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

Morning Scan

#1. L&T to buy 21 percent stake in AI cloud provider E2E Networks for Rs 1,327 crore  

Larsen & Toubro will buy 21 percent stake in E2E Networks, an artificial intelligence cloud provider, in a Rs 1,327 crore all-cash transaction, the Economic times reported. In a two-part deal, L&T will acquire 4.17 million equity shares. It has also struck a strategic partnership with the company to integrate E2E’s cloud and AI cloud platforms with its existing data center management and solutions.

Why it’s important: The investment would hasten L&T’s offerings in the data centers and AI space by 18-30 months as it opens access to an existing AI cloud platform. The partnership could potentially deliver a cloud ecosystem designed for businesses in India.

#2. Reliance Jio’s public listing in second or third quarter of 2025 could be pegged at over $6 billion  

Reliance Jio, the telecom business of the Mukesh Ambani-promoted conglomerate, is expected to go for an initial public offering of over $6.25 billion either in the second or third quarter of 2025, the Business Standard reported. At an estimated valuation of around $125 billion, Reliance Jio could be looking at a $6.25 billion IPO or more.

Why it’s important: The IPO size of Reliance Jio, which occupies pole position in telecom in India, is likely being derived on the basis of the company’s valuation benchmarked against rival Bharti Airtel. There is bound to be considerable investor interest in the potential listing.

#3. TGP may invest $1 billion as initial equity pool to set up green financing platform  

Private equity firm TPG is planning to set up a green financing platform in India and may invest $1 billion as the initial equity pool in the NBFC, the Economic Times reported. TPG is in discussions with at least two private lenders and financial institutions to come on board. As banks can only buy up to 20 percent of an NBFC, TPG will be the lead partner even if a joint venture is formed.

Why it’s important: Developing economies like India are struggling to find cash to migrate legacy energy systems from fossil fuels to greener options. TGP’s effort is aimed at partially plugging that gap.

#4. IPO filings surge to record in 2024 on ample domestic liquidity and stable macros  

The number of filings for initial public offerings in 2024 has touched a record, surpassing the previous high set three years ago, the Hindu Businessline reported. The total filings until October stood at 132, higher than the 126 seen in the entirety of 2021. The September quarter alone saw 75 filings. As many as 68 IPOs have hit the market this year, garnering over Rs 1.03 lakh crore, Prime Database data show. Out of these, 54 ended in the green on the day of listing.

Why it’s important: The hot streak for IPOs has been driven by domestic liquidity and stable macroeconomic factors. High subscription numbers and listing pop have promoted firms waiting on the sidelines to move forward with their listing plans.

#5. Reserve Bank may permit use of rupee vostro accounts for greater ease in cross-border trade 

The Reserve Bank of India may permit the use of rupee vostro accounts for a wider variety of transactions, which could boost the utility of these accounts and advance rupee’s use in cross-border trade. The central bank is likely to come up with a new framework on vostro accounts in the next six months.

Why it’s important: The latest development is aligned with India’s efforts over the years to promote the use of the local currency in international trade and transactions. Although the move to internationalize the rupee is a welcome move, there are significant challenges to be overcome.

#6. India is of pivotal important to Unilever’s global business, CEO Hein Schumaker says  

Unilever CEO Hein Schumacher has said India was of pivotal importance to the Anglo-Dutch consumer goods giant, and the company sees rural growth returning on moderating inflation, the Economic Times reported. Schumacher is on a two-week trip to India, Unilever’s second biggest market after the US in terms of revenue.

Why it’s important: Unilever’s local unit, Hindustan Unilever, is India’s biggest consumer goods firm. It has been cautious in its guidance as the company does not expect massive pricing and volume growth in India in the short term. But the faith in India’s growth story remains.

#7. Pipeline of new fund offers remain strong despite recent weakness in local stock markets  

Mutual fund houses in October introduced 21 new equity schemes, with another five launches lined up for November, the business Standard reported. The number of filing with the Securities and Exchange Board of India suggests this momentum will continue with asset management companies seeking approval for 21 more equity schemes in October.

Why it’s important: This calendar year has seen a surge in mutual fund launches. The equity market’s recent downturn is unlikely to slow the brisk pace of launches as Indian savers are increasingly turning to mutual funds and SIPs as a long-term investment option.

#8. State-owned banks chase fixed deposits with best rates in at least eight years  

State-owned banks have taken their average fixed deposit rate to the highest in nearly eight years, the Mint reported, citing data from the Reserve Bank. In September, the weighted average domestic term deposit rate for public sector banks touched 7 percent, a first since March 2017. In the same month, private sector lenders offered 0.5 percentage points lower on term deposits.

Why it’s important: Faced with the slow pace of deposit growth compared with loan offtake, state-owned banks seem to have doubled down on attracting depositors, even at the cost of a potential hit on margins.

#9. Government may bring flexible fuel vehicles at par with electric cars, mimicking Brazil  

The central government is likely to push a multipronged policy approach to promote flexible fuel vehicles on the lines of Brazil, and bring them on a par with electric vehicles, even as India pursues avenues to decarbonize its economy and become a global hub for green energy services and products, the Hindu Businessline reported.

Why it’s important: In the government’s thinking, the thrust on flex fuel vehicles is crucial because, unlike the electric vehicle supply lines, this ecosystem has the least influence from China. It could provide India a competitive edge.

#10. Muted festive season sales could lead to lower bonuses by as much as 15 percent  

Slow festive sales at consumer, electronics and e-commerce firms may erode yearly bonuses by about 15 percent, the Mint reported. The overall consumer sector has had a toned down fiscal second quarter and the bonuses that come in at the end of the year may be lower than the past few years, industry executives and experts said.

Why it’s important: Some firms have noted the impact of moderating sales in multiple sectors. This is a vicious cycle as the dent in bonuses would in turn leaves less disposable funds in the hands of salaried staff.

Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.