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HDFC Bank | IndusInd | DCB: RBI allowing promoters to have 26% stake to benefit HDFC Bank, IndusInd & DCB: Siji Philip, BFSI News, ET BFSI

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“RBI has remained silent on the NBFCs getting converted into banks and also large corporates getting more into the banking game. We feel that the RBI is taking a more calibrated approach and looking at how NBFCs are getting attuned to larger scale regulations which were announced earlier,” says Siji Philip, Senior Research Analyst, Axis Securities.

The RBI’s new circular on bank ownership has come out allowing 26% stake to promoters. Already reports are coming in of the Hindujas looking at increasing their stake in IndusInd and a $1.1 billion financial chest for that sense being readied; HDFC Limited now has headroom when it comes to HDFC Bank. Bandhan Bank there could see action as well. Your view?.
Whatever steps were announced on Friday in terms of the promoter shareholding definitely is a positive because there was uncertainty and some expectations were building up. Raising the promoter stake from 15% to 26% would definitely be a positive, more specifically for banks like IndusInd where the promoters have earlier shared their intention of increasing their stake. In the case of HDFC Bank, HDFC Limited can increase its stake, Aga Khan promoters can raise their stake in DCB. So for these kinds of banks, it is definitely a positive step.

There are certain guidelines which have been announced and the recommendations are on track on gradual calibration with the entire financial industry. RBI has remained silent on the NBFCs getting converted into banks and also large corporates getting more into the banking game. We feel that the RBI is taking a more calibrated approach and looking at how NBFCs are getting attuned to larger scale regulations which were announced earlier.

RBI clearly is still reluctant on issuing bank licenses to large corporates. To add to that, payment banks are also allowed to convert into SFBs but only after a gap of almost five years. With large numbers of fintechs and SFBs now, is there a need to issue more licenses?
We feel that RBI has always been about granting banking licenses and if the payment banks get listed, definitely a watch period is required to see how things pan out, how the entire financial system gets attuned to the various new entities which are coming in with the likes of fintechs.

Just a three-year proposal, which was given in the earlier recommendation, would be considered a slightly shorter duration compared to a five-year duration where one can see the gradual working and how it plays out in the financial system. That would be one of the key reasons why the five-year period has been kept rather than switching to a three-year period.



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Omicron Covid variant: Policymakers, markets will shoot from the hip without data, says Uday Kotak

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With the Omicron variant scare gripping the world, people, markets, and policymakers worldwide will shoot from the hip in crisis management without data, Uday Kotak said on Monday.

“Omicron variant scare today, something else tomorrow. People, markets, and policymakers worldwide will shoot from the hip in crisis management without data. Welcome to the ‘never’ normal world we live in!” Kotak tweeted.

Kotak’s comment comes even as many countries have once again begun shutting down cross-border travel. Currency and stock markets around the world crashed on Friday as a knee-jerk reaction.

Meanwhile, WHO designated the variant B.1.1.529 a variant of concern, named Omicron, on the advice of WHO’s Technical Advisory Group on Virus Evolution (TAG-VE). This decision was based on the evidence presented to the TAG-VE that Omicron has several mutations that may have an impact on how it behaves, for example, on how easily it spreads or the severity of illness it causes.

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Paytm Payments Bank rolls out ‘Paytm Transit card’

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Paytm Payments Bank (PPBL) has rolled out a ‘Paytm Transit Card’, aiming to equip millions of Indians with one physical card for all their everyday needs — from travel in metro, railways, State-owned bus services, toll & parking charges to payments at offline merchant stores, online shopping and more.

The first phase of rollout is being launched in collaboration with Hyderabad Metro Rail, Ahmedabad Metro and the Delhi Airport Express Line.

The card linked to the Paytm Wallet can be used for all transactions of a user — from travel in metros, buses and trains, to pay toll and parking charges, payment at offline and online stores to withdrawal of cash from ATMs.

Users can top up the Paytm Wallet account to use the card and do not need to maintain any separate account. Satish Gupta, MD & CEO of Paytm Payments Bank said, “The launch of the Paytm Transit Card will enable millions of Indians with the power of one single card that takes care of all transportation as well as banking needs. This will drive financial inclusion and accessibility for all. We are glad to be a part of the NCMC initiative and will continue to work towards the digitisation of the transit ecosystem in the country while driving the adoption of smart mobility solutions.”

With this launch, users won’t have to worry about carrying multiple cards for different purposes and just use the Paytm Transit Card for all their payments.

The launch of the Transit Card is aligned with the firm’s initiatives to bring out products that make banking and transactions seamlessly operable for all Indians. ‘Paytm Transit Card’ would help promote National Common Mobility Card (NCMC) and the Digital India initiative further.

How it works

The physical card will be delivered at the doorstep of the user or can be purchased at designated sales points. The prepaid card is directly linked to the Paytm Wallet, where users can just top-up the wallet to use the transit card and do not need to create any separate account.

The Paytm Transit Card is already live in the Delhi Airport Express line and Ahmedabad Metro. With the Paytm Transit Card, people can use the same card in these metros as well as other metro stations across the country.

Paytm Transit Card is the firm’s second product in the mass transit category after the success of PPBL FASTags. .

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Bharat Financial top management resignations: Board defers relieving them till completion of review, says IndusInd Bank

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The top management of Bharat Financial Inclusion Ltd – Shalabh Saxena and Ashish Damani have resigned from their positions, but the board has decided to defer the consideration to relieve them until an ongoing review is completed, IndusInd Bank said on Monday.

A review of disbursal of nearly 84,000 loans without customer consent due to a technical glitch at BFIL is going on at the microfinance company.

“Shalabh Saxena and Ashish Damani, currently employed with BFIL in the capacity of the Managing Director and CEO and the Executive Director and CFO, respectively, have tendered their resignations pursuant to emails addressed to the Chairman of the Board of BFIL on November 25, 2021,” the private sector lender said in a stock exchange filing on Monday.

The announcement comes after Spandana Sphoorty (SSFL) had on November 22 announced the appointment of Saxena as its new Managing Director and CEO and Damani as the President and Chief Financial Officer.

BFIL is the wholly-owned microfinance subsidiary of IndusInd Bank.

Both of them have offered to assist in the ongoing review of transactions related to BFIL, for which the bank has appointed an international audit firm to conduct an independent review and ascertain the veracity of the anonymous complaints, the bank further said.

“The Board of BFIL has deferred consideration of the decision to relieve them until the completion of the ongoing review,” IndusInd Bank said.

The lender has nominated J Sridharan as Executive Director on the Board of BFIL and appointed Srinivas Bonam to oversee the day-to-day functioning of BFIL, it further said.

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“BUY” This Mid Cap IT Stock With A Target Price of Rs. 1200: Axis Securities

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Q2FY22 results of Cyient Ltd

Axis Securities in its research report has said that “Cyient reported robust results in Q2FY22 with revenue for the quarter at Rs 1,112 Cr, improving by 4.6 % QoQ and 11.2% YoY. Operating Margins expanded by 90bps QoQ to 15.5%. Operating margins of the Services segment grew by 90bps QoQ and stood at 15.5%. DLM margins stood highest at 6.8%, advancing from 5.6% in the quarter before and were driven by the company’s strong execution during the quarter. The company’s Net profit for Q2FY22 stood at Rs 121 Cr, registering a growth of 5.5% QoQ. The management expects double-digit revenue growth for FY22 with the Communications growth to be led by Network Transformation, E&U (to be benefited from IG Partners acquisition), and Transportation (to be led by the Rail).”

Buy Cyient Ltd with a target price of Rs. 1200

Buy Cyient Ltd with a target price of Rs. 1200

The brokerage has claimed that the company’s “DLM business is expected to grow in the range of 15% to 20% and Operating Margins to improve by 250bps-300bps. The deal pipeline continues to look healthy at $63 Mn (6 deals in the pipeline). Growth in key accounts and a few large deal wins (4 key deals in fibre, wireless, system integration, and 5G rollout) and accelerated deployment of 5G led segment significantly contributed to the Communication vertical’s growth. The company’s outlook remains positive, supported by robust investments in technology-led network transformation and accelerated deployment of broadband and wireless infrastructure. We recommend a BUY rating on the stock with a target price of Rs 1,200/share.”

Disclaimer

Disclaimer

The stock has been picked from the brokerage report of Axis Securities Limited. 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.



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Buy Reliance Industries For A 20% Upside In The Stock, Says Motilal Oswal

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Buy Reliance Industries For A 20% Upside, Says Motilal Oswal

“Following Bharti and VIL, RJio finally took 20% tariff hike effective 1st Dec’19. The success of JioPhone, JioFiber, and new digital investments should offer steady growth opportunities. We expect revenue CAGR of 10% and EBITDA growth of 16% over FY21-24E on the back of an 8% subscriber CAGR over FY21-24E,” the brokerage has said.

Upbeat on retail story

Upbeat on retail story

Motilal Oswal also remains upbeat on the retail story of Reliance Industries. Reliance Retail’s consistent performance over the last 4-5 years has been stellar and offers huge scope of growth, given its: a) strong growth of over 25% CAGR; b) enhanced digital capabilities in JioMart, Ajio, among others; and c) new businesses/verticals.

“The GoI has already raised the gas price ceiling to USD6.13/mmbtu for 2HFY22. Considering the current high gas price environment, the management believes that the subsequent revision in the ceiling would be even higher. Thus, sustained high production and improved realization would result in better profitability in the segment in the near future,” the brokerage has said.

Valuation of Reliance Industries

Valuation of Reliance Industries

According to Motilal Oswal, the Consumer biz – RJio and Reliance Retail are richly valued given their strong growth potential.

“We see price hikes in the Telecom business and revival in the Retail business – led by strong growth potential in JioMart – as key levers for the stock over the next two years. Reliance Industries is trading at 11.9x FY23E EV/EBITDA and 19.2x FY23E P/E. Using SOTP, we value the stock at Rs 2,900 and reiterate Buy,” the brokerage has said.

The shares of Reliance Industries was last seen trading at Rs 2,477 on the NSE.



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“BUY” This Small Cap Stock With A Target Price of Rs. 1,163 Says Geojit

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Q2FY22 results of Power Mech Projects Ltd

According to the brokerage the company’s “Q2FY22 revenue grew by 56.2% YoY to Rs539cr, however, it was below our estimate as the execution was largely impacted due to the rainy season. While Civil and Erection segments witnessed strong execution with a growth of 121% YoY/117% YoY. The other verticals like O&M and Electrical division registered a growth of 29% & 21% respectively. Non-power segment continues to remain the growth driver for the company.”

The brokerage has also said that “The management expects the execution to pick-up in H2FY22 and has guided to achieve a top-line of Rs2,600cr in FY22. Since most of the projects are in the execution stage, we expect revenue to grow at a CAGR of 28% over FY21-FY23E.”

Geojit has reported in its research report that “During the quarter EBITDA margin improved to 10.7% YoY (Vs. -12.3% in Q2FY22) on account of 1742bps YoY improvement in gross margin to 29.1%. Given an expectation of higher execution in H2FY22, the management highlighted that EBITDA margin to normalize to 12.5 to 13% in FY22. Additionally, the shift in revenue mix to high margin O&M business and growth in non-power business also supports the margin estimate. We, therefore, improved the margin estimate to 12.1%/12.5% for FY22/FY23 respectively. The PAT stood at Rs 27cr (Vs. Rs55cr loss in Q2FY21).”

Buy Power Mech Projects Ltd With A Target Price of Rs. 1,163

Buy Power Mech Projects Ltd With A Target Price of Rs. 1,163

According to the brokerage “Despite the company not bagging any orders in Q2FY22, the order book remains robust at Rs15,809cr (includes MDO orders of Rs9,294cr). The total order book is 6.5x trailing twelve months revenue which provides strong revenue visibilities in the coming years. The management is expected to add Rs 3,500cr to Rs4,000cr of orders in FY22. The company is looking for opportunities worth Rs10,000cr in energy, infra, metals, railway, mineral sectors. The management hopes to finalise two major projects on mineral processing EPC orders from NMDC in the coming quarters.”

The brokerage in its research report has said that “With a strong order book, diversification to non power segment and increased focus in the O&M segment, we expect the company to be in its growth trajectory in FY22. We, therefore, revise our rating to Buy and value the stock at a P/E of 7.5x FY23E EPS.”

Disclaimer

Disclaimer

The stock has been picked from the brokerage report of Geojit Financial Services Limited. 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.



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PNB puts up National Steel & Agro Industries for sale to recover Rs 200cr dues, BFSI News, ET BFSI

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State-owned Punjab National Bank (PNB) has put up a Madhya Pradesh-based steel and agriculture company for sale to recover its outstanding of nearly Rs 200 crore. The National Steel and Agro Industries Ltd has a balance outstanding of Rs 199.90 crore to the bank.

“We intend to place the account for sale to ARCs/NBFCs/other banks/FIs, on the terms and conditions stipulated in the bank’s policy, in line with the regulatory guidelines,” PNB said in an auction notification.

The lender has set the reserve price (on cash basis) at Rs 95 crore for the sale process.

For the prospective bidder to expedite the process of due diligence exercise and for verification purposes of the buyer, the bank said it will make all possible efforts to bring copies of documents at one place.

However, the bank at its sole discretion may withdraw the account offered for sale, without assigning any reasons, it added.

PNB has set December 8 as the last date for completion of due diligence exercise. The last date of submission of binding bids is December 9, while the date for opening of bids is fixed as December 10, 2021. PTI KPM MR MR



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Cryptocurrency exchange Coinstore enters India despite pending curbs on trade, BFSI News, ET BFSI

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By Nupur Anand

MUMBAI – Singapore-based virtual currency exchange Coinstore has begun operations in India at a time when the Indian government is preparing legislation to effectively bar most private cryptocurrencies.

Coinstore has launched its web and app platform and plans branches in Bangalore, New Delhi and Mumbai which will act as its base in India for future expansion, its management said.

“With nearly a quarter of our total active users coming from India, it made sense for us to expand into the market,” Charles Tan, head of marketing at Coinstore told Reuters.

Asked why Coinstore was launching India despite the pending clampdown on cryptocurrencies, Tan said: “There have been policy flip-flops but we hope things are going to be positive and we are optimistic that the Indian government will come out with a healthy framework for cryptocurrencies.”

The New Delhi government is planning to discourage trading in cryptocurrencies by imposing hefty capital gains and other taxes, two sources told Reuters earlier this month.

It has said that it will allow only certain cryptocurrencies to promote the underlying technology and its uses, according to a legislative agenda for the winter session that is set to start later this month.

Tan said Coinstore plans to recruit about 100 employees in India and spend $20 million for marketing, hiring and development of crypto-related products and services for the Indian market.

Coinstore is the second global exchange to enter India in recent months, following in the footsteps of CrossTower which launched its local unit in September.

The price of the world’s biggest cryptocurrency, Bitcoin, has more than doubled since the start of this year, attracting hordes of Indian investors.

Industry estimates suggest there are 15 million to 20 million crypto investors in India, with total crypto holdings of around 400 billion rupees ($5.33 billion).

Coinstore also plans to expand into Japan, Korea, Indonesian and Vietnam, according to Tan.

($1 = 75.0400 Indian rupees)

(Reporting by Nupur Anand; Editng by Mark Heinrich)



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Depositors of 16 stressed cooperative banks to get up to Rs 5 lakh, BFSI News, ET BFSI

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New Delhi, Nov 28 (PTI) Customers of 16 stressed cooperative banks will get up to Rs 5 lakh deposit insurance cover on Monday by Reserve Bank of India’s subsidiary DICGC as part of its mandate under a new law. The Deposit Insurance and Credit Guarantee Corporation (DICGC) had earlier prepared a list of 21 banks but five, including Punjab & Maharashtra Co-Operative Bank (PMC Bank), are out of the list as they are either in merger process or out of the moratorium.

Parliament in August passed the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021 ensuring that account holders get up to Rs 5 lakh within 90 days of the RBI imposing a moratorium on the banks.

Following enactment, the government has notified September 1, 2021 as the date on which the provisions of the Act would come into force. The mandated 90 days from the notified date comes to an end on November 29, 2021.

The depositors of these banks, who have not yet submitted their claims, are advised to contact the respective banks, a public notice from DICGC said.

“The claims should be supported by officially valid documents of identity and written consent to receive the amount lying in credit of their deposit account (willingness declaration) subject to a maximum of Rs 5 lakh along with alternate bank account details into which the said amount may be credited,” it said.

Depositors submitting valid documents, as mentioned above, will be paid by credit to the alternate bank account specified by depositors or on their consent, to their Aadhaar linked bank account, it said.

For the second phase, the last date for submission of documents is December 10, 2021 while date of payment is December 31, 2021, it added.

Besides PMC Bank, depositors of Hindu Co-Op Bank Ltd, Pathankot of Punjab, Rupee Co-Operative Bank Ltd and Needs Of Life Co-Operative Bank Ltd from Maharashtra and Bidar Mahila Urban Co-Op Bank Ltd of Karnataka are out of this.

It is to be noted that the RBI had in June given in-principle approval to a consortium of Centrum Financial Services and fintech startup BharatPe to acquire the stressed PMC Bank.

Clearing decks for the takeover, the RBI in October gave licence for small finance bank to the consortium. Recently, the DICGC said there may be a need to invoke the provisions of Section 18 A (7) (a) of the Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, 2021.

As per the Section 18 A (7) (a) of the Act, if a stressed bank is under the resolution process, the period for disbursement of Rs 5 lakh can be further extended by 90 days.

Last year, the government increased the insurance cover on deposits by five times to Rs 5 lakh. The enhanced deposit insurance cover of Rs 5 lakh came into effect from February 4, 2020.

Every bank used to pay 10 paise as an insurance premium per Rs 100 of deposit. It was raised to 12 paise per Rs 100 in 2020. It cannot be more than 15 paise at any point in time per Rs 100 deposit.

It is to be noted that the enhanced deposit insurance cover of Rs 5 lakh is effective from February 4, 2020. The increase was done after a gap of 27 years as it has been static since 1993. PTI DP MKJ



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