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

A cash pile of this magnitude would help cushion import shocks.

Managing inflows from multiple channels is complex, so the RBI wants better safeguards for the corpus that now amounts to about a fifth of India’s GDP.

Big Four consulting firms and financial institutions already reached out to RBI.

Adani Group plans to hive off-airport business, launch IPO

The Adani Group has begun preliminary talks to separate its airport business from holding entity Adani Enterprises Ltd, says The Economic Times.

How it is important: It is a first step toward listing the unit.

It is expected to raise $500 million through a private placement of shares in Adani Airports Holdings.

Adani controls Mumbai airport, India’s second busiest, as well six regional facilities – Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram.

It is targeting a valuation of ₹25,500-29,200 crore ($3.5-4 billion) for the business.

The group is awaiting better air passenger numbers after the Covid.

The unit has become the country’s top airport platform, catering to at least 10% of India’s air passenger traffic, exceeding 200 million people in FY20.

Adani Airports has debt of Rs 4,100 crore while that of AEL amounts to Rs 15,293 crore.

‘India remains a strong long-term investment bet’

India remains an attractive destination for long-term global investors despite the severe pandemic-induced slowdown, Deloitte’s global CEO Punit Renjen told The Economic Times in an interview.

“Over the long arc of time, and the long investment horizon, India is a very attractive destination,” he said.

Why it is so: It is attractive because the fundamentals are attractive: the talent pool, the demographics, the consumer base, the democratic tradition.

Global companies such as Deloitte won’t change their investment plans even if India seems to have faltered in dealing with the aggressive second wave.

Deloitte is going to hire between 75,000 to 100,000 additional people over the next number of years.

It appears that India may have turned the corner in its fight against Covid and the worst may be behind the country.

IPO rush: Six companies plan to raise over ₹10,000 crore

It’s pouring IPOs this monsoon season in Mumbai, says The Economic Times.

Who they are: Half-a-dozen companies — Sona BLW Precision Forgings, Shyam Metalics, India Pesticides, KIMS Hospital, Clean Science & Technology, and Dodla Dairy.

They will hit the primary market in the next four weeks to raise collectively ₹10,500 crore in initial share sales.

Another six firms are finalising plans to raise funds in the next two months.

Another 25 companies have filed their draft red herring prospectuses with the market regulator to raise more than ₹50,000 crore.

Why this rush: The buoyant secondary markets and excess liquidity that institutional investors are sitting on have made more companies rush to raise funds through the primary market.

There is enough investor appetite for IPOs.

Govt plans to rejig PSBs before sale; BoM, BoI, IOB in queue

The Centre plans to rejig public sector lenders’ balance sheets through capital support and sale of non-core assets among other measures before putting them on the block, says The Economic Times.

Why it is important: Banks will be nudged to exit their non-core businesses to improve their financials before privatisation.

The transformation plan includes the transfer of impaired loans to the proposed bad bank.

Reducing employee count by offering attractive voluntary retirement schemes.

Bank of Maharashtra, Bank of India, and Indian Overseas Bank are the frontrunners. The Central Bank of India may be taken up based on its financial recovery. Punjab & Sind Bank and UCO Bank, the other two lenders that were not merged as a part of the public sector bank consolidation, are not being considered for privatisation yet.

₹25,000 cr plan to boost railway communication infra gets nod

The central government approved a ₹25,000 crore five-year plan to use 4G technology to modernise communication networks in railway stations, says a Mint report.

Why it is important: The purpose of LTE band for the railways is to provide secure and reliable voice, video and data communication services for operational safety and security applications.

Railways will be allotted 5MHz spectrum in 700MHz frequency band to provide long-term evolution or LTE-based mobile train radio communications.

Indian Railways has approved an indigenously developed ATP (Automatic Train Protection) system, which will help avoid train collisions.

It will be used for modern signalling and train protection systems and ensure seamless communication between loco pilots and guards.

It will also enable the Internet of Things-based remote asset monitoring especially of coaches, wagons and locos, and live video feed of CCTV cameras in the train coaches to ensure efficient, safer and faster train operations.

The modern rail network will result in reduced transportation cost and higher efficiency.

Firms tiptoe into FCCBs as equity turns hard to get

Foreign currency convertible bonds (FCCBs) that went out of fashion more than a decade ago are gradually making a comeback, says a Mint report.

The reason: Fundraising through equity alone is not an easy task.

Companies want to tap a wider set of investors who can invest through structured FCCBs.

They can use FCCB to sweeten the deal and protect any downside for incoming investors.

FCCBs earn regular coupon payments and guaranteed principal for the investor and may be converted into shares at a later stage.

Who is doing what: In 2021 so far, Indiabulls Housing Finance Ltd has raised $150 million through FCCBs.

Parag Milk Foods has raised $11 million.

Last week, the board of Anil Ambani’s Reliance Infrastructure Ltd said the company will seek authorisation to issue FCCBs of up to 24% of the then fully diluted capital in tranches.

Cash-strapped Vodafone Idea has also approached foreign investors to raise close to $1 billion through FCCBs.

BharatPe acquires loyalty platform PAYBACK India

Merchant payments and financial services provider BharatPe has acquired a multi-brand loyalty platform, PAYBACK India, says Mint.

Why it is important: It will help its 6 million offline merchants roll out rewards and loyalty programmes for customers.

The acquisition is expected to give an exit to American Express and ICICI Investments Strategic Fund, which hold 90% and 10% stake respectively in the entity.

PAYBACK India will continue to function independently, after the acquisition.

The deal is expected to be worth $30 million.

With this deal, BharatPe, which has traditionally been powering payments and providing credit and other financial services to offline merchants, enters a consumer-facing business.

BharatPe will now also provide digital credit to customers and launch ‘Buy Now Pay Later’ services on the PAYBACK platform.

Retailers roll out the goodies for shoppers

With nonessential retail now allowed to operate in key metros, shoppers can expect massive discounts on everything from iPhones to track pants, says Business Standard report.

Amazon, Myntra and Reliance Retail´s Ajio have already begun to roll out their offers from this week.

Myntra is organising a midyear sale between June 12 and 16 with 40-70 per cent discounts.

Ajio is holding a fashion sale with 50-80 per cent discounts.

Amazon is clearing stocks of electronics items such as notebooks and the latest iPhone 12 models.

The iPhone 12 Mini and iPhone 12 are now offered at 9-11 per cent discounted rates, apart from cashback offers.

Pantaloons, Allen Solly, Levi´s, Puma and Bata, among others, are expected to follow suit.

Kaya and Enrich Salons are offering discounts on products and services.

Covid after-effect: Huge inventory pileup of refrigerators, ACs and smartphones need to be cleared to arrest losses.

Subdued sales of fashion items for over a year push retailers to offer deep discounts.

‘We have a target of 16,500 for Nifty by December’

As India unlocks after the second wave of Covid19, Piyush Garg, executive vice-president and chief investment officer PMS, ICICI Securities, tells Business Standard in an interview that the market is factoring in a deterioration in India Inc´s June numbers.

He added that the indices are looking for a revival of capex at large corporates and some fiscal stimulus for sectors adversely affected.

He said markets have largely factored in the downward revision to economic growth in the first quarter of the current fiscal due to the second wave.

Equity markets are looking forward to a faster pace of vaccination in India in Q2. And set a target of 16,500 for Nifty by December.

Banks drove the earnings in Q4. Lower-than-expected slippages have boosted confidence.

The shift from informal to formal in most sectors of the economy, coupled with the market share gains by sector leaders is the key highlight, which is overshadowing the margin pressure.

However, the rise in the earnings of commodity producers could offset this to a large extent.

The banking, financial services and insurance space is likely to outperform, as the restructuring from the retail segment is coming at sub 1 per cent, which is encouraging along with deleveraging of the metal sector.