exposure will be treated as substandard asset, which is the first stage of non-performing asset (NPA). Banks will now have to set aside around 15 per cent provision for secured loans while it would be higher for unsecured credit.
Srei loans were stressed for many quarters, but lenders could not classify them as NPAs due to restrictions by the tribunals. However, they have made provisions for the Srei loans under general and Covid provisions.
Based on the results of a forensic audit, banks may have to even make 100 per cent provisions if the accounts are treated as fraud.
Promoters move court
Meanwhile, Srei Group promoters have moved the Bombay High Court challenging Reserve Bank of India’s decision to supersede the board of two group companies, in preparation for sending them to bankruptcy courts.
Srei group promoters are seeking stay on any insolvency proceedings at group companies Srei Infrastructure Finance Ltd and Srei Equipment Finance Ltd, whose board the regulator sacked and appointed an administrator.
The promoters are also seeking stay on the appointment of the administrator. On October 4, the banking regulator superseded the board of directors of Kolkata-based Srei Infrastructure Finance and Srei Equipment Finance and said that it will initiate insolvency proceedings with the National Company Law Tribunal (NCLT). The RBI move makes Srei the second non-bank lender to be referred to the bankruptcy courts after DHFL.
The RBI cited governance concerns and defaults by the company and appointed Rajneesh Sharma, former chief general manager, Bank of Baroda as an administrator of the company.
In June 2021, Srei companies reported to the exchanges that the RBI inspection had flagged loans worth Rs 8,576 crore as related party loans. These accounted for nearly 30% of the group’s consolidated debt.
The loans
Srei Infrastructure, and its subsidiary Srei Equipment Finance, together owe lenders and debenture holders a total of Rs 30,000 crore. Kolkata-based UCO Bank is the lead lender, with more than Rs 2,000 crore of exposure. State Bank of India (SBI)’s exposure to the group is also more than Rs 2,000 crore.
The bank loans have turned non-performing assets after the end of the September quarter.
The company had earlier announced that Arena Investors, Makara Capital and others had evinced interest to invest in the company to the tune of Rs 2,200 crore. The company had formed a strategic coordination committee to coordinate, negotiate and conclude discussions with the investors.
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