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Adani Lenders Consider $750 Million Loan For Ambuja Cements – Top Indian Market Updates

Here are some of the major updates that could move the markets tomorrow:

Adani lenders consider up to $750 million loan for Ambuja debt

Barclays Plc, Deutsche Bank AG and Standard Chartered Plc are in talks to lend between $600 million and $750 million collectively to Adani Group. The loan is part of discussions to refinance the debt taken to fund its purchase of Ambuja Cements Ltd. The loan would be syndicated. If executed, the loan of as much as $750 million would be part of that broader refinancing. The talks haven’t yet concluded, and the amounts could still change. 

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Bajaj Finserv Q1 Results: Net profit rises 48% YoY to ₹1,943 crore

Bajaj Finserv reported a 48.4% YoY rise in consolidated net profit to ₹1,943 crore for the quarter ended June (Q1 FY24. The company’s net profit in the same quarter last year was ₹1,309 crore. Its operating revenue also rose 47% YoY to ₹23,280 crore during the same period. Its subsidiary, Bajaj Finance reported the highest-ever quarterly increase in its customer franchise of 3.84 million and the highest-ever new loans booked of 9.94 million in Q1FY24.

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Sona BLW Precision Q1 Results: Net profit rises 47% to ₹112 crore

Sona BLW Precision reported a 47% YoY increase in consolidated net profit to ₹112 crores for the June quarter (Q1 FY24). Its revenue from operations rose 25.17% YoY to ₹731 crore during the same period. The company’s board approved an investment of ₹99.7 crores for capacity expansion of its Chennai plant from 4 lakh to 6 lakh electric vehicle traction motors. It also decided to add a new capacity of 5 lakh units of printed circuit board assembly by 2024-2025.

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US FDA concerns in Lupin’s Goa, Pithampur facilities are now resolved

Drug Ltd has received correspondence from the US Food & Drug Administration (USFDA) that it has now addressed the concerns raised in the warning letter for its facilities in Goa and Pithampur Unit-2, Indore. This comes after the satisfactory evaluation of the corrective actions taken by Lupin. The actions were in response to the Warning Letter issued by the US FDA on November 6, 2017.

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IEX Q1 Results: Net profit rises 10% YoY to ₹76 crore

Indian Energy Exchange Ltd (IEX) reported a 10% YoY increase in consolidated net profit to ₹10 crore for the June quarter (Q1 FY24). Its total income stood at ₹127 crore during the same period, up 12.3% YoY. EBITDA grew marginally to ₹82 crore in Q1FY24 from ₹81 crore in Q1FY23. Recently, IEX witnessed a steep fall in its share price that could be related to the Central Electricity Regulatory Commission’s plan to initiate market coupling.

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Cipla promoters in talks to sell part stake to private equity firms

According to a CNBC TV18 report, Cipla’s promoters are in talks with private equity firms to sell a part of their total holding in the company. At present, The promoters own a 33.47% stake in the company. An investment bank has been hired to advise on the deal. Furthermore, Private Equity (PE) firms like Blackstone and Baring Asia are amongst others that are in talks to explore a deal. 

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Bharat Forge receives approval to participate in potential defence programs in future

Bharat Forge Ltd has received approval to participate in potential defence programs in future. The license is granted by the Ministry of Home Affairs (MCA) under Arms Rules, 2016. The approval is for small arms and ammunition. Bharat Forge serves several sectors including Automotive, Railways, Aerospace, Marine, Oil & Gas, Power, Construction and Mining. It is among the largest forging companies globally.

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L&T says it will pay back to shareholders if the cash surplus is much higher than requirement

Larsen & Toubro will return money to shareholders if the cash surplus is much higher than the company’s requirements. L&T’s CFO, R Shankar Raman’s declaration of the company’s willingness to return surplus cash to shareholders showcases Larsen & Toubro’s commitment to financial prudence and shareholder value. 

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Kalpataru Projects International, subsidiaries bag orders worth ₹2,261 crore

Kalpataru Projects International and its subsidiaries have bagged orders worth ₹2,261 crore. These new contracts include orders in the T&D (transmission and distribution) business of ₹2,036 crore in overseas markets. Besides, it also got a cross-country oil & gas pipeline project in India of ₹225 crore. It is currently executing projects in over 30 countries and has a presence in 70 nations.

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BPCL still in talks for Russian oil deal, discounts narrow

Bharat Petroleum Corp is still in talks with Russian oil major Rosneft to buy oil under a term deal. According to a Reuters report from last month, BPCL is in talks to buy up to 6 million metric tons of Russian oil under a term deal with Rosneft. Indian refiners have been snapping up discounted Russian oil since many other countries imposed sanctions on Moscow after it invaded Ukraine. The discounts make Russian oil cheaper than similar grades from the Middle East.

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Editorial

Adani Group to Become India’s Second Largest Cement Maker!

The Adani Group has entered into definitive agreements to acquire a majority stake in Holcim AG’s cement businesses in India for a whopping $10.5 billion (~Rs 81,361 crore)! This buyout marks Adani’s entry into the cement industry and makes it the second-largest cement producer in India. In this article, we dive into the details of the acquisition and find out how the conglomerate plans to establish itself in the cement sector.

The Adani-Holcim Deal

  • The Adani Group will acquire Switzerland-based Holcim’s entire stake in two leading cement companies— Ambuja Cements Ltd and ACC Ltd. For the uninitiated, Holcim is the world’s largest cement manufacturer.
  • Through its subsidiaries, Holcim holds a 63.19% stake in Ambuja Cements and a 4.48% stake in ACC. [Ambuja Cements holds a 50.05% stake in ACC.]
  • The Ahmedabad-based conglomerate will offer Rs 385 per share for Ambuja Cements and Rs 2,300 per share for ACC Ltd.
  • With this acquisition, Adani Group will become the second-largest cement maker in India after Aditya Birla’s UltraTech Cement.
  • The group will establish its new materials, metal, and mining vertical once the deal is completed.
  • The sale of Holcim’s Indian business is expected to close in the second half of 2022.

Why is Holcim Leaving India?

After 17 years of steady operations, Holcim decided to exit its cement business in India. The exit is part of its ‘Strategy 2025’ initiative, which aims for sustainable solutions for the building materials sector. Cement is the most consumed product in the world. However, its production adversely affects the environment due to high levels of carbon dioxide emissions.

Thus, Holcim is going green and trying to reduce its dependence on cement. They have already sold stakes in cement operations across Brazil, Indonesia, Malaysia, and Zimbabwe. The company plans to diversify and ramp up its business in building materials (roofing, waterproofing, insulation, etc.) globally.  

As per reports, many believe that intense scrutiny of the Competition Commission of India (CCI) on Holcim’s India operations could also be one of the reasons why the company was in a hurry to move out. The CCI opened its second investigation against Holcim in December 2020.

The Way Ahead

Over the past few years, Adani Group has diversified beyond its core businesses of operating ports, coal mines, and power plants into airports, data centres, and green energy. Now, its foray into cement production looks highly promising. In 2021, the group set up two cement subsidiaries— Adani Cementation Ltd and Adani Cement Ltd. It had announced plans to establish two cement manufacturing units in Dahej (Gujarat) and Raigarh (Maharashtra). 

Ambuja Cements has a cement capacity of 31 million tonnes (MT), with six integrated cement manufacturing plants and 8 cement grinding units across India. Meanwhile, ACC operates 17 cement production units and nine captive power plants. It has a distribution network of 56,000 dealers and retailers across our country. With the deal finalized, Adani’s total production capacity will stand at ~70 metric tonnes per annum (MTPA)! With its deep expertise in infrastructure development, logistics, and renewable energy, the group aims to achieve higher margins in its cement business. 

Cement is one of the most vital substances required in the construction sector. India’s current cement consumption stands at just 242 kg per capita, compared to the global average of 525 kg per capita. The growing middle class, rapid urbanisation, affordable housing projects, and post Covid-19 recovery in construction activities are likely to drive growth in the cement sector. 

Let us look forward to seeing how the Adani Group executes its strategic plans! Will they be able to beat UltraTech Cement and become a leader in the cement sector? Let us know your views on this acquisition in the comments section of the marketfeed app.

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Market News Top 10 News

Manufacturing PMI Rises to 53.7 in September – Top Indian Market News

Manufacturing PMI rises to 53.7 in September 

India’s manufacturing activity expanded for the third straight month in September. The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) stood at 53.7 in September, compared with 52.3 in August. Companies benefited from strengthening demand conditions amid the easing of Covid-19 restrictions. However, the increase in fuel, raw material, and transportation prices pushed the overall rate of input cost inflation to a five-month high. 

PMI is a month-on-month calculation, and a value above 50 represents an expansion when compared to the previous month.  

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Auto sales data for September 2021: Highlights

Maruti Suzuki India posted a 34% month-on-month (MoM) decline in total sales to 86,380 units in September 2021. The fall in sales is mainly due to the global semiconductor shortage. Sales from its utility vehicle segment and exports fell 43% and 14.8%, respectively.  

Tata Motors Ltd registered an 8.16% MoM decline in passenger vehicle sales to 25,370 units in September. The automaker’s commercial vehicle sales increased 11.6% MoM to 33,258 units. Overall domestic sales rose 9.16% MoM to 59,156 units. 

Mahindra & Mahindra’s auto segment posted total sales of 28,112 units in September, a decline of 8% over August. M&M’s farm equipment segment posted an 89% rise in sales to 40,331 units.   

Bajaj Auto Ltd posted a 7.7% MoM increase in total sales to 4,02,021 units. Meanwhile, Escorts posted a 54.8% MoM rise in tractor sales to 8,816 units in September.

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Natco Pharma launches Everolimus tablets in the US

Natco Pharma Ltd’s marketing partner, Breckenridge Pharmaceutical Inc., has launched Everolimus tablets 10mg in the US market. The drug is indicated for the treatment of certain types of cancers, tumors, and seizures. According to industry sales data, the generic version of the drug generated annual sales of $392 million (~Rs 2,905 crore) during the twelve months ended July 2021.

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Ipca Labs’ US arm acquires further 20% stake in Bayshore Pharma

Ipca Pharmaceuticals Inc., USA has acquired an additional 20% share capital of New Jersey-based Bayshore Pharmaceuticals LLC. The consideration paid for acquiring the stake is $1.2 million (~Rs 8.90 crore). With this acquisition, Bayshore Pharma is now a wholly-owned subsidiary of lpca Pharmaceuticals Inc, USA. The company will continue to commercialise registered generic drug products in the US market through Bayshore.

IEX power market grows 59% in September

Indian Energy Exchange (IEX) traded 8,997 mega unit (MU) electricity volume in September 2021, achieving a 59% YoY growth. The electricity market registered a 57% YoY growth in volumes to 25,857 MU for the quarter ended September (Q2 FY22). The day-ahead market traded 6,418 MU volume in September, with the average monthly price at Rs 4.4 per unit. The term-ahead market (comprising intraday, contingency, daily & weekly contracts) traded 193 MU during the same month, recording 81% YoY growth.

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NMDC targets 47 MT iron ore production in FY22

NMDC Limited is aiming to achieve 47 million tonnes (MT) of iron ore production during the current financial year (FY22). The state-owned company will also spend Rs 3,720 crore on capital expenditure. NMDC’s total production in September 2021 stood at 2.69 million tonnes, compared to 1.83 MT in September 2020. Its sales increased by 29% YoY to 2.73 MT in September 2021.

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VST Tillers Tractors signs pact with US-based Zimeno

VST Tillers Tractors Ltd (VTTL) has entered into a master service agreement with US-based Zimeno, Inc to develop an integrated tractor powertrain for Zimeno’s electric tractor. VTTL is a leading farm mechanisation player in India, with a dominant market share in the power tiller segment (54% as of FY21). The company also has a market share of 10% in the compact tractor segment.

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Ambuja Cements begins commercial production at Marwar plant

Ambuja Cements Ltd has commenced commercial production of clinker and cement at its Marwar greenfield plant in Nagaur, Rajasthan. The investment for this project is around Rs 2,350 crore. The plant will increase Ambuja Cement’s clinker capacity by 3 million tonnes per annum (MTPA) and cement sales by 5 MTPA. The plant has a Waste Heat Recovery System (WHRS) that converts waste heat derived during the production process into energy.

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Oyo files DRHP to raise over Rs 8,000 crore via IPO

Hotel-booking startup Oyo Hotels & Homes has filed the Draft Red Herring Prospectus (DRHP) with market regulator SEBI to raise Rs 8,430 crore ($1.1 billion) via an initial public offering (IPO). The IPO comprises a fresh issue of equity shares aggregating up to Rs 7,000 crore and an offer for sale (OFS) of Rs 1,430 crore. According to CB Insights, the startup was last valued at ~$9 billion (~Rs 66,720 crore), making it India’s third most valuable startup. The company is expected to list on the Indian stock exchanges by early next year.

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Tech Mahindra to acquire Germany-based BERIS consulting GmbH

Tech Mahindra GmbH will acquire a 100% stake in BERIS consulting GmbH for a cash consideration of €7 million (~Rs 60.2 crore). BERIS is headquartered in Wolfsburg, Germany, and has about 125+ employees. The acquisition will help Tech Mahindra unlock the transformational growth in the IT and application space for the automotive industry.

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