IT majors post strong revenue growth in third quarter
India’s top three software services companies, announcing their quarterly earnings on the same day for the first time, saw healthy growth in revenue in the three months to December. Compared with the September quarter, revenue at Infosys rose 7 percent, prompting it to raise its 2021-22 target. Tata Consultancy Services grew 4.5 percent and announced a Rs 180 billion share buyback. Revenues of Wipro increased by 3 percent sequentially.
Why it’s important: The fiscal third quarter is considered seasonally weak for India’s IT sector because there are lesser working days in the US and Europe, their main markets. Despite that, the top three companies saw revenues rise both sequentially and on an annual basis.
Retail inflation soars, industrial production falls
India’s Consumer Price Index rose to 5.59 percent in December, the highest in five months. At the same time, the growth in industrial output slowed to a nine-month low of 1.4 percent in November, down from 4 percent in October.
Why it’s important: The numbers indicate that India’s economic recovery is still very fragile. High inflation and low industrial production present a tough choice for the Reserve Bank of India, as it should raise interest rates to control price rise, but that would hit the brakes on economic growth further.
Yes Bank seeks Rs 120 billion for asset reconstruction
Yes Bank, which will select a partner for an asset reconstruction company to sequester a large portion of its non-performing assets, is seeking as much as Rs 120 billion from potential investors. The troubled private lender has sought binding bids by 25 January from private equity investors.
Why it’s important: In August, Yes Bank invited expressions of interest to set up the asset reconstruction company and hired EY as process adviser. It received expressions of interest from a dozen investors for setting up the ARC in which it will be a minority partner with 20 percent stake.
Government won’t manage operations at Vodafone Idea
The telecommunications company’s existing promoters and management will continue to be in charge, chief executive and managing director Ravinder Takkar said a day after the government become the biggest shareholder in Vodafone Idea. The government will neither manage the company nor seek a seat on the company’s board of directors.
Why it’s important: Vodafone has converted its dues of about Rs 160 billion to stock as part of a rescue package, ensuring that it survives as a mobile phone operator. The government may exit the firm once it stabilizes.
Bad timing affected Paytm IPO, said founder
Negative macro trends impacted the company’s initial public offering, said Vijay Shekhar Sharma, co-founder of One97 Communications that owns Paytm, even as even as the share price of the payments firm fell further on Wednesday.
Why it’s important: JPMorgan, Morgan Stanley and Goldman Sachs have started covering One97 Communications over the past two weeks, giving a one-year target price for the stock between Rs 1,630 and Rs 1,875. Paytm’s stock price has almost halved since its listing in November. It closed at Rs 1,083.40 on Wednesday.
Market regulator comes down heavily on stock tips scam on social media
The Securities and Exchange Board of India has cracked down on a scam regarding stock recommendations on social media applications Telegram and Twitter. The market regulator fined six individuals Rs 28.4 million and barred them from accessing the stock market indefinitely.
Why it’s important: SEBI is taking increasing cognizance of stock tips circulated by unregistered research analysts on social media or TV channels. These people give stock tips to artificially influence share prices, making a quick buck at the cost of other investors.
Go Airlines puts listing plans on hold due to third wave
The Nusli Wadia Group has put on hold a Rs 36 billion initial public offering plan for budget carrier Go Airlines. The aviation firm had filed for the IPO in May last year and received SEBI’s nod in August. In addition to the public issue, it was planning to raise another Rs 15 billion through a pre-IPO placement.
Why it’s important: The third wave of the coronavirus pandemic has against disrupted the aviation sector. Big investors are said to be watching the impact of Omicron spread on the health and travel plans of consumers before committing funds in aviation.
Taxpayers seek jobs, support for small business, lower taxes
There were some 3,100 suggestions on the MyGov website after the Centre asked for public comments on budget expectations. Most of them are about the critical need to create more jobs, on reducing the tax burden on salaried people, and providing financial support to small businesses, especially in sector like hospitality and tourism, which are among the worst hit due to the pandemic
Why it’s important: Millions have lost jobs due to economic disruption caused by the Covid-19 pandemic. Many others have seen reduced earnings as well. Small businesses have been badly hit. Expectations are, therefore, high that the central government will take stronger measures in the budget to alleviate the pain.
Actuary pegs LIC’s embedded value at Rs 4-5 trillion
An actuary appointed by the government has pegged the embedded value of the Life Insurance Corporation of India at Rs 4-5 trillion, a key parameter that will be used to compute the market valuation of India’s largest insurer.
Why it’s important: Calculating the embedded value is crucial for the launch of LIC’s initial public offering expected to be held in March. It is the first time since the life insurer began operations that such an exercise has been undertaken.
Shops witness weak business as pandemic curbs return
Retail stores in India are again facing a slowdown in sales as the rapid increase in Covid-19 cases have driven consumers indoors, and new restrictions on shopping hours and lowered incomes have put a halt to discretionary spending.
Why it’s important: The slackening of retail sales is another indicator that the incipient economic recovery is tenuous. Consumer sentiment surveyed by the Reserve Bank of India also shows persistent weakness, which is a worrying sign as demand is not growing.
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