Equities continue to witness sell-off after a record US inflation print led to fears of more aggressive monetary tightening by the US Fed. Markets are also contending with Covid outbreaks in China, where Beijing and Shanghai resumed mass virus testing.
NCLAT rejects Amazon’s plea against CCI order; directs to deposit over ₹200 cr penalty in 45 days
The National Company Law Appellate Tribunal (NCLAT) on Monday rejected Amazon’s plea challenging the decision of fair trade regulator CCI to suspend the approval for the e-commerce major’s deal with Future Coupons.
The NCLAT said “the appellant Amazon has not made full, whole, forthright and frank disclosures of relevant materials. It had furnished only limited disclosures pertaining to acquiring its strategic rights and interest in FRL (Future Retail Ltd)” and executing the commercial contract.
In December, the Competition Commission of India (CCI) had suspended the approval given by it in 2019, for Amazon’s deal to acquire a 49% in Future Coupons Pvt Ltd (FCPL).
The regulator had said Amazon suppressed information while seeking clearances for the transaction back then and also slapped a fine of ₹202 crore on the company.
This includes a ₹200 crore penalty for Amazon’s to notify the combination in the requisite terms and two penalties of ₹one crore each for suppressing the actual scope and purpose of the combination.
However, NCLAT slightly modified the orders of CCI and said the penalty of ₹one crore each imposed was “on the higher side” and reduced it to ₹50 lakh each.
Rajesh Exports setting up India’s first display plant with $3 billion investment: Reuters
Jeweller Rajesh Exports has agreed to invest $3 billion in India’s southern Telangana state to set up the country’s first electronic-display plant, the state government said late on Sunday.
Crompton Greaves Consumer Electrical to raise up to ₹925 crore through NCDs: BSE filing
ICICI Securities on Voltas: Negative EVA generation and decline in market share
Voltas struggled to generate positive economic value during FY22 due to a decade-low RoE. We note its EVA creation was impacted for first time in past decade. It also lost market share by 180bps in FY22 after gaining for a decade. Voltas Beko customer acceptance has increased and it reported 45% volume growth in FY22, to claim ~3% market share in home appliances segment. We model Voltas to report revenue and PAT CAGRs of 15.3% and 24.2% over FY22- FY24E, driven by: (1) high single-digit price hikes, and (2) likely market share recovery.
At current valuations, we believe stock price upside is capped. Hence, we maintain HOLD rating with a DCF-based target price of Rs1,033 (implied P/E 44x FY24E).
Market weakness: Naveen Kulkarni, Chief Investment Officer, Axis Securities
Weakness was seen in the equity market across the globe, led by higher-than-expected inflation data in the US market, leading to a rise in the bond yields. US bond yields are now trading above 3.15% levels, indicating the aggressive rate hike expectation by the US FED in the upcoming FOMC meeting, scheduled this week. The market is now eyeing the outcome of the FED meeting, and how the central bank influences the path of interest rates trajectory to maintain growth and inflation dynamics. In the domestic market, India’s VIX rose by 11% led by weaker global cues, a stronger dollar, and the expectation of Hawkish commentary by the US FED. FII behaviour is likely to be volatile this week, and a clear trend is likely to emerge only after the volatility settles at a lower level for a longer time. Investors should focus on the asset allocation and use this volatility in a calibrated manner to build long-term positions in quality companies, where the earnings visibility is high.
Keystone Realtors files DRHP to raise up to ₹850 crore via IPO
Mumbai-based Keystone Realtors Ltd, which operates under the ‘Rustomjee’ brand, has filed a draft red herring prospectus with Securities and Exchange Board of India (Sebi) to raise up to ₹850 crore via an initial public offering (IPO).
The initial share sale comprises a fresh issue of ₹700 crore and an offer for sale (OFS) of up to ₹150 crore by its existing shareholders and promoters. The OFS consists of up to ₹75 crore worth share sale by chairman and managing director Boman Rustom Irani, up to ₹37.50 crore by Percy Soraji Chowdhry, and up to ₹37.50 crore by Chandresh Dinesh Mehta.
Non-contributing countries seek ban on export curbs on World Food Programme
Of the nearly 81 World Trade Organization member countries, led by Singapore, seeking a ban on export restrictions for the World Food Programme at the ongoing ministerial underway in Geneva, most have not contributed to the United Nation’s programme, as per data.
Although India has been opposing such a move to restrict its policy space to ensure domestic food security, it contributes to the WFP, and in fact was the highest contributor in 2015. (Read here)
Axis Securities’ Pick of the Week – Relaxo Footwears Ltd
Relaxo is the largest footwear manufacturer in India. It manufactures quality and affordable footwear comprising slippers, sandals, sports, and casual shoes. The company boasts of several popular brands including Relaxo, Sparx, Flite, and the Bahamas which stand as leaders in their respective domains. Its product mix comprises Hawai and Bahamas which account for ~25% of total sales value (60% shoes & 40% sandals) while Flite and Sparks account for ~37% of total sales each.
· Open footwear on a recovery track: The company’s Q4FY22 performance stood tepid, especially for the open footwear category (~75-80% of Relaxo’s sales). On a positive note, its closed footwear reported robust recovery on account of the opening of schools, colleges, and work offices. We believe a significant pent up demand will be released as the rural economy revives, thereby benefiting the company’s operating performance moving forward.
· Key catalyst: Normal Monsoon, Higher MSP: Normal monsoon forecast, the recent announcement of a hike in MSP, and higher remittances will be key catalysts aiding in the revival of the rural economy, which in turn, will kick-start the overall consumption cycle.
· Low pressure on profitability: Hyper-inflation in key raw material prices, coupled with subdued volume growth, has been posing pressure on profits. However, we believe the company’s margins are likely to inch up going forward as the pick-up in the volumes and market share gains from the unorganized/smaller players trigger operating leverage.
· Superior financial matrix: Relaxo has maintained healthy operating cash flow and asset turns. Moreover, its robust EBITDA Margins over the years have made it one of the most capital-efficient businesses in the industry. We believe a strong balance sheet with zero net debt and efficient working capital should help Relaxo prosper in the long run.
Recommendation: We recommend a BUY on the stock with a near-term TP of ₹1,100/share implying an upside of 11% from the CMP.
Nifty Bank among worst hit sectoral indices today
Investor wealth tumbles over ₹5.47 lakh cr in early trade: PTI
Equity investors became poorer by over ₹5.47 lakh crore in early trade on Monday amid an extremely weak trend in the broader market with the Sensex plunging over 1,500 points.
The 30-share BSE benchmark tanked 1,568.46 points to 52,734.98 in early trade. The broader NSE Nifty slumped 451.9 points to 15,749.90.
In line with weak trend in equities, the market capitalisation of BSE-listed firms eroded by ₹5,47,410.81 crore to ₹2,46,36,948.05 crore in morning trade.
Bitcoin tumbles to 18-month low on US inflation impact contagion
Bitcoin plunged to the lowest in about 18 months in Asia trading Monday as the impact of Friday’s shock US inflation data continued to reverberate through global risk assets.
The world’s largest digital token tumbled as much as 8.9% to $24,903.49 — its lowest since December 2020. Other cryptocurrencies also declined as a broader sell-off continued. The MVIS CryptoCompare Digital Assets 100 Index, which measures 100 of the top tokens, dropped as much as 9.7
Asian equities deep in the red as inflation boosts bets on monetary tightening
Asian stocks dropped and bond yields surged on Monday following a fresh high in American inflation that heaped pressure on the Federal Reserve to intensify monetary tightening. The yen reached a 24-year low.
Equities shed 2.7% across Asian markets. Tech shares in Hong Kong declined by almost 4%, weighing on the broader Hang Seng index, while…
Read More: Stock Market LIVE Updates: Sensex, Nifty crack 2.5%; Bajaj twins tank 5%