8 min read
Hello, hope you are doing well!
To sum up Week 2 of August 2021, we will be reading about…
ITC’s 110th AGM
Tata’s plan to enter chip manufacturing business
July exports rise due to Petroleum and jewellery shipments
Snippets of other things that happened
Wrap-up
(I)t’ll (T)ake (C)are of its own!
ITC chairman Sanjiv Puri announced on Wednesday (11.08.2021) that ITC is poised to change for the better as various announcements were made for the investors. The company plans to spend $2 billion over the next few years to meet the rising demand of consumers. The tobacco-to-hotels conglomerate also plans to demerge its hotels business and listing its IT arm are also in the works. It will invest in growth areas such as sustainable packaging and an agri focused super app.
The investments will be made towards capacity expansion and inducting state-of-the-art technology. The chairman elucidated the importance of scaling its food processing business and explore various expansion opportunities to meet domestic market expectations. Single-use plastic substitutes for products across verticals will prove crucial. The strategy has been coined ITC Next by claiming to open a new chapter in its life. ITC-MAARS or Metamarket for Advanced Agriculture and Rural Services will provide hyperlocal services to farmers along with providing an online marketplace for the same. It plans to expand inorganically via mergers and acquisitions in the FMCG space as well.
Experts believe that the demerger might not work as the hotels business may not be sustainable individually but its huge cash reserves might play an important role. Even after a stellar show in the AGM and the decent earnings and dividend payout its share price remained in the consolidation range. Even the chairman was taken back for a bit as the share price barely showed signs of improvement. Its shares gained merely 3% against the 15.52% in the Nifty FMCG benchmark over the last year. It has distributed ₹50,000 as dividends in the past five years and hence underperformance remains a concern for the firm. We are hopeful that things will take a turn for the better, for the company and the investors as well.
Chipping in with a Tata!
The Tata Group has announced that it plans to foray into chip manufacturing business that seems lucrative for the firm. The timing cannot be questioned as the world is in a grip of a severe chip shortage as pent up demand for electronic items is yet to be met and major factories in Taiwan and South Korea have been shut down. Hence, the Tata’s have planned to reduce their dependency on large factories and enter the business with a bam!
The high-tech manufacturing of electronic items in India will in itself amount to $1 trillion in GDP and create millions of jobs. The semiconductor business is crucial for digital speedometers, fuel pressure sensors and navigation displays. The lack of semiconductors in the UK will heap huge amounts of losses on the subsidiary of Tata, Jaguar Land Rover. The business will supply parts to companies like Tata Power and Tata Motors and other competitors as well. Mr. N. Chandrasekaran also announced that companies need to have time-bound goals rather than distant vague targets.
He also highlighted the importance of investing in the research and development of renewable energy as it will reduce costs significantly. Moreover, it acquired a stake in Tejas Networks recently, a company that is involved in manufacturing of telecom equipment. Its key competitors are Samsung, Intel, Renesas and Taiwan Semiconductor once it enters the chip manufacturing business. The firm has taken 5G off its checklist and has also ticked off a major one for the time being. We are just curious to see the checklist as a whole and the companies’ future plans for all-round growth.
Buoyance of Jewellery and Petroleum exports
Merchandise exports became 49.9 percent year-on-year to a record $35.4 billion in July on the rear of ascending in shipments of oil-based goods, diamonds and adornments, according to government information on Friday. A considerably quicker 63% year-on-year development in imports to $46.4 billion prompted the import/export imbalance enlarging to $11 billion from $5 billion in July 2020. In June, the import/export imbalance was at $9.4 billion.
In the initial four months of this financial, sends out developed to $130.8 billion, from $75 billion in July 2020 and $107.2 billion in July 2019.
"The $130.8 billion combined fares in the initial four months and the fare level of $7.4 billion in the main seven day stretch of August 2021 means the capacity of India to come to the $400-billion objective effectively," said Prahalathan Iyer, chief general manager (research and analysis) Exim Bank. Key non-oil and non-diamonds and adornments things that saw an ascent in send out in July included materials, attire, electronic and designing products.
India's unrefined petroleum imports became 97.5 percent year-on-year because of more appeal for oil-based commodities contrasted with the year-prior period and the 73.8 percent ascend in unrefined petroleum costs contrasted with the year-prior period. Aditi Nayar, boss business analyst, Icra Ratings, said the current record deficiency was probably going to enlarge as homegrown interest recuperates. "In our view, the current record will record an excess of $2-3 billion in Q1 FY2022, prior to returning to a shortfall of $3-5 billion in the continuous quarter."
What else happened?
New Energy Reliance: Reliance New Energy Solar (RNSEL), a wholly-owned subsidiary of Reliance Industries, will invest $50 million in Ambri, a US-based energy storage company. The low-cost energy storage industry will be of prime importance for developing economies like India. It will boost the efficient usage of clean and renewable energy in various sectors.
It will mitigate climate change and reduce cost of electricity for various business houses. Mukesh Ambani’s plan to create an end-to-end renewable energy ecosystem will bear fruit once the deal takes shape and is implemented.
Caffeinated with funds!: The lack of fresh and high-quality coffee led to the birth of specialty coffee startup, Blue Tokai Coffee, in 2012. Launched by Matt Chittaranjan, Namrata Asthana and Shivam Shahi, the firm aimed source, roast and highlight specialty-grade Indian coffee in contrast to the quick filter ones available. It spread its business online via B2B partnerships during the pandemic after having a strong D2C base in multiple cities across India.
The startup has raised ₹17 crore in a pre-series B bridge round from Anicut Angel Fund. The funding will help improve farm-level interventions, launch new products, expand internationally and keep aside a handsome amount for marketing activities. We just can’t wait to try out the new products on offer and explore its cafes in picturesque locations.
Liquidity settled?: Having moved to a T+2 settlement period in 2003 from the obnoxious T+3, India now plans for an even faster settlement period in the equity markets. SEBI has set up a panel to explore the strengths and weaknesses of a T+1 settlement regime wherein the shares would be transferred to the buyer’s Demat account the following day itself.
No doubt its going to benefit investors, as liquidity is poised to boom if at all the new regime kicks in. The SEBI panel will comprise officials from depositories, clearing corporations and exchanges. Trade turnover and liquidity are the major factors to bring the T+1 period whereas Foreign Portfolio Investors (FPIs) continue to oppose the move as it might impact volume on the cash market.
To wrap it up…
There was a sequential rise in hiring activities as the job market rose for the second month in a row at 15%. All sectors reported positive growth numbers contributing to the 11% growth in July’s hiring activity. Sectors such as hotels, restaurants, airline and travel continued to show signs of recovery. Passenger vehicle sales rose 63% to 2,61,744 units last month with robust demand for SUV models and new launches. However, the long due waiting period continued due to the supply side constraints induced due to pandemic-related restrictions.
Equity MFs witnessed a massive influx of ₹22,583 crore in July with the AUMs continuously on the rise and ending at ₹35.32 lakh crore. Easy liquidity conditions by the RBI may be removed from the following year according to experts. The central bank may hike interest rates as inflation cooled down to 5.6% for July. Analysts opine that rates may be raised by 0.25% as the bank has been tolerant of inflation for quite some time now. The festive season has been duly rung in as Sensex and Nifty touched their respective highs in the last week. Sensex and Nifty rose 593/164.70 points on Friday (13.08.2021) as they closed at 55,437 and 16,529 respectively.
The industry output grew 13.1% on a low base effect, while the mining sector rose by 23.1% and power generation increased by 8.3%. Numbers showed signs of recovery but we are still below pre-pandemic levels. The IIP stood at 122.6 points in June as compared to 107.9 points in the same month last year.
Market indices are at an all-time high but the small and mid-caps have borne the brunt of strategies that favored the large caps. Although the FMCG sector clocked 37% value-based growth in the April-June quarter, we are still wary of the path the broader indices might take. Hence, consider each day as an opportunity to invest and grow your portfolio as it is devoid of a ‘Birth date’ but should be celebrated with vigour and excitement on a daily basis.
It is on your birth date that you are your youngest and oldest self. So make sure you live each moment to the fullest. Invest rigourously. Multiply your wealth. Maintain portfolio and physical hygiene. And look onwards and upwards, always.
We wish you a very Happy Independence Day!
Stay Safe!
Check out: FinWeek’s Economically Yours, a financial podcast.
Listen on: Spotify, Google Podcasts, iTunes, or Anchor.
That brings us to the end of this weekly wrap-up.
See you next weekend. Stay safe!
To leave a comment or to start a discussion, please visit the blog.
If you liked reading this and found it thora bahut insightful then be a good bro and maybe tell your friends and colleagues about this, please?
Send them via WhatsApp or just copy the link to share on other platforms!
Sources: Moneycontrol, The Signal, The Boring News Co., Business standard, Upstox Daily, and Motilal Oswal.
If you think we have missed out on something important or if you just want to have some (chai) coffee pe charcha with us, why don’t you weigh in and let us know?