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

Nifty firms to grow earnings in high double digits in fiscal fourth quarter

Stockbrokers expect another three months of high double-digit growth in the earnings of companies that comprise the 50-share Nifty index. The combined net profit of the index firms is expected to grow by 29.1 percent on an annualized basis in the March 2022 quarter to an all-time high of Rs 1.61 trillion, from around Rs 1.25 trillion a year ago, according to brokerage estimates.

Why it’s important: Growth in corporate earnings will be led by cyclical sectors such as banking, finance and insurance, and oil and gas. Mining and metals companies are expected to report muted expansion due to a high base effect and a sharp rise in input costs.

Godrej group to enter non-banking finance business

The Godrej group is set to enter the non-bank lending business with Godrej Finance. The $4.1 billion conglomerate is expected to make an announcement in this regard on Monday. The lender, with an authorized share capital of Rs 10 billion, will provide loans to small enterprises and loans against property. It may enter consumer lending later, a space dominated by Bajaj Finance.

Why it’s important: Godrej Finance has held a non-banking financial company license since 1998, when it was known as Ensemble Holdings and Finance. It has, however, never been active in the lending space.

IndInfravit Trust to acquire Brookfield’s India roads business

Brookfield is finalizing the sale of its roads portfolio in India to IndInfravit Trust, an infrastructure investment trust led by Canada Pension Plan Investment Board, for an enterprise valuation of Rs 90-95 billion. Both sides have signed an exclusivity agreement and expect to finalize the sale agreement in the next three-four weeks.

Why it’s important: Road traffic and toll revenue have been rising as the Covid pandemic recedes. The infrastructure sector is expected to expand rapidly as the government sees it as a means to boost overall growth.

Government to frame rules to eliminate seller bias in ecommerce

The central government is working on a policy to bring about algorithmic fairness for ecommerce consumers. The proposed rules will make it compulsory for ecommerce firms to show search results of several sellers instead of just focusing on preferred sellers. The rules will also restrict ecommerce companies from sharing buying behavior trends with anyone.

Why it’s important: The move to frame fairness rules will be welcomed by a majority of sellers on ecommerce platforms because showing some chosen sellers limits the choices for consumers and is deemed discriminatory to the concerned sellers.

Vodafone Idea in talks to raise $1 billion from Apollo Global

Vodafone Idea is in advanced discussions with US private equity investor Apollo Global to raise $1 billion by selling a mix of debt and equity. An announcement is likely later this month. India’s third-largest telecom operator was on the brink of bankruptcy when the government offered a rescue package that gave the troubled company more time to pay dues and convert a part of it into equity.

Why it’s important: The debt-laden Vodafone Idea has been wanting to raise money from external investors for more than a year but has found it difficult to convince them to write large cheques because of its large government dues.

Indian regulators mull uniform hours for markets across asset classes

The Reserve Bank of India and the Securities and Exchange Board of India are considering the possibility of synchronizing the trading time for all markets that include stocks, bonds, currency, and commodities. The aim is to ensure ease of operations for investors betting across asset classes as well as for the backend staff at intermediaries.

Why it’s important: A uniformity in timings and settlement processes across different asset classes such as equities, currency and government and corporate bonds can help investors. Payments against transactions could become more streamlined as well.

LIC may launch mega IPO by the end of April

Government officials have suggested mid- or end-April dates to a top ministerial panel, which includes finance minister Nirmala Sitharaman, commerce minister Piyush Goyal and transport minister Nitin Gadkari, for the initial public offering of the Life Insurance Corporation of India. The panel is likely to make its decision soon and give a go-ahead to prepare for the launch.

Why it’s important: The LIC IPO, expected to be the biggest such offering in India, has been delayed due to adverse market conditions that now seems to be stabilising. The insurer has a window till the middle of May to launch the offer, after which it will have to again seek regulatory approval.

Home healthcare provider Portea may raise up to Rs 10 billion through public offering

Portea Medical, India’s largest home healthcare provider, plans to raise around Rs 9-10 billion through an initial public offering. Existing shareholders will sell shares worth Rs 7 billion, and the firm will sell new shares worth Rs 2 billion. Portea is likely to file draft documents for the IPO in May.

Why it’s important: Portea, which is yet to book profits, will likely use the money to expand operations. Healthcare services through the online route has been expanding in India and could be lucrative for firms that can ensure prompt and quality service.

Microfinance loan rates rise as lenders pencil in credit risks

Borrowing costs for bottom-of-the-pyramid customers have begun to climb as the regulator removed the margin cap on microfinance institutions. Some lenders have raised rates by 3.2 percent as they have started applying risk-based pricing to curtail asset quality degradation. Several others are expected to follow suit

Why it’s important: The deregulation has allowed microfinance lenders to price in credit risks. However, the appetite for such loans could become subdued as the borrowers could find difficult to service such microloans.

Saudi sovereign fund could buy stake in Tata Power

Saudi Arabia’s Public Investment Fund in looking to buy a stake in Tata Power’s green energy, power transmission and distribution businesses. The due diligence has been done. The proposed investment will be in addition to BlackRock and the United Arab Emirates’ sovereign wealth fund Mubadala Investment’s plan to invest in a new energy entity being floated by Tata Power.

Why it’s important: The Public Investment Fund has been looking to invest in India’s infrastructure sector like its peers in other countries in the Middle East. There is increasing investor interest in India’s burgeoning green energy sector.