Government of India has announced the sale (re-issue) of Government Stock detailed below through auctions to be held onNovember 18, 2021. As per the extant scheme of underwriting notified on November 14, 2007, the amounts of Minimum Underwriting Commitment (MUC) and the minimum bidding commitment under Additional Competitive Underwriting (ACU) for the underwriting auction, applicable to each Primary Dealer (PD), are as under:
(₹ crore)
Security
Notified Amount
Minimum Underwriting Commitment (MUC) amount per PD
Minimum bidding commitment per PD under ACU auction
6.10% GS 2031
13,000
310
310
GOI FRB 2034
4,000
96
96
New GS 2061
7,000
167
167
The underwriting auction will be conducted through multiple price-based method on November 18, 2021 (Thursday). PDs may submit their bids for ACU auction electronically through Core Banking Solution (E-Kuber) System between 9:00 A.M. and 9:30 A.M. on the date of underwriting auction.
The underwriting commission will be credited to the current account of the respective PDs with RBI on the date of issue of securities.
Homegrown digital payments platform PhonePe on Wednesday announced that it has processed over two billion transactions on its platform in October 2021.
The platform had crossed the one billion monthly transaction mark in February this year, and has now hit the two billion milestone in eight months.
It’s significant growth comes on the back of rapid traction across Tier II, Tier III cities and beyond, it said. PhonePe said that it has seen over 145 million monthly active users, $600 billion annualised total payments value (TPV) and digital transactions from over 19000 pin codes.
Sameer Nigam, Founder and CEO, PhonePe said, “Last month was phenomenal for PhonePe, as we processed our highest ever transactions till date, cementing our position as India’s leading payments platform.”
“The fact that 80 per cent of our transactions come from Tier II, Tier III cities and beyond, show that digital payments have truly penetrated across the length and breadth of the country. We will continue to build the most preferred digital payments and financial services destination for a billion plus Indians while transforming lives positively,” added Nigam.
The platform has crossed this milestones as digital payments continue to gain traction.
Amidst festival season sales and opening up of the economy, Unified Payments Interface (UPI) transactions touched a record high at ₹7.71 lakh crore in value terms in October. This marked a new record for UPI, which is fast becoming the most popular choice for digital payments.
It was a 56 per cent jump from ₹6.54 lakh crore in transaction value recorded in September.
According to data recently released by National Payments Corporation of India, the number of transactions on the UPI platform amounted to 421 crore in October, compared to 365 crore in September.
PhonePe and Google Pay continue to maintain their lead as the most popular UPI payment apps, with the two apps enjoying market shares of 44 per cent and 35 per cent, respectively, in the first six months of 2021, according to a recent 2021 India Mobile Payments Market report. Together, the two apps handled more than 12 billion transactions worth $338 billion, as per the report.
State Bank of India has entered into a co-lending agreement with U GRO Capital to offer financing solutions to the unserved and underserved MSMEs of the country in line with RBI guidelines.
Dinesh Khara, Chairman, SBI said, “This collaboration will further enhance our distribution network, as we aim to extend our credit reach to more MSMEs. Such partnerships align with our commitment to accelerate effective and affordable credit to MSMEs in India and contribute to the country’s financial inclusion imperative towards building an Atmanirbhar Bharat.”
RBI had issued guidelines on co-lending schemes for banks and NBFCs for Priority Sector Lending to improve the flow of credit to unserved and underserved sectors of the economy and to make funds available to borrowers at an affordable cost.
Shaktikanta Das, governor of Reserve Bank of India, has asked banks to be investment-ready when the private Capex cycle picks up, as the pandemic-battered economy is on a strong recovery path that will demand huge investments to sustain in the long run.
Crediting the faster-than-expected recovery primarily to the improved vaccination pace and the resultant steady fall in the infection caseload, Das said this has led not only to lower extreme health outcomes like mortality/ hospitalisation but also boosted consumer confidence, which was visible in the festival demand.
Addressing an event by State Bank of India, Das said it is heartening to note that the economy is gradually getting back on its feet after the devastating second wave, which is very visible from the numerous high-frequency indicators that suggest that economic recovery is taking hold.
Since contact-intensive services are yet to regain the lost capacity despite rapid improvement in the recent period, it is clear that there still exists a significant gap in private consumption and investment relative to their pre-pandemic levels in FY20.
So, while the economy is picking up pace, it is yet to cover a lot of ground before it gets broad-based and entrenched. This points to the need for sustained impetus so that growth could return to or, better still, exceed the pre-pandemic trend, he said.
The growth triggers
Stating that the country has the potential to grow at a reasonably high pace after the pandemic, Das pointed to the several factors that are stacked in our favour of faster growth.
First, as a developing economy, it has significant potential to catch up with the rest of the world supported by favourable demographics, improving skill base and strong domestic demand.
Secondly, the government is providing necessary support, especially through Capex and reforms in various sectors like infrastructure, manufacturing and telecom, apart from other institutional changes to boost productivity, ease supply constraints and improve the business environment.
Thirdly, he said the pandemic has opened new opportunities for growth in the digital and green technology and also on account of resetting of global supply chains that could be advantageous to us and finally exports have been a bright spot since recent months and are likely to benefit further from global economic recovery.
With such enabling conditions and supportive policies, I have no doubt that we have a unique opportunity to step up growth as we emerge from the pandemic, Das said.
Private consumption
Calling private consumption as the backbone of overall economic growth, he said private consumption contributes the largest share of aggregate demand with around 56 per cent of GDP and is thus critical for inclusive, durable and balanced growth.
There are many signs that consumption demand triggered by the festive season is making a strong comeback. This would encourage companies to expand capacity and boost employment and investment amidst congenial financial conditions, he said, adding the recent tax cuts on petroleum products will give a further fillip to consumption.
Stating that reinvigorating private investment is crucial to realise the growth potential, Das said various policy measures such as a cut in corporate taxes, taxation reforms, the introduction of a performance-linked incentive scheme for 13 major sectors, enhanced focus on infrastructure development and asset monetisation, and proactive liquidity measures by the RBI etc are all leading to investment demand.
The Current Market Price (CMP) of PNC Infratech is Rs. 329. The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 420. Hence the stock is expected to give a 28% return, in a Target Period of 1 year.
Stock Outlook
Current Market Price (CMP)
Rs. 329
Target Price
Rs. 420
1 year return
28.00%
Company performance
PNC Infratech (PNC) has reported a strong quarter with revenue/EBITDA/APAT of Rs. 16/2.2/1.4 bn beating HDFC’s estimates. Management has maintained its guidance of ~20% topline growth and 13.5-13.7% EBITDA margin. Aligarh asset proceed is likely to flow in by the end of Nov-21; it will be partly used for funding Rs. 8bn of balance equity requirement in 11 HAM assets. HDFC mentioned, “In the water segment, it has Rs. 32bn worth of projects under JJM, and going forward, it expects to retain 25% of the order book (OB) under projects from this scheme.”
Comments by HDFC Securities
According to HDFC Securities, the company has shown a “Robust performance. The company’s revenue stood at Rs. 16bn (+53%/+29% YoY/QoQ); EBITDA stood at Rs. 2.2bn (+56% YoY, +26% QoQ). PNC expects annual growth of ~20% in FY22 topline, with a margin in the range of 13.5-13.7%. Given a strong OB and a comfortable balance sheet, we maintain BUY with an unchanged TP at Rs. 420 (15x Sep23E).”
About the company
PNC Infratech (PNC) is an Indian infrastructure construction, development, and management company. The company works across the fields of Highway Construction, BOT-(TOLL)/BOT (Annuity)/OMT/HAM Highway Projects, Airport Runway Project, Industrial Area Development, etc.
Disclaimer
The above stock has been picked from the brokerage report of HDFC Securities. 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.
The Current Market Price (CMP) of Max Healthcare is Rs. 364. The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 430. Hence the stock is expected to give an 18% return, in a Target Period of 1 year.
Stock Outlook
Current Market Price (CMP)
Rs. 364
Target Price
Rs. 430
1 year return
18.00%
Company performance
Max’s Q2 proforma EBITDA came broadly in line with ~Rs. 3.2-3.3bn, led by the all-time-high ARPOBs and strong volumes on the back of robust traction in non-Covid business. Adjusting for the Covid vaccine (Rs. 0.9bn), the company’s hospital revenue increased ~8% QoQ to Rs. 12.1bn, led by all-time-high ARPOBs (+15% QoQ). On the other hand, Lab revenue came in at Rs. 220mn (-39% QoQ), as Covid business plunged ~80%. However, the non-Covid business grew at a healthy pace (+18% QoQ).
Comments by HDFC Securities
According to HDFC Securities, “Despite the aggressive expansion plans, we expect post-tax RoCEs to stay at ~ 18-23% levels through FY28E. We raise our estimates by ~1% for FY23/24E, to factor in encouraging overall outlook.” The firms added maintaining the buy rating, “With a multitude of short and long term growth catalysts (recovery in international business, improvement in payor mix, and expansion plans), we expect Max EBITDA to grow at ~15% CAGR over FY22-FY28E.”
About the company
Max Healthcare has hospitals across locations like Delhi / NCR, Punjab, Uttarakhand, Maharashtra. The healthcare company has major departments in their hospitals namely Cancer Care / Oncology, Cardiac Sciences, Liver Transplant and Biliary Sciences, Orthopaedics & Joint Replacement, Neurosciences, Gastroenterology, Hepatology & Endoscopy, Thoracic Surgery, Laparoscopic / Minimal Access Surgery, etc.
Disclaimer
The above stock has been picked from the brokerage report of HDFC Securities. 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.
U GRO Capital, a technology-focused small business lending platform, has entered into a co-lending partnership with the State Bank of India (SBI) to provide credit to micro, small and medium enterprises (MSME).
Through this collaboration, SBI and U GRO aim to disburse up to ₹500 crore by March 2022, U GRO said in a statement.
The agreement has been signed under the alternative option of Reserve Bank of India’s revised co-lending guidelines, which involves post disbursal takeover of the bank’s share in the loan on a back-to-back basis.
“This arrangement will leverage SBI’s prowess on the liability side and U GRO Capital’s origination and distinctive underwriting engine capabilities on the assets side,” the company said, adding it also has co-lending partnerships with Bank of Baroda and IDBI Bank.
U GRO lends to SMEs in eight sectors — Healthcare, Education, Chemicals, Food Processing / FMCG, Hospitality, Electrical Equipment and Components, Auto Components, Light Engineering.
Dinesh Kumar Khara, Chairman, SBI, said, “Such partnerships align with our commitment to accelerate effective and affordable credit to MSMEs in India and contribute to the country’s financial inclusion imperative towards building an Atmanirbhar Bharat.”
Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital, observed that India’s lending landscape for NBFCs is transitioning. The next decade is expected to be all about collaboration between large banks and niche NBFCs / FinTech wherein ‘Lending as a Service’ would become the prominent force.
Under the current Takeover Code rules, commercial banks and public financial institutions are exempt from making an open offer if they acquire shares beyond a threshold by invoking a pledge. ARCs acquire loans that qualify as non-performing assets from banks.
Banks sell bad loans to an ARC for a lower price and cut losses. In this process, all the collateral that was pledged in favour of the bank will be transferred to ARC.
If the collateral exceeds 25% of the total equity of the company, then such pledge invocation will need the ARC to give an open offer to the minority investors.
Takeover code
Sebi’s takeover code is triggered when an entity acquires over 25% stake in a listed company. At this point, the acquirer has to declare an open offer and buy at least 26% more stake from public shareholders.
Until 2019, the open offer exemption was available to all classes of investors undertaking debt restructuring. In 2019, Sebi changed the rules because RBI dissolved all the debt restructuring schemes and instead all the liquidation was being done through the Insolvency and Bankruptcy Code (IBC).
Market participants say the open offer requirement also slows down the resolution process since a lot of minority shareholders would view it as their last chance to cash in on the shares of a company that is most probably going to be liquidated.
Revised norms
In 2018, the RBI revised norms for bad loan resolution. Until then, banks were allowed to recast the corporate debts by converting their debt into equity.
In February 2018, the central bank phased out the debt restructuring schemes and made it mandatory for banks to refer all bad loans to the IBC process after a specific timeline. This circular of RBI prompted Sebi to revise its rules.
The RBI is mulling easier rules for ARCs. Earlier this month, an expert panel led by former RBI executive director Sudarshan Sen submitted its report to the central bank aimed at simplifying regulations for these financial institutions.
What Sudarshan Sen panel says
In the interest of debt aggregation, the scope of Section 5 of the SARFAESI Act, and other related provisions, may be expanded to allow ARCs to acquire ‘financial assets’ as defined in the Act, for the purpose of reconstruction, not only from banks and ‘financial institutions’ but also from such entities as may be notified by the Reserve Bank.
Reserve Bank may consider permitting ARCs to acquire financial assets from all regulated entities, including AIFs, FPIs, AMCs making investment on behalf of MFs and all NBFCs (including HFCs) irrespective of asset size and from retail investors.
ARCs should be allowed to sponsor SEBI registered AIFs with the objective of using these entities as an additional vehicle for facilitating restructuring/ recovery of the debt acquired by them.
The new application will enable merchants and retailers to undertake activities such as accept instant cashless payments on mobile phones from customers through multiple digital modes, track inventory via in-built dashboards, apply for a Point of Sale (PoS) machine to facilitate card based payments and avail small ticket business loans from the bank in a digital manner.
Current account holders of IndusInd Bank can download the ‘Indus Merchant Solutions’ app.
Soumitra Sen, Head – Consumer Bank, IndusInd Bank said, “Given the sharp rise in the number of consumers as well as merchants, who prefer transacting online, Indus Merchant Solutions is a holistic proposition that will significantly improve merchant engagement, user experience and convenience”
Currently, the app is available on smartphones with Android operating systems. It will soon be available for smartphones using the iOS operating system.
