Morning Scan: All the big stories to get you started for the day

Morning scan.

#1. SME initial public offerings see buying frenzy by retail investors in 2023

India’s SME market segment has seen 166 companies raising a total of Rs 4,472 crore by listing on both BSE SME and NSE Emerge. As many as 51 of the 166 firms saw subscription rates of more than 100 times, with 12 companies seeing over 300 times subscription, according to FYERS Research. At least 136 of them closed in positive territory on listing day.

Why it’s important: Alongside the boom in the main board primary market issuance, interest in IPOs on SME platforms has touched a new high. The huge listing gains after hefty oversubscription attracted retail investors to bet big on small-ticket IPOs.

#2. Gift City may allow listed firms to directly launch qualified institutional placements

Indian companies could be allowed to launch qualified institutional placement of shares through exchanges at international financial service centers. The IFSC Authority submitted its report on direct listing in IFSC exchanges last week. Earlier this month, IFSC Authority chairperson K Rajaraman had indicated a timeline of April to facilitate direct listing at the maiden IFSC, GIFT City in Gujarat.

Why it’s important: International exchanges at Gift City can act as a driver to attract foreign capital into Indian firms through QIP issuances to select large institutional investors.

#3. Companies raise record Rs 8.8 lakh crore through bonds and non-convertible debentures

Corporate bond and non-convertible debenture issuances breached a new high in 2023, with companies and financial institutions raising Rs 8.82 lakh crore through these instruments until November. Fundraising through NCDs and bonds issuances might exceed Rs 9 lakh crore by the end of the year, which would be nearly 18 percent more than last year’s Rs 7.63 lakh crore.

Why it’s important: The corporate bond market is finally deepening in India. The surge in such issuances could well continue into the next year.

#4. Byju’s seeks to raise $300 million in return for more investor control

Byju’s founder and chief executive Byju Raveendran is asking investors to infuse $300 million into the company for more control. Shareholders have been asking the edtech unicorn to revamp the board so that they can have a bigger say in company operations. A deal may materialize in a few months.

Why it’s important: The cash-strapped start-up is struggling to meet financial commitments and settle legal disputes while improving corporate governance. It will also have to sharply reduce losses to establish a sustainable business model for the long term.

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#5. GMR Group expects lower cost of capital, foreign funds after merger

The GMR group is expecting the debt cost for its airports to decline, ensuring significant inflow from passive funds, as well as foreign fund managers following the merger of GMR Airports with group holding company GMR Airports Infrastructure, according to Saurabh Chawla, executive director, finance and strategy at GMR Airports Infrastructure. The merger is expected to be concluded around March.

Why it’s important: The merged entity expects some relief in refinancing costs by issuing new bonds to repurchase existing ones. Its business prospects remain robust for it to eye lower capital costs.

#6. Taxmen to scrutinize mismatches between tax deducted at source and claims

The income-tax department is trying to catch discrepancies in the tax deducted at source by firms and the declarations by its employees in the annual returns. Several companies in Mumbai, Delhi and other big cities have been served notices under Section 133C, which empower authorities to call for information to verify details. The companies are being asked to either confirm the information or furnish a correction statement.

Why it’s important: Authorities are seeking to plug leaks where tax has escaped with firms deducting less TDS than they should have or employees claiming refunds through extra investment declarations.

#7. Government may extend extending incentive scheme for electric vehicles to 2024-25

The central government may extend the second leg of its incentive scheme for manufacturing electric vehicles into the next financial year and would seek additional resources in the interim budget to expand its corpus. With the third edition of the Faster Adoption and Manufacturing Electric Vehicles
scheme yet to get a nod from the finance ministry, possibilities are being explored to extend the current edition.

Why it’s important: The Indian government has been pushing aggressively for electric mobility. What needs to be considered is whether electric two-wheeler makers need further business encouragement as sale seem to have passed an inflection point.

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#8. India’s economic growth may race past 6.7 percent in the year to March

The Indian economy is likely to grow 6.7 percent in 2023-24, according to a median forecast of 11 economists. Prospects have improved from a month ago, when an ET poll pegged the current financial year’s expansion at 6.3 percent. The median is still short of the recent Reserve Bank of India revised estimate of 7 percent after a better-than-expected 7.6 percent rise in GDP in the September quarter.

Why it’s important: This year has seen the Indian economy come out of a trough. It is likely to stay resilient despite external headwinds since domestic demand and improving investments are providing support.

#9. India’s farm budget may rise 39 percent to Rs 2 lakh crore in 2024-25

The budget for 2024-25 may set aside Rs 2 trillion for the agriculture ministry to help it expand the government’s welfare schemes on income support and crop insurance for farmers. It will be a 39 percent increase in allocation for the ministry, which received Rs 1.44 trillion in the 2023-24 budget.

Why it’s important: The agricultural sector continues to face a crisis with declining incomes amid increasing climate shocks. Providing increasing income support to farmers would help them cope with the distress.

#10. IT majors Infosys and Wipro see senior exodus under Parekh and Delaporte

Infosys and Wipro have each seen about two dozen executives at the rank of senior vice-president and above leave under the tenures of chief executives Salil Parekh and Thierry Delaporte. Since Parekh took over as Infosys boss in January 2018, 22 executives at the rank of SVP and above have left. At Wipro, 22 SVPs and above have moved out in the past three-and-a-half years since Delaporte helmed the firm.

Why it’s important: The country’s software behemoths are finding it hard to retain senior talent. A robust start-up ecosystem is expected to make the challenge even harder.