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Reserve Bank of India – Notifications

Notifications

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RBI/2021-22/54
CO.DPSS.POLC.No.S188/02-27-020/2021-2022

June 14, 2021

The Chairman and Managing Director / Chief Executive Officer
Scheduled Commercial Banks including RRBs /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks / Payment Banks / Small Finance Banks /
NPCI Bharat BillPay Ltd. / Bharat Bill Payment System Providers /
System Participants and prospective Bharat Bill Payment Operating Units

Madam / Dear Sir,

Bharat Bill Payment System – Addition of Biller Category

This has reference to the guidelines on Bharat Bill Payment System (BBPS) issued by the Reserve Bank of India vide circular DPSS.CO.PD.No.940/02.27.020/2014-2015 on November 28, 2014. BBPS, started as an interoperable platform for repetitive bill payments, which covered bills of five categories viz. Direct to Home (DTH), Electricity, Gas, Telecom and Water. The system provided standardised bill payment experience, centralised customer grievance redressal mechanism, prescribed customer convenience fee and ensured availability of a bouquet of anytime, anywhere digital payment options. The scope and coverage of BBPS was expanded vide circular DPSS.CO.PD.No.605/02.27.020/2019-20 dated September 16, 2019 to include all categories of billers which raise recurring bills (except mobile prepaid recharges) as eligible participants, on a voluntary basis.

2. With consistent growth in different biller categories and to facilitate mobile prepaid customers with more options to recharge, it has been decided to permit ‘mobile prepaid recharges’ as a biller category in BBPS, on a voluntary basis. This will be implemented on or before August 31, 2021.

3. This directive is issued under Section 10 (2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

Yours faithfully,

(P. Vasudevan)
Chief General Manager

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Wadhawan, Dhoot may lose assets as banks move to invoke personal guarantees, BFSI News, ET BFSI

Banking & Finance

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The business tycoons whose bankrupt companies have been sold for a small fraction of the loans they owed may not be let off easily.

Lenders are in the process of appointing advisors to arrive at a fair value of their assets following the Supreme Court’s order on invoking personal guarantees of defaulting promoters.

Banks are assessing the value of assets held by promoters of at least 40 companies that are under the insolvency process, according to a report.

The promoters whose value of assets is being determined include Kapil and Dheeraj Wadhwan of DHFL; Videocon promoters Venugopal and Rajkumar Dhoot; Lanco Infratech’s Madhusudhan Rao and family, IVRCL’s Sudhir Reddy and Jatin Mehta of Winsome Diamonds.

Armed with the Supreme Court go-ahead to seize assets of personal guarantors, banks are looking to recover money parked in family trusts.

Many of the family trusts created by businesspeople are meant primarily to protect their assets from potential claims related to their companies, such as in bankruptcies. Neither lenders nor agencies such as the Enforcement Directorate or income tax department have been able to penetrate these asset protection trusts.

The SC verdict

The Supreme Court had upheld the validity of the Centre’s notification allowing banks to proceed against personal guarantors for recovery of loans given to a company under the Insolvency and Bankruptcy Code (IBC).

A bench comprising justices L Nageswara Rao and S Ravindra Bhat held that approval of resolution plan under the IBC does not discharge personal guarantors of their liability towards the banks.

“In the judgment, we have upheld the notification,” Justice Bhat said while reading out the conclusion of the judgement which decided as many as 75 petitions pertaining to the validity of the notification.

Petitioners had challenged the November 15, 2019 notification issued under the IBC and other provisions in as far as they relate to personal guarantors to corporate debtors.

Upholding the validity of the notification, the top court ruled that initiation of an insolvency resolution plan for a company does not absolve corporate guarantees given by individuals from paying up the dues to financial institutions.

The IBC law

Under the IBC law, banks can go after the family trusts formed by promoters or those who have given personal guarantees, provided there is a fraud or siphoning of money involved as per provisions of the IBC.

Promoters of several Indian companies had earlier accused their professional managers of fraud and diverting company funds. But they would not get any respite from the IBC as lenders will now invoke their personal guarantees.

SBI action

SBI was one of the respondents to the 74 petitions and challenges by promoters on invocation of personal guarantees. It has been in the forefront of invoking guarantees of promoters of defaulting companies. It had invoked Rs 1200 crore of guarantees given by Ambani for defaulting companies Reliance Communications and Reliance Infratel.

In January SBI had also approached the Mumbai bench of the NCLT to initiate invoking guarantees by the Videocon Industries Dhoot brothers totalling Rs 11,500 crore.

It had also taken Bhushan Power & Steel promoter Sanjay Singal to court to recover Rs 12,276 crore dues to the bank for which he was a guarantor. All these promoters had challenged these actions in court.



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Subscribers of PM Kisan Yojana Can Get 2 Installments At Once, Here’s How

Personal Finance

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Double benefits under PM Kisan Yojana

Farmers who are not registered under the scheme can get double benefits of the scheme, i.e. they will get instalments at once. A farmer will be eligible for the two instalments of the scheme only if he or she gets registered under the scheme on or before June 30, 2021. In this way, he or she will receive Rs 2,000 as the scheme’s first instalment in July. Farmers who get enrolled under the scheme on or before June 30 will get their first instalment under the PM Kisan scheme in July 2021, as part of the eighth instalment. However, in August, the ninth instalment of this scheme will be revealed. Therefore, farmers who enrolled before June 30th will get the first instalment in July and the second instalment in August. As a result, the farmer will benefit Rs 4,000 if he or she applies for the initiative before June.

Who is eligible to enrol for the scheme?

Who is eligible to enrol for the scheme?

The PM Kisan Yojana provides annual income assistance of Rs 6000 to eligible farmer households across the country in three equal instalments of Rs 2,000. According to the scheme, a family that includes a husband, wife, and minor children is eligible for the scheme. Small and marginal farmers with combined land ownership of up to two hectares are eligible for income assistance of Rs 6,000 per year, paid in three equal instalments of Rs 2000 every 4 months. Individuals and families who filed income tax in the previous Assessment Year (AY) are ineligible for the Pradhan Mantri Kisan Samman Nidhi Yojana. This scheme is not applicable to anyone who has retired or superannuated and receives a monthly pension of Rs. 10,000 or more.

How to enrol for the scheme before June to get double benefits?

How to enrol for the scheme before June to get double benefits?

To enrol for the scheme online you must keep some documents handy such as Aadhaar Card, citizenship certificate, landholding certificate, and bank account details. With these documents, you can apply for the scheme by following the steps listed below:

  • Visit pmkisan.gov.in and navigate to the ‘Farmers Corner’
  • Now click on ‘New Farmer Registration’ and enter your Aadhaar number with the required CAPTCHA code.
  • Now select your state as per your Aadhaar card and fill the online application form with all the required details correctly.
  • Once you are done, enter your bank account details on which you want to get the instalments and click on ‘Submit’.
  • After successfully submitting the application form, you can check the status of the application by dialling the helpline number 011-24300606 using your registered mobile number.



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RBI expands scope and coverage of Bharat Bill Payment System

Banking & Finance

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The Reserve Bank of India (RBI) has expanded the scope and coverage of Bharat Bill Payment System (BBPS) to include all categories of billers who raise recurring bills (except prepaid recharges) as eligible participants, on a voluntary basis.

BBPS, as an interoperable platform for repetitive bill payments, currently covers bills of five segments —Direct to Home (DTH), Electricity, Gas, Telecom (landline, mobile post-paid, broadband) and Water.

BBPS was conceptualised to offer interoperable and accessible bill payment services to customers through a network of agents with multiple payment modes and instant confirmation of payment.

Also read: Amid economic uncertainty, many banks eye capital raising plans

The pilot phase of BBPS was launched on August 31, 2016 and BBPS live operations commenced from October 17, 2017.

The system offers ‘anytime anywhere’ bill payment service to customers using online payments as well as through a network of physical agent locations.

As per NPCI data, the volume of BBPS transactions almost doubled in FY21 to 154.482 crore from 77.809 crore in FY20.

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Amid economic uncertainty, many banks eye capital raising plans

Banking & Finance

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With expectations of further economic uncertainty as the second wave of the Covid-19 pandemic continues and expectations of a third wave, banks are looking to raise funds to improve their capital buffers and fund expansion plans.

Private sector lender Federal Bank said its board will meet on June 16 to consider proposals for issuance of equity shares by way of a preferential allotment and raising of equity capital of the bank either through Rights Issue, Private Placement, Preferential Issue, Further Public Offer, Qualified Institutional Placement, Global Depository Receipts, American Depository Receipts annd Foreign Currency Convertible Bonds.

Also read: Public sector banks support for Covid-19 health infra gathers pace

The board will also consider a proposal for borrowing or raising of funds in Indian Currency or any other permitted foreign currency by way of issue debt instruments including but not limited to Additional Tier-I bonds, Tier-II bonds, Long Term Bonds (Infrastructure and Affordable Housing), Masala Bonds, Green bonds, Non-convertible Debentures or such other debt securities as may be permitted by RBI from time to time, in domestic market and/or overseas market, on a private placement basis, it said in a regulatory filing.

More plans ahead

In recent weeks, other lenders too have announced plans to raise funds and expectations are that more will be finalising plans soon. Private sector lender Yes Bank had on June 10 said it has received approval from its board of directors to raise ₹10,000 crore through debt securities.

Similarly, public sector Canara Bank has also announced board approval for its capital raising plan for 2021-22, amounting up to ₹9,000 crore by way of equity and debt instruments.

Bank of Maharashtra is also looking to raise up to ₹2,000 crore through the qualified institutional placement route before end of July. Reserve Bank of India governor Shaktikanta Das had on June 4 also urged banks and NBFCs to build capital buffers and ensure adequate provisioning to face challenges emanating from the second wave.

“Building adequate provisioning and capital buffers, together with sound corporate governance in financial entities, have become much more important than ever before, more so in the context of banks and NBFCs being at the forefront of our efforts to mitigate the economic impact of Covid-19,” he had said on June 4.

Public and private sector lenders had also raised funds in 2020-21 amidst the Covid-19 led economic uncertainty.

“Banks and need to augment their capital because there could be stress arising out of the second wave,” Das had told reporters post the monetary policy announcement. Their overall capital position is at a very stable level currently, he had further said.

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Reserve Bank of India – Press Releases

Press Releases

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(Amount in ₹ crore, Rate in Per cent)
  Volume
(One Leg)		 Weighted
Average Rate 		Range
A. Overnight Segment (I+II+III+IV) 3,67,237.89 3.26 1.90-5.30
     I. Call Money 6,926.87 3.10 1.90-3.40
     II. Triparty Repo 2,52,859.75 3.26 2.92-3.37
     III. Market Repo 1,07,432.27 3.29 2.00-3.40
     IV. Repo in Corporate Bond 19.00 5.30 5.30-5.30
B. Term Segment      
     I. Notice Money** 158.11 3.02 2.75-3.25
     II. Term Money@@ 669.50 – 3.15-3.70
     III. Triparty Repo 385.10 3.25 3.25-3.26
     IV. Market Repo 509.86 3.19 3.15-3.45
     V. Repo in Corporate Bond 1,000.00 3.45 3.45-3.45
  Auction Date Tenor (Days) Maturity Date Amount Current Rate /
Cut off Rate
C. Liquidity Adjustment Facility (LAF) & Marginal Standing Facility (MSF)
I. Today’s Operations
1. Fixed Rate          
     (i) Repo          
     (ii) Reverse Repo Fri, 11/06/2021 3 Mon, 14/06/2021 3,62,304.00 3.35
     (iii) Special Reverse Repo~          
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo          
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo – – – – –
3. MSF Fri, 11/06/2021 3 Mon, 14/06/2021 27.00 4.25
4. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)£          
5. Net liquidity injected from today’s operations
[injection (+)/absorption (-)]*		       -3,62,277.00  
II. Outstanding Operations
1. Fixed Rate          
     (i) Repo          
     (ii) Reverse Repo          
     (iii) Special Reverse Repo~ Fri, 04/06/2021 14 Fri, 18/06/2021 150.00 3.75
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo Fri, 04/06/2021 14 Fri, 18/06/2021 2,00,029.00 3.46
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo          
3. MSF          
4. Long-Term Repo Operations# Mon, 17/02/2020 1095 Thu, 16/02/2023 499.00 5.15
  Mon, 02/03/2020 1094 Wed, 01/03/2023 253.00 5.15
  Mon, 09/03/2020 1093 Tue, 07/03/2023 484.00 5.15
  Wed, 18/03/2020 1094 Fri, 17/03/2023 294.00 5.15
5. Targeted Long Term Repo Operations^ Fri, 27/03/2020 1092 Fri, 24/03/2023 12,236.00 4.40
  Fri, 03/04/2020 1095 Mon, 03/04/2023 16,925.00 4.40
  Thu, 09/04/2020 1093 Fri, 07/04/2023 18,042.00 4.40
  Fri, 17/04/2020 1091 Thu, 13/04/2023 20,399.00 4.40
6. Targeted Long Term Repo Operations 2.0^ Thu, 23/04/2020 1093 Fri, 21/04/2023 7,950.00 4.40
7. On Tap Targeted Long Term Repo Operations€ Mon, 22/03/2021 1095 Thu, 21/03/2024 5,000.00 4.00
8. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)£ Mon, 17/05/2021 1095 Thu, 16/05/2024 400.00 4.00
D. Standing Liquidity Facility (SLF) Availed from RBI$       1,662.00  
E. Net liquidity injected from outstanding operations [injection (+)/absorption (-)]*     -1,16,035.00  
F. Net liquidity injected (outstanding including today’s operations) [injection (+)/absorption (-)]*     -4,78,312.00  
G. Cash Reserves Position of Scheduled Commercial Banks
     (i) Cash balances with RBI as on 11/06/2021 6,15,890.88  
     (ii) Average daily cash reserve requirement for the fortnight ending 18/06/2021 6,11,914.00  
H. Government of India Surplus Cash Balance Reckoned for Auction as on¥ 11/06/2021 0.00  
I. Net durable liquidity [surplus (+)/deficit (-)] as on 21/05/2021 8,43,197.00  
@ Based on Reserve Bank of India (RBI) / Clearing Corporation of India Limited (CCIL).
– Not Applicable / No Transaction.
** Relates to uncollateralized transactions of 2 to 14 days tenor.
@@ Relates to uncollateralized transactions of 15 days to one year tenor.
$ Includes refinance facilities extended by RBI.
& As per the Press Release No. 2019-2020/1900 dated February 06, 2020.
* Net liquidity is calculated as Repo+MSF+SLF-Reverse Repo.
# As per the Press Release No. 2020-2021/287 dated September 04, 2020.
^ As per the Press Release No. 2020-2021/605 dated November 06, 2020.
€ As per the Press Release No. 2020-2021/520 dated October 21, 2020, Press Release No. 2020-2021/763 dated December 11, 2020 and Press Release No. 2020-2021/1057 dated February 05, 2021.
¥ As per the Press Release No. 2014-2015/1971 dated March 19, 2015.
£ As per the Press Release No. 2021-2022/181 dated May 07, 2021.
~ As per the Press Release No. 2021-2022/177 dated May 07, 2021.
Ajit Prasad
Director   
Press Release: 2021-2022/357

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ARCs bank on retail loans in pandemic shift and bad bank competition, BFSI News, ET BFSI

Banking & Finance

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As the bad bank is set to take away the big chunk of their business, asset reconstruction companies (ARCs) are thinking smaller to grow big.

ARCs have been banking on retail loans to drive business in the pandemic-hit FY21 and see the share of retail loans reaching 50% of the pie.

The ARCs are also hit by the RBI-mandated loan restructuring and moratoriums, which had led to a drop in bad loans among corporates,

The Rs 1.5-lakh-crore asset reconstruction market comprises over a dozen players. The upcoming national bad bank will add to the competition in the market and lead to distortion due to government guarantees.

The pandemic-hit FY21 saw tepid overall growth for ARCs, but retail loan portfolio grew faster adding at least 25 per cent more to the assets under management (AUM).

Retail growth

Lenders like HDFC Bank, Indusind Bank, IDBI Bank, Federal Bank and non-banks like Bajaj Finance among others have been aggressively selling their stressed retail books — auto, home and personal loans as well credit cards dues to ARCs like Edelweiss, Phoenix ARC run by Kotak Mahindra Bank, JM Financial and Reliance ARC among others since the past few years.

While Reliance ARC snaps up only retail loans, Phoenix ARC has 20 per cent of its Rs 8,500-crore total book/AUM as retail loans.

Edelweiss ARC, which has AUM of Rs 40,8000 crore, and has made a recovery of Rs 5,400 crore in FY21 from 179 accounts. The company expects about around 50 per cent of overall ARC assets coming in from retail loans in the next two years from the 10% now. On industry level, the share of retail in ARCs is around 20%.

Why retail loans?

In the past two years retail loans are rising, while corporate NPAs are coming down due to the moratorium and restructuring allowed by the Reserve Bank, which has led to a rise in interest in retail loans.

Retail loans give higher margins and better recovery rates despite the high costs.

ARCs which focus on retail portfolio may be better placed to cushion the impact of the national bad bank on their business, as the proposed national ARC will primarily be dealing with large chunky loans of Rs 500 crore and above and that too mostly from public sector banks which have the highest bad loans piles. So to secure their business, it makes better sense for ARCs to focus on retail loans as it offers better margins and faster resolution too, he adds.

However, the retail book may not grow too big for too long as once the pandemic situation normalises and large corporate books may come up for sale.

The national bad bank will leave the field uneven for private players like us due to the proposal of government guarantee.



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NPS Has Given 60% Returns In 1-Year, Should You Invest?

Personal Finance

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NPS Tier-1 Returns

LIC Pension Fund has generated the highest returns in the Tier 1 Account of NPS, with 59.56 per cent, followed by ICICI Pru Pension Fund with 59.47 per cent and UTI Retirement Solutions with 58.91 per cent. Tier 1 of the NPS is a basic account and only after establishing a Tier 1 account you can initiate a Tier 2 account. Individuals of all backgrounds are welcome to establish an NPS Tier-1 account. NPS Tier 1 contributions are tax-deductible up to Rs 1.5 lakh under Section 80 C and an additional deduction of Rs 50,000 under Section 80 CCD (1B) of the Income Tax Act of 1961. The NPS Tier 1 account has a lock-in period of 60 years. So, based on this and the previous year’s performance of NPS Tier-1, which is shown in the table below, you may place your bet.

Scheme E Tier-I
Pension Funds AUM In Rs (Cr) NAV 1 year returns 3 year returns 5 year returns
Aditya Birla Sun Life Pension Management Ltd. 134.3 16.6096 50.99% 13.06% NA
HDFC Pension Management Co. Ltd. 8,020.07 30.9763 57.37% 14.61% 15.32%
ICICI Pru. Pension Fund Mgmt Co. Ltd. 3,358.17 40.8469 59.47% 13.81% 13.96%
Kotak Mahindra Pension Fund Ltd. 657.44 37.457 55.53% 13.44% 13.93%
LIC Pension Fund Ltd. 1,657.48 25.8288 59.56% 12.63% 12.78%
SBI Pension Funds Pvt. Ltd 6,218.67 34.0406 53.49% 12.80% 13.52%
UTI Retirement Solutions Ltd. 960.36 40.3413 58.91% 13.30% 14.04%
Benchmark Return as on 04/06/2021 59.35% 14.78% 15.08%
Source: NPS Trust

NPS Tier-II Returns

NPS Tier-II Returns

Tier II of the NPS is a voluntary account or add-on account, whereas Tier I is compulsory to open. These accounts will have a three-year lock-in term. The NPS Tier II Account Scheme E has produced double-digit returns over the last year. Tier 2 accounts have no lock-in period. Tier-II accounts are open to all Indian citizens. Additionally, the scheme provides no tax breaks to the private sector or self-employed persons. A government employee, on the other hand, can claim tax deductions of Rs 1.5 lakhs under Section 80C if the account is opened for a lock-in period of 3 years. Check out the following NPS Tier II Account Scheme E returns as of June 4, 2021:

Scheme E Tier-II
Pension Funds AUM In Rs (Cr) NAV 1 year returns 3 year returns 5 year returns
Aditya Birla Sun Life Pension Management Ltd. 13.32 16.5238 51.01% 12.99% NA
HDFC Pension Management Co. Ltd. 368.1 26.742 57.26% 14.51% 15.36%
ICICI Pru. Pension Fund Mgmt Co. Ltd. 170.61 32.3085 59.43% 13.92% 14.05%
Kotak Mahindra Pension Fund Ltd. 47.01 32.9585 54.78% 13.25% 13.78%
LIC Pension Fund Ltd. 65.7 21.5965 59.76% 12.84% 12.77%
SBI Pension Funds Pvt. Ltd 250.1 31.4896 54.24% 12.92% 13.60%
UTI Retirement Solutions Ltd. 49.02 33.1986 60.43% 13.88% 14.36%
Benchmark Return as on 04/06/2021 59.35% 14.78% 15.08%
Source: NPS Trust

Should you invest?

Should you invest?

Because it is a long-term strategy, you must register an NPS account in your working years or as soon as possible in order to get the entire scheme benefits when you retire. The risk element related to NPS is one of its most critical characteristics as it enables allocation to equities, government bonds, and corporate bonds. Once you retire, you can withdraw a portion of your pension fund as a lump sum, and the remainder can be used to purchase an annuity in order to get monthly pension benefits which are only determined by the outcome of your NPS investments or pension funds.

Over the last year, the equity market’s returns have been driven by strong gains in equity, as a result, the performance has benefited the National Pension System’s (NPS) equity scheme, Scheme E, tremendously. And by considering the long-term nature of NPS investments, we would suggest those investors to invest in NPS Tier 1 scheme who are ready to lock-in their investment and have higher exposure to equities. That being said, past performance should not be the only justification to invest in NPS. Allocation to equities can be a good bet for retirement savings since it helps you overcome inflation over time, but only if you are a conservative investor. But those with a risk-averse attitude can still stick to EPF, PPF, SCSS and PMVVY to create a secure retirement corpus.

Disclaimer

Disclaimer

The views and investment tips expressed by authors or employees of Greynium Information Technologies, should not be construed as investment advise to buy or sell stocks, gold, currency or other commodities. Investors should certainly not take any trading and investment decision based only on information discussed on GoodReturns.in We are not a qualified financial advisor and any information herein is not investment advice. It is informational in nature. All readers and investors should note that neither Greynium nor the author of the articles, would be responsible for any decision taken based on these articles. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in GoodReturns.in



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3 Stocks To Buy Today From Motilal Oswal

Personal Finance

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SAIL

The firm is bullish on the stock of Steel Authority of India and sees good traction going ahead. It has suggested to buy the stock of SAIL for long term with a price target of Rs 185.

According to it, SAIL a government majority owned company continues to reap the benefits of higher steel prices as 4QFY21 and EBITDA grew 21% QoQ, despite a wage revision impact.

“In the absence of significant capex, net debt declined further to Rs 366 billion (v/s Rs 538 billion in March’20).

With steel prices at a record high, SAIL is poised to post its best ever EBITDA/t of Rs 20,000 in 1QFY22. We upgrade our FY22E/FY23E EBITDA estimate by 71%/33% to factor in higher steel prices, and estimate a further Rs 102 billion (Rs 25/share) fall in net debt to Rs 265 billion (1 times EBITDA) in FY22E. We expect dividend payout to be strong at Rs 10 per share in FY22E (7.5% yield), based on an expected 25% payout ratio. Reiterate Buy wih a target price of Rs 185 per share,” the brokerage firm has said. The shares of SAIL were last seen at Rs 136.35

SUN TV Network

SUN TV Network

SUN TV Network is another stock that broking firm Motilal Oswal has recommended to buy. The company is a leading player in programme and broadcasting.

The firms sees subscription revenue expected to grow in the double digits in FY22E, led by digitization trends, along with a rise in OTT subscriptions. Viewership trends are yet to see a steady uptick.

“Plans to launch new TV shows and movies and a Marathi channel in FY22 have been delayed given the second COVID wave. However, the most concerning factor is the delayed OTT investment – besides monetizing the existing library, the company has not made any material inroads in the space. Furthermore, it has curbed the dividend payout to just Rs 5 per share, the lowest since FY10. Sun TV trades at FY22E/FY23E P/E of 14.1x/12.9x. We value the stock at FY23E price to earnings of 15 times to arrive at target Price of Rs 620. Maintain Buy,” the broking firm has said.

Sun TV Network shares were last seen trading at Rs 517.50 on the NSE.

LUPIN – Motilal Adopts Neutral Stance

LUPIN – Motilal Adopts Neutral Stance

Lupin recently received a warning letter from the US health regulator for its Somerset facility in the US.

According to Motilal Oswal, although regulatory issues persist at select sites, we expect a 35% earnings CAGR over FY21-23E, led by a 19%/14% sales compounded annua growth rate in the US/Domestic Formulation (DF) market, supported by 400 basis points margin expansion.

“This is attributable to potential inhaler launches, increased traction in existing commercialized niche products, and a better outlook for the DF segment. We value LPC at 25 times 12 month forward earnings to arrive at our price target of Rs 1,32 per share. We maintain Neutral as the current valuation adequately factors in potential earnings growth over the next two years and thus provides a limited upside from current levels,” the brokerage has said.

LUPIN shares were last seen trading at Rs 1,189 today.

Disclaimer

Disclaimer

The above mentioned stocks have been picked from brokerage reports. The author, the brokerage or Greynium Information Technologies do not take any responsibility for losses that maybe incurred. The above article is for informational purposes only.



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IPO pie set to grow bigger as over a dozen financial services players line up Rs 55,000 crore issues, BFSI News, ET BFSI

Personal Finance

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MUMBAI: With payments major Paytm‘s board reportedly approving a bumper share sale plan running north of Rs 22,000 crore, the IPO market is set for a big days as over a dozen financial services players, including fintechs, are set to mop up over Rs 55,000 crore this fiscal from the market, according to investment bankers.

With more than a dozen insurance, asset management, commercial banking, non-banks, microfinance, housing finance and payment bank players already filing draft documents with the market regulator Sebi for public offerings, the financial services sector is set to dominate the primary issues or initial public offerings (IPOs) over the coming months.

Some of those who have already filed the draft red herring prospectus (DRHPs) with the Sebi include Aadhar Housing Finance (Rs 7,500 crore), Policy Bazaar (Rs 4,000 crore), Aptus Housing Finance (Rs 3,000 crore), Star Health Insurance (Rs 2,000 crore), Aditya Birla Sun Life AMC (Rs 1,500-2,000 crore) Arohan Financial Services (Rs 1,800 crore), Fusion Microfinance (Rs 1,700 crore), Fincare Small Finance Bank (Rs 1,330 crore), Tamilnad Mercantile Bank (Rs 1,000-1,300 crore), Medi Assist (Rs 840 crore) and Jana Small Finance Bank (Rs 700 crore), among others.

And the board of the biggest payments bank Paytm has reportedly cleared an over Rs 22,000 crore IPO. Together, these financial services companies are set to garner around Rs 55,000 crore from the public.

If materialised, the Paytm issue will be the largest IPO ever in the country, eclipsing the hitherto largest issue — the Rs 15,000-crore share sale by the government in national miner Coal India in October 2010, says investment bankers seeking not to be quoted.

Investment bankers and analysts consider the IPO boom to be reflective of the ongoing bull run and thus advice retail investors to be cautious while parking money in new companies.

V K Vijayakumar, chief investment strategist at Geojit Financial Services in Kochi, said the performance of the IPO market usually has a strong correlation to the performance of the secondary market.

“If the stock market is bullish, it attracts a large number of investors into IPOs. Particularly, new investors lured by high potential profits, get attracted to new offers and the IPO market has always done well during market booms, Vijayakumar told .

Rupen Rajguru, head of equity investments and strategy at global wealth management firm Julius Baer in Mumbai, concurs and cautions retail investors to study the valuations very carefully before investing as the market is a but over-heated now.

“The current IPO market buoyancy is expected to continue into the next few quarters. IPOs are in fact playing on the financialisation of savings theme, which is a big structural shift in the country,” Rajguru told .

He said Julius Baer at the global level is “bullish on India as it considers it to be one of the preferred emerging markets after China”.

Though stating that the present bull market provides a favourable setting for IPOs, Vijayakumar also cautioned retail investors to be careful while applying for IPOs as some of the recent IPOs got listed at a huge discount to the tune of 30-40 per cent below the issue price. Kalyan Jewellers and Suryoday Small Finance Bank are even now quoting at a discount to the issue price, he said.

“Promoters and merchant bakers have a responsibility to price the issue reasonably to leave something on the table for retail investors. Aggressive pricing will be damaging to all,” Vijayakumar warned.

Pointing out that even good issues will be impacted by an adverse market, he said since markets are overvalued now, there is a possibility of a sharp correction. If IPOs are to sail through even under difficult market conditions, the pricing has to be right, he said.

Apart from traditional financial services players, several digital payment and fintech players are also planning to tap the IPO market.

Digital payments major Paytm’s board has approved a proposal to raise over Rs 22,000 crore from IPO, while online insurance platform Policy Bazaar is also looking to float a Rs 4,000-crore offering, industry sources said.

Two small finance banks — Jana SFB and Fincare SFB — have also filed their draft papers with the markets watchdog. While Fincare is planning to mop up Rs 1,330 crore through public offering, Jana is looking to raise around Rs 700 crore.

Aditya Birla Sun Life AMC, the largest non-bank sponsored AMC, is looking to go public with Rs 1,500-2,000 crore offering. With an AUM of Rs 2.7 lakh crore, this is among the top five asset managers and will become the fourth AMC to get traded on the domestic bourses.

From the insurance sector, there are two IPOs – Westbridge Capital and billionaire investor Rakesh Jhunjhunwala-backed Star Health & Allied Insurance, and the largest health benefits administrator Bengaluru-based Medi Assist TPA.

Medi Assist filed IPO papers last month to raise around Rs 840 crore and it will be the first IPO by an insurance TPA (third-party administrator), while Star Health is firming up a Rs 2,000 crore issue.

Private equity firm Blackstone-backed Aadhar Housing Finance and Chennai-based Aptus Housing Finance are also looking to raise Rs 7,500 crore and Rs 3,000 crore respectively through IPOs.

Microfinance players like Arohan Financial Services, Fusion Microfinance and digital debt platform Northern Arc are also looking to hit the IPO market.

The southern Tamil Nadu-based old generation private sector lender Tamilnad Mercantile Bank is also planning a Rs 1,000-crore issue before the end of the calendar year, according to sources.



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