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PNB Housing Finance plans to raise Rs 35,000 crore debt as Carlyle deal in abeyance, BFSI News, ET BFSI

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PNB Housing Finance is now looking to raise Rs 35,000 crore debt, after facing legal hurdles in the Carlyle group deal, days after SAT gave a split verdict in the matter.

The company will seek shareholders’ nod in its annual general meeting (AGM) on September 3, 2021, PNB Housing Finance said in a regulatory filing.

The company said it will seek shareholders’ approval for further fund raising by way of debt issue.

“Shareholders’ approval is being sought in the 33rd AGM for further fund raising by way of debt issue and the shareholders are being requested to authorise the board of directors to offer, from time to time, the subscription of redeemable, secured/unsecured non-convertible debentures aggregating to Rs 35,000 crore in one or more tranches,” it said in the filing.

On Monday, Securities Appellate Tribunal (SAT) gave a split verdict in the company’s appeal to the court in the matter related to Rs 4,000 crore equity fund infusion led by its existing investor Carlyle group, and others through preferential allotment of shares and warrants.

Had the deal not stuck into regulatory and legal hurdles, the company would have been successful in raising the equity capital.

The Carlyle deal

The Carlyle-led deal was announced on May 31, in which a clutch of investors including former HDFC Bank MD&CEO Aditya Puri‘s family investment vehicle Salisbury Investments, were to infuse equity capital in PNB Housing. Puri is also a senior advisor for Carlyle in Asia.

However, the deal soon got into a controversy after a proxy advisory firm raised issues and said it would hurt the interest of the minority shareholders as well the promoter. It said the issue price of Rs 390 apiece was too low vis-a-vis the prevailing stock price.

Subsequently, Sebi asked the company to get the valuation of the issue price done from an independent registered valuer, while the company approached the SAT in June, citing it followed the Sebi guidelines on deciding on the price.

The SAT order

SAT in its order, by the two-member bench of Justice Tarun Agarwala and Justice M T Joshi said:”In view of the difference of opinion between the members of the bench “we direct the interim order dated 21st June, 2021 to continue till further order.” Prevalence of interim order means the company can’t disclose the results of the shareholders’ voting that happened on June 22, to know if they cleared the proposal with requisite majority or not.

The company has been looking to raise funds for the past few years. Also, the Reserve Bank of India earlier this year had barred PNB from infusing capital into its subsidiary.

The Carlyle matter is likely to reach the Supreme Court since the tribunal did not provide a clear verdict on the way forward for the deal.



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2 Smallcap Stocks To Buy From Motilal Oswal For Up To 30% Profits

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Motilal Oswal’s price target for NALCO

Current market price Target price Gains %
Rs 82.20 107 29.87%

The brokerage firm believes that the NALCO stock can hit as high as Rs 107, thereby taking the gains on the stock to as much as 30% from the current market price of Rs 82.45. National Aluminium Company is one of the top aluminium players in the country.

Motilal Oswal expects higher aluminum prices to absorb the cost shock and lead to improved margin in subsequent quarters. “With integrated mining operations, ational Aluminium Company is the best play on higher London Metal Exchange prices,” the brokerage has said.

Buy NALCO stock for a target price of Rs 107: Motilal Oswal

Buy NALCO stock for a target price of Rs 107: Motilal Oswal

The brokerage expect the tight demand-supply scenario, to lead to aluminium prices remaining at elevated levels over the coming months.

“The management has announced a 1mtpa alumina refinery expansion at a capital expenditure of Rs 64 billion, and expects to complete the project in FY23. Given its slow execution, we expect commissioning by FY24E. We value the stock on a SoTP basis at 5 times FY23E EV/EBITDA and at 0.75 times book value for growth CWIP to arrive at our target price of Rs 107. At the current market price, it provides an attractive dividend yield of 5%. We maintain our Buy rating,” the brokerage has said.

Shares of NALCO last closed at Rs 82.20 on the National Stock Exchange.

Whirlpool of India

Whirlpool of India

Brokerage firm, Motilal Oswal sees gains of nearly 32% on the stock of Whirlpool of India, which is engaged in the manufacture of Refrigerators, Washing Machines, Air Conditioners, Microwave Ovens etc.

Current market price Target price Gains %
Rs 2030 2650 31.82

According to Motilal Oswal institutional Equities, Whirlpool of India, is the only White Goods company in its coverage universe to meet its revenue expectations in the first quarter of QFY22.

Whirlpool of India: Buy with a price target of Rs 2,650

Whirlpool of India: Buy with a price target of Rs 2,650

“Whirlpool of India’s revenue growth doesn’t suggest any market share loss, providing us confidence in the strong White Goods franchise. On a relative basis, demand for Washing Machines and Refrigerators can potentially surprise over the next six months v/s a seasonal category like ACs, provided consumer demand holds good as the economy opens up. We cut our FY22E/23E EPS by 10% each to factor in higher than expected input cost pressures.

Our target price stands at Rs 2,650/share (earlier: Rs 2,900 per share) as we roll forward our valuation to Sep’23E EPS, but cut our target P/E to 50 times from 55 times earlier. We maintain our Buy rating,” the brokerage has said in its report.

Disclaimer

Disclaimer

Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. Investors should take care because the markets have hit a new peak. Please consult a registered professional advisor before you take a decision.



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About Rs 6.19 lakh crore Indian banks’ loans at climate change risks, BFSI News, ET BFSI

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The United Nations has flashed the Code Red signal on climate change for humanity with serious warnings for India. The recent floodings and landslides have also underscored the risk of climate change for the Indian industry and that banks that lend to them.

About Rs 6.19 lakh crore of debt at India’s leading financial institutions was at risk from extreme weather events such as droughts, floods and cyclones, according to non-profit CDP that has been lobbying banks to measure and disclose the risk climate change may pose to their portfolio.

The organisation has reached the figure based on information provided by some of the biggest lenders, including the State Bank of India and HDFC Bank.

The reason

Indian banks need to plan for a transition for a cleaner future even though they may be locked into funding coal projects for the near term. That’s because the government is still trying to do coal auctions and the industry is still reliant on coal. A lot of the iron and steel and the heavy industry use coal as a fuel. The encouraging sign is that the government has also initiated a plan for green hydrogen, according to CDP. Banks need to look at these newer technologies, newer methods of fuel substitution. All these things require policy support and public capital.

Bank initiatives

State Bank of India is talking about agriculture and allied agri-activities, HDFC Bank has done a scenario analysis in five states on agriculture, flooding and it’s its portfolio in sectors such as steel, cement, power, oil and gas.

SBI, which is facing concerns from shareholders and investors over its proposal to help fund the controversial Carmichael coal mine in northern Australia, valued its total climate risk at Rs 3.83 lakh crore. The bank said it may “indirectly face reputational risks, should it be involved in lending to environmentally sensitive projects which may have significant public opposition.”

SBI has tied up with the European Investment Bank to jointly pump Euro 100 million in equity financing into Indian small businesses focused on climate change and sustainability.

SBI already invests in a vehicle called Neev Funds for its impact investing objectives, and the two entities have created ”Neev Fund II” for taking ahead this partnership. This is one of the EIB’s first private equity investments in India.

Reserve Bank of India

The Reserve Bank of India (RBI) has been talking about green finance for many years and has taken various steps towards it. It has pushed, on the lines of corporate social responsibility for private companies, the concept of Environmental, Social and Governance (ESG) principles into financing aspects. In April this year, the RBI joined the Network for Greening the Financial System (NGFS) in April 2021. The NGFS, launched in December 2017 at the Paris One Planet Summit, is a group of central banks and supervisors from across the globe to share the best practices and contribute to the development of the environment and climate risk management in the financial sector. It is an institutional yet voluntarily membership, which will also help mobilise mainstream finance to support the transition toward a sustainable economy.

The status

India is the only major economy to not have a net-zero emissions target now, even China has a net-zero target. You need If India wants to be net-zero on emissions by 2050, on a broad calculation, its need to have 50% reduction by 2030, according to CDP. This is the action of the decade on climate change and if the opportunity is missed in this decade, it may be too late, it said, according to an S&P Global report.

UN climate change warning

The Indian Ocean is warming at a higher rate than other oceans, the latest report by the Intergovernmental Panel on Climate Change said on Monday, with scientists warning that India will witness increased heatwaves and flooding, which will be the irreversible effects of climate change.

For a country like India, some of the increase in heat waves is masked by aerosol emissions, and reducing that is important for air quality. We will also see an increase in the heatwaves, heavy rainfall events, and the further melting of glaciers, which will impact a country like India, more compound events from sea-level rise, which could mean flooding when tropical cyclones hit. These are some of the impacts which will not go away,” Friederike Otto, one of the authors of the report, said.



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We will be back issuing cards by mid-September, huge potential to tap: Shalini Warrier, executive director, Federal Bank

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Shalini Warrier, executive director, Federal Bank

Federal Bank recently launched its credit card and has US-based Fiserv as its technology partner to enable digitisation of its end-to-end card issuance and processing cycle. Shalini Warrier, executive director of Federal Bank, speaks to Rajesh Ravi about cards and future plans. Excerpts:

What is the current status of the credit card launched by the bank?
We launched our credit card in May. We started with our staff and then in June, we started issuing them to our customers. It is a complete digital product with no paperwork involved. We had gone in with an exclusive partnership with Mastercard. Unfortunately, they had a restriction placed on them by the RBI and we stopped issuing cards in July. We are currently working with Rupay and Visa to certify ourselves. We will be back issuing cards by mid-September.

Do you have any target in numbers for the credit card ?
In numbers, currently, we are around 25,000 and geared to upscale. There is immense potential in our existing customer base itself. We have around 80 lakh debit cards, and the typical ratio in the market is that for every 10 debit cards, there is one credit card. Building card numbers is easy, but there are risks from both the credit and technology sides. We want to take it in a gradual manner.

Federal Bank is one of the few in India to enable tokenization with Google Pay.
The most important thing is that you can just tap and pay. You don’t have to take out your credit card or debit card. We are the first bank to enable tokenisation with both Visa and Mastercard. It is a safe and secure system for customers and you don’t have to store your card number. Literally, it anonymizes card numbers and reduces the risk of leak.

Buy now pay later (BNPL) is gaining acceptance across the world. Where does the bank stand regarding this?
We are one of the few banks that offer debit card EMI products. We now offer it to our existing customers. We have not gone to new-to bank customers, and will do that in near future.

Fiserve is your technology partner for credit card. Do we see new products from this tie-up?
We are working with them and their technology platform is very advanced. It is a long-term partnership. There are so many innovations in the credit card sector and they have a very agile technology. We are working with them on the credit card EMI facility, balance transfer facility, etc.

The bank is launching a credit card when youngsters are moving to fintech platforms.
Penetration of credit cards in the Indian market is still very low. According to research, customers reach out to credit cards when the ticket size is large. Youngsters use debit cards when the ticket size is small. That is a reason why we went for credit cards. This is true for even e-commerce platforms. Credit cards are here to stay.

Are you planning any new technology-based products for your customers?
We have a promising partnership with two neobanks – Fi and Jupiter. Youngsters who are digitally native, the salaried millennial who wants all the convenience of the banking and at the same time wants the safety and security of a bank are best served through collaboration with our fintech partners.

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Yes Bank scouts for partner to set up asset reconstruction firm

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They must also have demonstrated ability to commit funds for investment or deployment in Indian companies or assets of approximately $0.5 billion.

Yes Bank on Wednesday said in a public notice that it is looking for a partner to join the bank in setting up an asset reconstruction company (ARC).

The prospective investor must be a player with experience in the distressed assets space, and it will be the lead partner in the ARC.

“The Prospective Investor would be the lead partner/sponsor of the ARC, with the Bank as the other significant partner/sponsor, for conducting the business of asset reconstruction in adherence with existing RBI (Reserve Bank of India) guidelines governing identification, sourcing and resolution of stressed financial assets,” Yes Bank said in the notice.

Ernst & Young sought expressions of interest from prospective investors on behalf of the bank.

Those putting in bids or their sponsors must have had minimum assets under management and funds deployed globally of at least $5 billion in the preceding financial year.

They must also have demonstrated ability to commit funds for investment or deployment in Indian companies or assets of approximately $0.5 billion.

Bidders must have global experience in the distressed assets space, and a track record of turning around or resolving non-performing assets (NPAs), apart from satisfying the central bank’s ‘fit and proper’ criteria.

Yes Bank MD & CEO Prashant Kumar declined to comment on the development or to share any further details on Wednesday.

After Yes Bank declared its financial results for Q4FY21, Kumar said that the bank had reached out to the RBI for its approval for the ARC.

While the RBI had not approved the plan for the ARC in the form it was initially envisaged, Yes Bank was continuing to pursue its plan for the company.

“Now we would be waiting for the report of the expert committee which has been set up by the Reserve Bank of India on the entire ARC framework and then we will move according to those guidelines,” Kumar had said.

Kumar had guided that in FY22, Yes Bank’s cash recoveries would be more than its slippages.

In Q1FY22, the lender reported a gross NPA ratio of 15.6%, up from 15.41% in the previous quarter, and a net NPA ratio of 5.78%, down from 5.88%.

Slippages stood at Rs 2,233 crore, while recoveries and upgrades were to the tune of Rs 2,325 crore.

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Reserve Bank of India – Annual Report

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April 14, 2015




Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.




With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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Reserve Bank of India – Annual Report

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April 14, 2015




Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.




With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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6 Stocks That Have Turned Multibagger This Year 2021

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Happiest Minds Technologies

It is placed fourth in IT services, which include artificial intelligence, blockchain, cloud, digital process automation, internet of things, robotics/drones, security, virtual/augmented reality, and other disruptive technologies. The company Happiest Minds Technologies Ltd. was founded in 2011. Its share price currently is 1439.5. It currently has a market capitalization of Rs 21141.01 crore.

The stock has risen sharply after the firm stated in June that it is among India’s top 25 best companies to work for in 2021. Since the beginning of the year, the stock has returned a staggering 325 percent.

Another driver for the company’s continuous expansion is its management’s optimism. This year’s sales will increase, resulting in bigger profits.

JSW Energy

JSW Energy

JSW Energy and its subsidiaries are largely in the power generation business with their power assets. It is the holding company for the power division of the JSW group. Since the beginning of the year, the company’s stock has risen by as much as 270 percent.

The stock has benefited from an increase in FII holdings. Promoters owned 74.7 percent of the company as of June 2021, while FIIs owned 5.9%.

Another reason for the bullishness is that the corporation is continually reducing its debt.

Balaji Amines

Balaji Amines

Balaji Amines manufactures methylamines, ethylamines, speciality chemical derivatives, and pharmaceutical excipients. It is one of India’s leading producers of aliphatic amines.

It traded at Rs 938 on 1 January 2021, with a marketcap of Rs 30.4 billion, and now trades at Rs 3,437, with a marketcap of Rs 110.8 billion. Balaji Amines Ltd. has issued an equity dividend of Rs 4.00 per share in the last 12 months. The stock has increased by 266 percent since the beginning of the year.

Balaji Amines has a debt-to-EBITDA ratio of 0.62, which is quite low. In addition, the stock has outperformed the BSE 500 index over the last three years, one year, and three months.

Deepak Fertilisers

Deepak Fertilisers

Deepak Fertilisers and Petrochemicals’ hares have increased by 200 percent since the beginning of the year.

The government upped the fertiliser subsidy allocation by 147.8 billion dollars in May, bringing the total outlay for fiscal 2022 to 943.1 billion dollars.

The company has a modest debt load and has had five consecutive quarters of favourable earnings. Stock returned 74.22 percent over three years, compared to 45.99 percent for the Nifty Midcap 100. Deepak Fertilisers & Petrochemicals Corporation Ltd. has declared an equity dividend of Rs 3.00 per share in the last 12 months.

Gujarat Fluorochemicals

Gujarat Fluorochemicals

Gujarat Fluorochemicals’ stock has increased by 200 percent since the beginning of the year. Gujarat Fluorochemicals Ltd., founded in the year 2018, is a Chemicals Mid Cap business with a market capitalization of Rs 18,892.55 crore.

Refrigerant gases, caustic soda, chloromethane, polytetrafluoroethylene (PTFE), fluoropolymers, fluoro-monomers, specialty fluoro-intermediates, specialty chemicals, and allied operations are all part of the company’s business.

  • Share Price: Rs 1,509.25
  • Year to date Returns:161.10%

Alkyl Amines

Alkyl Amines

In India, Alkyl Amines is a prominent producer of aliphatic amines.

Chemical company stocks have been on a run for a while, and Alkyl Amines is one of them, with a return of 174 percent since the beginning of the year. Since then, the stock has increased by 12,640 percent. An annualised return of more than 60%.

The stock’s topline and operational earnings have grown 14 times and 65 times in the last decade, respectively.

The equity dividend of Rs 16.00 per share has been declared by Alkyl Amines Chemicals Ltd.

This translates to a dividend yield of 0.37 percent at the current share price of Rs 4286.40. When bonus/splits are taken into account, the dividend yield is 0.23 percent.

6 Stocks That Have Turned Multibagger This Year 2021

6 Stocks That Have Turned Multibagger This Year 2021

Company Price in Rs. Market Cap in Rs. YTD Returns
Happiest Minds Technologies 1,378.50 19.53TCr 307.42%
JSW Energy 227 37.43TCr 239.82%
Balaji Amines 3,310 10.76TCr 252.43%
Deepak Fertilisers 429 4.64TCr 170.83%
Gujarat Fluorochemicals 1,615.00 17.68TCr 179.53%
Alkyl Amines 4,180 21.49TCr 169.30%



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Shriram City expects to return to pre-Covid levels by Q2

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Shriram City Union Finance (SCUF) expects to return to the pre-Covid level of disbursements by the second quarter of this fiscal, backed by a steady pick up in demand across two-wheeler loans, loan against gold, personal loans and MSME finance.

According to YS Chakravarti, MD and CEO, Shriram City Union Finance, the company is looking to “aggressively push” two-wheeler as well as gold loans. While it also plans to push personal loans and SME loans, it will continue to remain cautious and prefer to lend to its existing customers.

“We normally do disbursements worth ₹6,500-6,600 crore during a quarter. We disbursed close to ₹2,000 crore in July alone, and we hope to register close to ₹6,000 crore during the second quarter of this fiscal,” Chakravarti told BusinessLine.

Also read: Shriram City, STFC raise ₹2,000 crore through retail fixed deposits in July

The NBFC had registered disbursements to the tune of ₹4,560 crore in Q1 FY22. While on a year-on-year basis it was higher by around 244 per cent, sequentially it was down by around 31 per cent when compared to ₹6,570 crore in Q4 FY21, due to lockdowns and limited business activities. However, things have been improving since June-July this year and the trend is expected to continue moving forward.

Sector-wise growth

As on June 30, 2021, Assets under Management (AUM) was ₹29,599 crore. The share of small enterprises finance came down to nearly 49 per cent of the AUM as on Q1 FY22 against 58 per cent in the same period last year.

The share of two-wheeler loans increased to 23 per cent (21 per cent); loan against gold was up at 15 per cent (10 per cent) and personal loans increased to eight per cent (six per cent) in the same period.

“NBFCs catering to MSME on the manufacturing side have been affected. Strategically, we work with the trading community; call it providence or the heritage (of the company), a majority (nearly 80 per cent) of our exposure has been to the trading communities and SMEs engaged in essential services, limiting the fallout due to Covid.

“But we are still cautious about this segment. Nearly 70-75 per cent of our lending is to the existing customers,” he said.

Also read: Shriram Housing Finance Q1 net profit up 82%

However, the company expects the share of SMEs to increase to 50-55 per cent of total business in the next two to three years, given the “immense scope for lending” and shortage of available funding options for the sector.

Nearly 80-90 per cent of the company’s two-wheeler loan book is in Tier II and rural markets, where the customers are either self employed or own small business. Nearly 98 per cent of the funding is for commuter vehicles and not high value bikes so the delinquency is low, he said.

GNPA

The company’s gross non-performing asset (GNPA) increased sequentially to 6.91 per cent in Q1 FY22 from 6.37 per cent in Q4 FY21; however, on a year-on-year basis, it improved from 7.28 per cent in Q1 FY21.

With collections improving on a month-on-month basis, the GNPA should pull back to March levels. “The NBFC’s collection efficiency in May was around 86 per cent; it went up to 93 per cent in June and in July it was almost 100 per cent,” he said.

Also read: Shriram City Union Finance Q1 net up 8% at ₹208 crore

SCUF’s restructured book stood at ₹39 crore as on June 30, 2021. It is likely to restructure accounts worth ₹40 core to ₹50 crore by September this year.

The company, which has a strong presence in South and West India, is looking to strengthen its footprint in UP and Bihar. Plans are afoot to grow its network and presence in the eastern States of Odisha and West Bengal post December this year.

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How Did The Gold Loan Segment Grow During The pandemic?

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Personal Finance

oi-Kuntala Sarkar

|

Amid the Covid-19 crisis, distress selling of gold has been popular in India for instant financial requirements. The gold loan segment has seen large-scale growth as people required liquidity in their hands due to job loss and low wages.

How Did The Gold Loan Segment Grow During The pandemic?

The World Gold Council is expecting that the gold loans market will grow at “an annual rate of 15.7% and reach 4.617 trillion rupees in the fiscal year ending March 2022, from 3.448 trillion rupees in the year ended March 2020.”

State Bank of India in its latest report stated that they have witnessed a 465.08% year-over-year growth in gold loans to 209.87 billion rupees for the previous FY’s 4th quarter ended March 31. Reserve Bank of India reported that outstanding loans against gold jewellery among all banks increased to 604.64 billion rupees in March 2021 from 185.96 billion rupees in January 2020. The outstanding loans against gold jewellery have witnessed a 225.15% positive growth from January 2020 to March 2021. Compared to that, total outstanding loans of all banks grew 8.29% during the same period.

V. P. Nandakumar, CEO and managing director of Manappuram Finance Ltd., a leading Indian non-banking financial company – popular in the segment has informed that their “gold loan assets grew by 24% during 2020.” The pandemic triggered the gold loan market to its next level.

It is certainly a positive touch for the gold loan segment. But it also indicates that people are being obliged to obtain loans by pledging their stored gold for immediate liquidity. As the gold prices are regularly falling now in August 2021, the gold loan segment might lose its pace, but would not lack popularity for sure. On the contrary, the rallying price of gold helped the segment to grow in the last year.

Gold loan is a segment of loan services that a customer can avail by the pledge of gold ornaments including gold coins sold (8-24 carats gold) by banks. Gold loans are available with low-interest rates across banks. Depending on the bank, the rates might vary approximately from 7% to 29%. Banks change their interest rates for gold loans depending on the global gold prices and other economic developments.

Story first published: Wednesday, August 11, 2021, 20:14 [IST]



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