Short Call | On a new BRICS currency; SAMIL, Godrej Properties in focus

Short Call

So what does it really take to create a new currency? Supposedly, a lot.

Let's look back in time to the creation of the euro. While it was introduced in 1999, the idea of the currency was floated much earlier, with some suggesting a pan-European currency as early as the 1920s. European states wanted to establish an economic and monetary union, scratching each other's backs so theirs could be scratched in return.

Euro-related discussions and negotiations kicked off from the 1960s onwards, with discussions and problems and challenges clouding its prospects. 40 years later, the euro finally came to life.

So now that chatter surrounding a supposed BRICS currency has swept headlines, we must ask ourselves: really, how realistic is this?

Sure, at the recently-concluded BRICS summit in Russia, a symbolic BRICS banknote was revealed. Pictures of Vladimir Putin with the note went viral, symbolising an alternative to the U.S. Dollar to for global trade.

But can it come to life? Unlikely.

Putin, who posed with this BRICS currency mock-up, himself admitted that the 'time has not yet come' for a currency. India's external affairs minister S. Jaishankar added that there is no proposal to have a BRICS currency. All the member states of the bloc don't share a consensus opinion on the matter either.

Does this mean a BRICS currency is unlikely in the future? Well, the euro took four decades to be birthed, so one can really never say never. Until then, there is a strong push to strenghten local currencies and bolster non-dollar denominated trade.

SAMIL (Rs 167, -2.2%)

Shares of Samvardhana Motherson International Ltd slipped after the Kotak Institutional Equities downgraded the stock to reduce from add following its acquisition of Japan-based Atsumitech.

Bull Case: The acquisition marks its entry into new product segments, including chassis components like gear shifters and powertrain parts such as pulleys, connecting rods, and stator shafts.

Bear Case: European Union passenger vehicle (EU PV) volumes have grown a modest 1 percent year-to-date in 2024, with weak demand persisting across major OEMs like Mercedes-Benz, Audi, BMW, Porsche, Stellantis, and Volkswagen. Since EU PV OEMs account for about 40 percent of SAMIL's revenues, this sluggish trend is likely to impact its revenue growth.

Godrej Consumer Products (Rs 1,126.5; -8.8%)

Shares plunged after the company's weak growth outlook for the December quarter.

Bull Case: Company delivered around 7 percent organic Underlying Volume Growth (UVG) over six quarters, driven by category development, innovations, and media investments. Company expects volume growth to normalise in the coming months as pricing stabilises. Indonesia business projected to sustain strong performance.

Bear Case: Demand conditions in the Indian FMCG sector have been subdued over the past few months. Inflationary environment is pressuring margins, with a temporary dip below the normative range expected this quarter. Soaps, accounting for a third of standalone revenue, has been hit by a 20-30 percent YoY rise in palm oil and derivative prices.

(With inputs from Veer and Neeshita.)