Tag: powergrid

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Bharti Airtel Posts 466% YoY Jump in Net Profit in Q1 – Top Indian Market Updates

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

Bharti Airtel Q1 Results: Net profit jumps 466% to Rs 1,606 crore

Bharti Airtel Ltd reported a 465.81% YoY jump in consolidated net profit to Rs 1,606.9 crore for the quarter ended June (Q1 FY23). However, net profit fell 20% when compared to the previous quarter. Its revenue from operations rose 22% YoY (or 4% QoQ) to Rs 32,805 crore during the same period. The average revenue per user (ARPU) improved to Rs 183 in Q1 FY23, compared to Rs 146 in Q1 FY22. 

The telecom major procured 19,867.8 megahertz (MHz) spectrum for Rs 43,040 crore in the recently concluded 5G spectrum.

Read more here.

Godrej Properties aims to add new projects worth Rs 15,000 crore in FY23

Godrej Properties Ltd (GPL) is looking to add new housing projects worth Rs 15,000 crore in the current financial year (FY23) by purchasing land outright and forming joint ventures with land owners. GPL has laid out Rs 10,000 crore as its goal for booking values in FY23. The company’s sales bookings jumped five-fold to Rs 2,520 crore during the April-June period (Q1 FY23). 

Read more here.

Adani Ports Q1 Results: Net profit falls 16% YoY to Rs 1,072 crore

Adani Ports & Special Economic Zone Ltd (APSEZ) reported a 16% YoY decline in consolidated net profit to Rs 1,072.38 crore for the quarter ended June (Q1 FY23). Net profit rose 4.72% when compared to the previous quarter. Its revenue from operations fell 0.71% YoY (up 20.6% QoQ) to Rs 4,637.95 crore during the same period. APSEZ handled 90.89 million metric tonnes (MMT) of cargo in Q1, up 8% YoY.

Read more here.

Lok Sabha passes bill to promote non-fossil fuels

The Lok Sabha has passed a bill seeking to mandate the use of non-fossil energy sources such as biomass, ethanol, and green hydrogen. The Energy Conservation (Amendment) Bill, 2022, provides for penalties for violations by industrial units or vessels and on manufacturers if a vehicle fails to comply with fuel consumption norms. The bill also seeks to promote renewable energy and the development of a domestic carbon market to battle climate change.

Read more here.

Tata Motors to acquire Ford’s Gujarat plant for Rs 725 crore

Tata Passenger Electric Mobility Ltd (TPEML) and Ford India Pvt Ltd (FIPL) have signed a Unit Transfer Agreement (UTA) for the acquisition of FIPL’s manufacturing plant at Sanand, Gujarat. The total consideration to be paid for the acquisition is Rs 725.7 crore. TPEML will make the necessary investments to reconfigure the plant to adapt to Tata Motors’ existing and future vehicle platforms. 

Read more here.

Suven Pharma Q1 Results: Net profit rises 17% YoY to Rs 107 crore

Suven Pharmaceuticals Ltd reported a 17.3% YoY (or 2.3% QoQ) increase in consolidated net profit to Rs 107.54 crore for the quarter ended June (Q1 FY23). Its revenue from operations rose 28.4% YoY to Rs 339 crore during the same period. EBITDA stood at Rs 151 crore in Q1, up 31.6% YoY.

Blue Star forays into water projects biz

Blue Star Ltd’s recently formed water projects business has secured orders totaling Rs 375 crore. It has received three rural water supply orders from the Department of Rural Water Supply and Sanitation (RWSS), Government of Odisha. The scope of all the orders comprises field investigation & total station survey, hydraulic & structural design, and construction of electro-mechanical equipment.

Read more here.

HFCL partners with Qualcomm to strengthen its 5G portfolio

HFCL has partnered with Qualcomm Technologies, Inc. for the design and development of 5G millimeter wave (mmWave) Fixed Wireless Access (FWA) Customer Premise Equipment (CPE) products. FWA helps operators with a cost-effective way to deliver fiber-like internet speeds wirelessly over 5G networks. HFCL’s 5G mmWave FWA product portfolio aims to enable telcos to deliver broadband internet services in rural, suburban, and dense urban areas.

Read more here.

Equity mutual fund inflows record 42% decline in July: AMFI data

Net inflows in equity mutual funds fell 42.6% month-on-month (MoM) to Rs 8,898.25 crore in July 2022, as per data released by the Association of Mutual Funds in India (AMFI). The number of mutual fund folios rose 29% YoY and 1% MoM to an all-time high at 13.55 crore. The net assets under management (AUM) for the Indian mutual fund industry stood at Rs 37.74 lakh crore in Q1, up 7% YoY.

Read more here.

Power Grid Q1 Results: Net profit falls 36% YoY to Rs 3,801 crore

Power Grid Corporation of India reported a 36.6% YoY (or 8.5% QoQ) decline in consolidated net profit to Rs 3,801.19 crore for the quarter ended June (Q1 FY23). Its revenue from operations rose 6.7% YoY to Rs 10,905.21 crore during the same period. The company’s transmission business posted a revenue of Rs 235.39 crore in Q1, up 5.9% YoY. Revenue from its telecom business grew 60.18% YoY to Rs 190.32 crore.

Read more here.

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Manufacturing PMI Rises to 54.7 in April – Top Indian Market News

Manufacturing PMI rises to 54.7 in April

India’s manufacturing activity picked up marginally in April after decelerating to a six-month low in March. The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) stood at 54.7 in April 2022, compared to 54 in March. Input costs rose to their fastest pace since November. 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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Adani Wilmar Q4 Results: Net profit falls 26% YoY to Rs 234.3 crore 

Adani Wilmar Ltd reported a 25.6% YoY decline in consolidated net profit to Rs 234.3 crore for the quarter ended March (Q4 FY22). Its revenue from operations rose 40.2% YoY to Rs 14,960.4 crore during the same period. The company’s total expenses increased by 40% YoY to Rs 14,726.7 crore in Q4.

Read more here.

Power Grid to acquire IL&FS Energy Development Company’s stake in CPTCL

Power Grid Corporation India Ltd (PGCIL) will purchase IL&FS Energy Development Company Ltd’s (IEDCL) equity shareholding in Cross Border Power Transmission Company Ltd (CPTCL). PGCIL’s board has cleared the proposal for the purchase of 77,30,225 equity shares of IEDCL in CPTCL. Currently, Power Grid owns a 26% stake in CPTCL, while IEDCL holds a 38% stake.

Read more here.

HDFC Q4 Results: Net profit rises 16% YoY to Rs 3,700  crore

HDFC Limited reported a 16.4% YoY increase in net profit to Rs 3,700 crore for the quarter ended March (Q4 FY22). Its net interest income (NII) rose 14% YoY to Rs 4,601 crore during the same period. [NII is the difference between the interest income a bank earns on loans and the interest it pays depositors.] Its loan book grew 14% YoY to Rs 5.55 lakh crore, driven by lending to affordable housing and high-end properties. HDFC’s board has declared a dividend of Rs 30 per share for FY22.

Read more here.

Vodafone Idea partners with ICRIER to set up telecom centre of excellence

Vodafone Idea Ltd has partnered with Indian Council for Research on International Economic Relations (ICRIER) to set up a telecom Centre of Excellence. The centre has been named InViCT (ICRIER & Vodafone Idea Centre for Telecom). It will provide a common platform to facilitate the development of a coordinated policy response to emerging technology and business trends for India’s telecom sector.

Read more here.

Britannia Industries Q4 Results: Net profit rises 5% YoY to Rs 378 crore

Britannia Industries Ltd reported a 4.96% YoY increase in consolidated net profit to Rs 377.95 crore for the quarter ended March (Q4 FY22). Its revenue from operations rose 13.4% YoY to Rs 3,550.45 crore during the same period. The FMCG major’s operating profit stood at Rs 549.68, up 9% YoY. Its board has declared a dividend of Rs 56.5 per share.

Read more here.

Mahindra Holidays Q4 Results: Net profit at Rs 16.25 crore

Mahindra Holidays & Resorts India Ltd reported a consolidated net profit of Rs 16.25 crore for the quarter ended March (Q4 FY22). It had posted a loss of Rs 10.17 crore in the corresponding quarter last year (Q4 FY21). The company’s revenue rose 16.58% YoY to Rs 542.58 crore in Q4 FY22. Its resort occupancies stood at 77% in Q4.

Read more here.

Route Mobile to acquire Teledgers’ blockchain, DLT platform for Rs 130 crore

Route Mobile Ltd (RML) will acquire the artificial intelligence-based blockchain and distributed ledger technology (DLT) platform of Teledgers Technology for ~Rs 130 crore. The acquisition will enable Route Ledger (a subsidiary of RML) to offer DLT and encrypted messaging solutions to mobile network operators. Route Mobile intends to enable telecom operators & enterprises with DLT Platform across Latin America, the Middle East, Africa, and Asia-Pacific.

Read more here.

LIC IPO’s Rs 5,630 crore anchor book oversubscribed: Report

According to a CNBC-TV18 report, LIC IPO’s Rs 5,630 crore anchor book saw an overwhelming response and was oversubscribed. Earlier reports stated that Goldman Sachs, Morgan Stanley, Nomura, Singapore’s GIC Pte, Norway’s sovereign wealth fund, and SBI Mutual Fund would be among those who may bid for the LIC’s anchor book.

Auto sales data for April 2022: Highlights  

Maruti Suzuki India posted a 5.6% year-on-year (YoY) decline in total sales to 1,50,661 units in April 2022. Sales of its compact vehicle segment fell 21.6% YoY to 76,321 units. Exports rose 6.8% to 18,413 units.

Tata Motors Ltd registered a 73% YoY increase in total domestic sales to 72,468 units in April. The automaker’s commercial vehicle sales rose 87% YoY to 30,838 units. Overall passenger vehicle wholesales rose 66% YoY to 41,587 units.

Mahindra & Mahindra’s auto segment posted total sales of 54,640 units in April, an increase of 25% YoY. M&M’s farm equipment segment posted a 49% YoY fall in sales to 40,939 units. 

Hero Motocorp posted a 12.45% YoY increase in total sales to 4,18,622 units in April.  

Read more here.

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Editorial

Could IndiGrid InvIT Be The Next Breakout Stock?

India Grid Infrastructure Investment Trust, or IndiGrid InvIT, is India’s first listed power-sector infrastructure investment trust. The trust’s assets under management (AUM) are currently worth ~Rs 15,000 crore. The listed company has delivered consistent growth in terms of share price appreciation, revenue, and profits since its Initial Public Offering in 2017. Could it be the next breakout stock?

In this piece, we discuss what an InvIT is, what sets IndiGrid InvIT from the rest, and what drives the company.

What is an InvIT?

An Infrastructure Investment Trust (InvIT) is an investment scheme (similar to a mutual fund) that enables individual and institutional investors to invest funds in infrastructure projects directly. These investors, who collectively invest small amounts of money in income-generating assets, receive a small portion of the income in return. These ‘assets’ could include road projects, power transmission lines, gas pipelines, and much more. Infrastructure companies monetise their income-generating assets (through InvITs) to repay their debt obligations quickly and effectively. The primary objective of InvITs is to promote the infrastructure sector of a country by encouraging more individuals to invest in it. 

Read more about InvITs at marketfeed over here. 

What is India Grid InvIT?

IndiGrid InvIT is India’s first listed power sector infrastructure investment trust. It is sponsored by American global investment firm KKR & Co. and Sterlite Power Grid Ventures Ltd (SPGVL). The InvIT owns 13 projects, spanning over 30 transmission lines, spread across 7,570 circuit kilometres. IndiGrid also owns 11 substations with  13,550 MVA mega-volt ampere (MVA) transformation capacity across 15 states and one Union Territory. The company has projects in both Transmission and Renewable (Solar) segments.

Investor Corner: IndiGrid InvIT

  • Between 2018 and 2021, The company’s total revenue has grown at a 3-year CAGR of ~56%. The company’s net profit has grown at a 3-year CAGR of ~59% in the same period. 
  • The company is profitable and has displayed consistent growth in terms of revenue, quarter after quarter. 
  • The company debuted in 2017. Soon after, its price took a dip, consolidated for a while and took slowly declined till 2019. The InvIT had seen consistent growth in share price way before the pandemic. Its share price saw a steel rally after the pandemic induced slow down. While the share price hasn’t noticed ‘strong momentum’ or ‘volatility’, it has witnessed a slow and steady growth rate in share price as is evident from the graph given below. IndiGrid has returned ~76% over the past three years. An investment of Rs 1,00,000 would yield Rs 76,000 at the end of three years. 
  • The company’s consistent growth is overshadowed by the HUGE debt burden that it has undertaken. Its Long Term Liabilities has grown from Rs 994.1 crore in March 2018 to Rs 10,401.7 crore in March 2021.
  • The average cost of debt is ~7.81%. This means that for every Rs 100 that the company borrows, it pays close to Rs 7.81 to the lender on average. Nearly 70% of the company’s debt are fixed-rate borrowings where the interest rate does not increase significantly with time or in case of delayed repayment. The InvIT is rated AAA by credit rating agencies like CRISIL, ICRA and India Ratings.

The Way Ahead

The power transmission and distribution sector has been entangled in a web of political and operational issues. These projects weren’t profitable because of high subsidization by the government, power theft, and payment defaults by local electricity boards. The 2021 budget session was a historical one for the power sector as the government tried to shift the burden of payments from power companies, onto itself. The government also paved the way through policies for the renewable energy sector to flourish. To sum it up, the power sector is going to flourish in the coming years. 

IndiGrid InvIT saw lesser interest from investors in its initial days because the concept of an InvIT getting listed on the stock market was unheard of. Despite being consistent, the company’s revenue and profits are not in tune with the debt burden that it has undertaken. This makes the company look fundamentally weak in the eyes of overseers. What one doesn’t realise is that infrastructure projects take many years to flourish and yield a return. The current power policy is signing towards a flourishing sector, which would yield good returns for both shareholders and lenders.

Click here to read more about India’s power transmission and distribution sector, its structure, functioning, and the business structure of the top players. 

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M&M Reports 8-Fold Jump in Net Profit in Q2 – Top Indian Market News

Mahindra & Mahindra Q2 Results: Net profit jumps 785% YoY to Rs 1,432 crore

Mahindra & Mahindra Ltd reported a 785% YoY jump in net profit to Rs 1,431.7 crore for the quarter ended September (Q2 FY22). Net profit increased 67% compared to the previous quarter. Its revenue from operations rose 14.7% YoY (or 13% QoQ) to Rs 13,305.4 crore during the same period. The automaker sold 99,334 vehicles in Q2, an increase of 9% YoY. Tractor sales fell 5% YoY to 88,920 units. The surge in profit was aided by strong export volumes and by mitigating some impact from the severe global semiconductor shortage.

M&M has announced plans to launch 16 electric vehicles (EVs) by 2027 across SUV and light commercial vehicle categories to strengthen its position in India’s electric mobility segment. The automaker will invest Rs 3,000 crore into EV development. 

Read more here.

Praj Industries partners with Indian Oil to produce cleaner fuel

Praj Industries Ltd and Indian Oil Corporation have signed a Memorandum of Understanding (MoU) to explore opportunities in the production of alcohol to jet (ATJ) fuels, 1G & 2G ethanol, compressed bio-gas (CBG), and related opportunities in the biofuels industry. This MOU will boost ATJ fuel production capacity and its use in India to curb emissions emanating from the airplanes as per the International Air Transport Association’s (IATA) mandate. Indian Oil and Praj will also collaborate to set up biofuel production facilities, including biodiesel, and ethanol.

Read more here.

MRF Q2 Results: Net profit falls 54% YoY to Rs 189 crore

MRF Limited reported a 53.9% YoY decline in consolidated net profit to Rs 189.06 crore for the quarter ended September (Q2 FY22). Its revenue from operations rose 15.62% YoY to Rs 4,907.81 crore during the same period. The tyre manufacturer’s board has declared an interim dividend of Rs 3 per share.

Read more here.

BHEL Q2 Results: Net loss narrows to Rs 46 crore

Bharat Heavy Electricals Ltd (BHEL) reported a consolidated net loss of Rs 46.58 crore for the quarter ended September (Q2 FY22). It had posted a net loss of Rs 552.38 crore in the corresponding quarter last year (Q2 FY21). Its revenue from operations rose 42.6% YoY to Rs 4,910.62 crore in Q2 FY22. Total expenses stood at Rs 5,275.39 crore during the July-Sept quarter of FY22, an increase of 16.2% YoY.

Read more here.

Tata Motors partners with Bank of India for vehicle financing

Tata Motors has partnered with Bank of India (BOI) to offer finance options to all its passenger vehicle customers. BOI will provide loans to Tata Motors’ customers at an interest rate starting from as low as 6.85%. The scheme will offer a maximum of 90% financing on the total cost of the vehicle, which includes insurance and registration. The offers through the partnership will be applicable on the ‘New Forever’ range of conventional cars, SUVs, and EVs for personal segment buyers.

Read more here. 

Indraprastha Gas Q2 Results: Net profit rises 30% YoY to Rs  crore

Indraprastha Gas Ltd (IGL) reported a 30% YoY increase in net profit to Rs 400.54 crore for the quarter ended September (Q2 FY22). The company’s turnover rose 39% YoY to Rs 2,005.07 crore during the same period. IGL registered an average daily sale of 7.24 million metric standard cubic meters per day (mmscmd) in Q2 FY22 compared to 5.50 mmscmd in Q2 FY21, recording a growth of 32%.

Read more here.

IRCON International emerges lowest bidder for order worth Rs 5,142 crore

IRCON International has emerged as the lowest (L-1) bidder in a tender valuing approximately Rs 5,142 crore floated by National High-Speed Rail Corporation (NHSRCL). The order involves the design, supply, and construction of track and track-related works (including testing and commissioning) for the double-line high-speed railway between Zaroli village and Vadodara in Gujarat. The completion period of the project is approx. 6.5 years.

Read more here.

IDFC Q2 Results: Net profit at Rs 262 crore

IDFC Limited reported a consolidated net profit of Rs 262.55 crore for the quarter ended September (Q2 FY22). During the quarter, the company had received Rs 200 crore as its share of profit from its associates and joint ventures. It had posted a net loss of Rs 146.68 crore in the corresponding quarter last year (Q2 FY21). 

The Board of Directors of IDFC Ltd has approved the merger scheme of IDFC Alternatives Ltd, IDFC Trustee Company Ltd, and IDFC Projects Ltd (wholly-owned subsidiary companies) into IDFC.

Read more here.

PowerGrid Q2 Results: Net profit rises 9% YoY to Rs 3,376 crore

Power Grid Corporation of India reported a 9% YoY increase in consolidated net profit to Rs 3,376.38 crore for the quarter ended September (Q2 FY22). Its total income rose 7% YoY to Rs 10,514.74 crore during the same period. During the quarter, 2,100 circuit kilometers (ckm) of transmission lines and 14,000 megavolt-ampere (MVA) transformation capacity were added. 

Read more here.

Mazagon Dock delivers 4th Scorpene Submarine ‘Vela’ to Indian Navy

Mazagon Dock Shipbuilders Ltd (MDL) has delivered the fourth Scorpene Submarine of Project P-71 to the Indian Navy. It will be commissioned as INS Vela. With the delivery of Vela, MDL has lived up to its reputation as one of the country’s leading shipyards and reaffirmed India’s membership in the exclusive club of submarine-building nations.

Read more here.

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IRDAI Grants Final Approval to Bharti AXA-ICICI Lombard Deal – Top Indian Market News

icici lombard bharti axa

IRDAI grants final approval to Bharti AXA-ICICI Lombard deal

ICICI Lombard General Insurance Co. Ltd has received final approval from the Insurance Regulatory and Development Authority of India (IRDAI) for the demerger of the general insurance business of Bharti AXA General Insurance to itself by way of a scheme of arrangement. The demerger and transfer of the general insurance business will be effective within three days from the date of final approval. IRDAI has also granted approval to ICICI Bank for reducing its stake in ICICI Lombard to 30%.

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PGCIL begins work on first EV charging station in Meghalaya

Power Grid Corporation of India Ltd (PGCIL) has laid the foundation stone for the first-ever electric vehicle charging station (EVCS) at its office complex in Shillong, Meghalaya. The EVCS is being developed under Phase-II of the Faster Adoption and Manufacturing of (Hybrid) & Electric Vehicles (FAME) India scheme. Under this scheme, PGCIL will develop 11 EVCS in Shillong— five public EVCS and six at government establishments. 

Read more here.

RIL’s arm acquires 57% stake in Strand Life Sciences for Rs 393 crore

Reliance Strategic Business Ventures Ltd (RSBVL), a wholly-owned subsidiary of Reliance Industries Ltd (RIL), has acquired a 57.06% stake in Strand Life Sciences for Rs 393 crore. RSBVL will make a further investment of up to Rs 160 crore by March 2023, increasing its total investment to Rs 553 crore. Strand Life Sciences is a pioneer of genomic testing in India. It offers bioinformatics software and clinical research solutions to healthcare providers.

Read more here.

Ashoka Buildcon secures Rs 1,567 crore order for upgrading national highway in West Bengal

Ashoka Buildcon Ltd has received a Letter of Award (LoA) from Adani Road Transport Ltd for upgrading a part of the national highway in West Bengal. The order consists of six-laning of National Corridor NH-19 from Pangarh to Palsit (total design length 67.75 km) in West Bengal on an Engineering, Procurement, and Construction (EPC) basis. The accepted contract price is Rs 1,567.45 crore

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Dr Reddy’s signs pact with Citrus Pharma to sell rights to anti-cancer agent

Dr Reddy’s Laboratories Ltd has entered into a definitive agreement with US-based Citius Pharmaceuticals to sell all its rights to E7777 (an engineered IL-2-diphtheria toxin fusion protein) and certain related assets. Under the terms of the agreement, Dr Reddy’s will receive an upfront payment of $40 million (~Rs 290 crore) upon closing the transaction. This will be followed by an approval milestone payment of up to $40 million related to the cutaneous T-cell lymphoma (CTCL) indication approval. E7777 has is an important component of systemic therapy for CTCL and other cancers. 

Read more here.

Barbeque Nation raises Rs 100 crore via preferential issue of equity shares

Barbeque Nation Hospitality Ltd has raised ~Rs 100 crore through the preferential issue of equity shares to three different investors. The company’s Stakeholders’ Relationship Committee has approved the allotment of 11.77 lakh fully paid-up equity shares (of the face value of Rs 5 each) at a premium of Rs 844 per share. The shares were allotted to Massachusetts Institute of Technology (MIT), Plan Associates LLC, and Motilal Oswal Equity Opportunities Fund Series-II.

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Coal India launches software for better assessment of coal resources

Coal India Ltd (CIL) has launched a software that will help in identifying thin coal seams under the earth’s crust and improve the assessment of coal resources using seismic surveys during the exploration process. The new software helps in enhancing the resolution of seismic signals, leading to the depiction of the thinnest coal seams. The software, named ‘Spectral Enhancement’, was developed by CIL’s research & development arm Central Mine Planning and Design Institute in association with Gujarat Energy Research and Management Institute.

Read more here.

Future Consumer focusing on Digital First model across brand activities

Future Consumer Ltd (FCL) is focusing on changing the orientation of all business and brand activities to make them Digital First, according to the company’s annual report for 2020-21. This move is based on the expectation that consumer behaviour of shifting to online shopping due to the Covid-19 pandemic will remain in the long term. FCL will continue to grow its portfolio of food, home, and personal care products. Key brands including Golden Harvest, Tasty Treat, Karmiq, Desi Atta Company will continue to drive volume and value growth.

Read more here.

JSPL’s shareholders approve 96.42% stake sale in Jindal Power

Jindal Steel and Power Ltd (JSPL) has received shareholders’ approval to divest its 96.42% stake in its subsidiary Jindal Power Ltd (JPL) to Worldone for Rs 7,401 crore. Of the total Rs 7,401 crore, Worldone (a company owned by the Jindal Group) will pay Rs 3,015 crore in cash and takeover liabilities worth Rs 4,386 crore of inter-corporate deposits (ICDs) and capital advances paid by JPL to JSPL. This deal will help JSPL reduce its debt of Rs 6,566.44 crore (as of December 31, 2020) and help it become a net cash firm.

Read more here.

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Adani Ports Gets Approval to Acquire 10.4% Stake in Gangavaram Port – Top Indian Market News

adani ports and sez

Adani Ports gets approval to acquire 10.4% stake in Gangavaram Port

Adani Ports and Special Economic Zone Ltd (APSEZ) has received approval from the Andhra Pradesh government to acquire a 10.4% stake in Gangavaram Port. The consideration to be paid for the acquisition is Rs 644.78 crore. The transaction is expected to be completed within a month. Gangavaram Port is a multi-cargo facility that has a capacity of 64 million metric tonnes (MMT). It handled cargo volumes of 32.81 MMT in FY21.

Read more here.

FM launches EASE 4.0; reviews performance of public sector banks

Finance Minister Nirmala Sitharaman undertook the annual performance review of public sector banks (PSBs) and launched EASE 4.0 or Enhanced Access and Service Excellence. EASE 4.0 is a common reform agenda for PSBs aimed at institutionalising clean and smart banking. PSBs have been requested to interact with export promotion agencies and chambers of commerce to understand and address the requirement of exporters in a timely manner. The Finance Ministry also urged banks to extend assistance to the fintech sector. 

Read more here.

Cipla forms JV with Kemwell Biopharma for developing, manufacturing biosimilars

Cipla Ltd and Kemwell Biopharma Pvt Ltd have announced the execution of a joint venture (JV) agreement to develop, manufacture, and commercialise biosimilars for global markets. A joint venture company will be incorporated with an aim to enter the respiratory biosimilars space. The JV will leverage Cipla and Kemwell’s complementary strengths for end-to-end product development, regulatory filings, manufacturing, and commercialisation of biopharmaceutical products.  

Read more here.

PGCIL commissions 765 kV Vindhyachal-Varanasi transmission line

Power Grid Corporation of India Ltd (PGCIL) has commissioned the 765 kilo-volts (kV) Double Circuit (D/C) Vindhyachal –Varanasi Transmission Line. The project was undertaken by its wholly-owned subsidiary POWERGRID Varanasi Transmission System Limited (PVTSL). This transmission line corridor will provide strong connectivity between Northern Region (NR) and Western Region (WR) and facilitate the reliable flow of power to industries and households.

JSPL plans to spend $2.4 billion to double output

Jindal Steel & Power Ltd (JSPL) has announced plans to spend $2.4 billion (~Rs 17,800 crore) over the next six years to ramp up production capacity. The company aims to raise total crude steel capacity from the existing 8.6 million tonnes (MT) to 15.9 MT by March 2025. JSPL also has plans to more than double pellet production capacity to 21 million tons by 2024.

Read more here.

UPL’s nature.farm launches program to end stubble burning

UPL’s agri-services subsidiary nature.farm has announced a program to end stubble burning practices in Punjab and Haryana by replacing the matchstick with a spray service for the PUSA decomposer, a bio-enzyme developed by the Indian Agriculture Research Institute (IARI). It decomposes the stubble within 20-25 days after spraying and turns it into manure, which further improves the soil quality. nature.farm has signed up over 5 lakh acres in this program and onboarded more than 25,000 farmers who will be availing this sustainable agriculture practice free of cost. 

Read more here.

Kaveri Seed board approves Rs 120 crore share buyback plan

The Board of Directors of Kaveri Seed Company Ltd has approved the buyback of equity shares of the company for an aggregate amount of Rs 120 crore. The buyback price has been fixed at Rs 850 per share. The shares of Kaveri Seed closed at Rs 579.15 on the NSE today. Telangana-based Kaveri Seed is engaged in the production and marketing of hybrid seeds.

Read more here.

Prestige Estates Projects acquires 70% stake in Shipco Infrastructure

Prestige Office Ventures, a wholly-owned subsidiary of Prestige Estates Projects, has acquired a 70% equity stake in Shipco Infrastructure Pvt Ltd for creating logistics and warehousing space. The transaction was valued at Rs 22.68 crore. Incorporated in 2006, Shipco Infrastructure is engaged in the business of real estate development.

Allied Digital Services secures 6-year contract worth $88 million from automotive company 

Allied Digital Services Ltd has secured a six-year contract worth $88 million (~Rs 650 crore) from a global automotive giant. The order consists of transforming the IT operating model and infrastructure landscape across the automotive firm’s workplace management. The transformation will establish a fully scalable on-demand digital IT anytime-anywhere workplace and empower the end-customer to drive business growth.

Centre hikes sugar FRP to Rs 290 per quintal; rules out raising sugar selling price

The Central government has hiked the Fair and Remunerative Price (FRP) of sugarcane by Rs 5 per quintal to Rs 290/quintal for the 2021-22 marketing year. FRP is the minimum price that mills have to pay sugarcane growers. However, the Centre has ruled out any immediate increase in the selling price of sugar. The decision to hike FRP will benefit around 5 crore sugarcane farmers and their dependents. It will also support ~5 lakh workers employed in sugar mills and related ancillary activities.

Read more here.

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Power Grid Reports 6% YoY Rise in Net Profit in Q4 – Top Indian Market News

Power Grid Corp Q4 Results: Net profit rises 6% YoY to Rs 3,526 crore

Power Grid Corporation of India reported a 6.42% YoY (or 4.7 QoQ) increase in consolidated net profit to Rs 3,526.23 crore for the quarter ended March (Q4). Its revenue from operations rose 3.5% YoY to Rs 10,510.32 crore during the same period. Net profit for the financial year ended March 31, 2021 (FY21) rose 8.83% YoY to Rs 12,036.46 crore. The company’s board has recommended a final dividend of Rs 3 per share. Its board has also declared a bonus issue in the ratio 1:3. [Eligible shareholders will receive one extra share for every three shares held in the company]

Federal Bank to raise Rs 916 crore from IFC, associate entities

Federal Bank will raise nearly Rs 916 crore by issuing shares to International Finance Corporation (IFC) and its affiliates. The private lender’s board has approved the issuance of up to 10.5 crore equity shares (of the face value of Rs 2 each) to IFC, IFC Financial Institutions Growth Fund (FIG), and IFC Emerging Asia Fund (EAF) at Rs 87.39 per share. Federal Bank is also seeking shareholders’ approval to raise Rs 4,000 crore through a rights issue or Follow on Public Offer (FPO).

Read more here.

Natco Pharma Q4 Results: Net profit declines 43% YoY to Rs 53 crore

Natco Pharma Ltd reported a 43.68% YoY decline in consolidated net profit to Rs 53 crore for the quarter ended March (Q4). Net profit has declined by 15.57% when compared to the previous quarter. Its total income declined by 24.62% YoY (or 6.81% QoQ) to Rs 359.7 crore during the same period. Net profit for the financial year 2020-21 (FY21) declined by 4.32% YoY to Rs 440.9 crore. The company expects strong growth during the current financial year due to multiple high-value product launches in the US and a rebound in its India business.

Read more here. 

Lupin receives USFDA approval for Sevelamer Hydrochloride tablets 

Lupin Limited has received approval from the US Food & Drug Administration (USFDA) to market Sevelamer Hydrochloride tablets. The drug is used to control serum phosphorus in patients with chronic kidney disease on dialysis. According to IQVIA data, the tablets had estimated annual sales of $80 million (~Rs 592 crore) in the US for the 12 months ended March 2021. The product will be manufactured at Lupin’s facility in Nagpur.

Read more here.

IndusInd Bank launches digital lending platform ‘IndusEasyCredit’

IndusInd Bank announced the launch of ‘IndusEasyCredit’, a digital lending platform that enables customers to meet their financial requirements from the comfort of their homes. Both existing customers and non-IndusInd Bank customers can instantly avail of personal loans or credit cards on a single platform in a completely paperless and digital manner. Currently, customers can only apply for the ‘IndusEasyCredit’ facility through the bank’s website.

Read more here.

DB Corp Q4 Results: Net profit jumps 157% YoY to Rs 61.9 crore

DB Corp Limited reported a 157.42% YoY jump in consolidated net profit to Rs 61.91 crore for the quarter ended March (Q4). Net profit has declined by 37.48% when compared to the previous quarter. Its revenue from operations declined by 6.17% YoY to Rs 456.60 crore during the same period. Net profit for the financial year ended March 31, 2021 (FY21) declined by 48.57% YoY to Rs 141.42 crore. The company’s board has recommended a final dividend of Rs 3 per share. DB Corp is a print media and publishing company based in Madhya Pradesh. 

Read more here.

Nazara Technologies to acquire 69.82% stake in gaming firm Publishme

Nazara Technologies Ltd has signed a binding term sheet to acquire a 69.92% stake in Publishme, a mobile game publishing agency based in the Middle East and Turkey. The company will invest nearly Rs 20 crore for acquiring the majority stake in Publishme. With this acquisition, Nazara Tech will expand its international footprint in the freemium segment. It aims to build local execution capabilities by cutting across key growth segments— freemium, gamified learning, and esports.

Read more here.

Adani Enterprises to invest Rs 1,000 crore in cement business: Report

According to a report from BusinessLine, the Adani Group is setting up a 5 metric tonne per annum (MTPA) cement plant in Maharashtra with an initial investment of Rs 1,000 crore. Adani Enterprises Limited (AEL) had recently announced the incorporation of a new wholly-owned subsidiary, Adani Cement Industries Ltd, to carry out the business as manufacturers and processors of all types of cement. The company has identified a 100-acre land in the Raigad district of Maharashtra to set up the cement plant. 

Read more here.

Novartis India Q4 Results: Net profit rises 43% YoY to Rs 9.7 crore

Novartis India Ltd reported a 43.07% YoY increase in net profit to Rs 9.7 crore for the quarter ended March (Q4). Its revenue from operations rose 6%YoY to Rs 99.29 crore during the same period. Net profit for the financial year ended March 31, 2021 (FY21) jumped 107.34% YoY to Rs 20.9 crore. The pharma company’s board has recommended a final dividend of Rs 10 per share. 

Read more here.

Domestic air passengers in May 63% lower than April: DGCA

The total number of domestic passengers that travelled by air declined by 63% to 21.15 lakh in May 2021, compared to 57.25 lakh passengers in April. The second wave of the Covid-19 pandemic has severely hit the aviation sector. IndiGo carried 11.69 lakh passengers in May and secured 55.3% of the domestic market share. SpiceJet flew 1.99 lakh passengers during the same month, accounting for a 9.4% market share. Go First (previously known as GoAir) carried 1.38 lakh passengers in May. The data was released by the Directorate General of Civil Aviation (DGCA).

Read more here.

Tube Investments Q4 Results: Net profit jumps 141% YoY to Rs 143 crore

Tube Investments of India reported a 141.91% YoY jump in consolidated net profit to Rs 143.84 crore for the quarter ended March (Q4). Net profit has increased by 34% when compared to the previous quarter. Its revenue from operations jumped 165.3% YoY to Rs 2,624.72 crore during the same period. Net profit for the financial year ended March 31, 2021 (FY21) declined by 6.54% YoY to Rs 286.32 crore. The company’s board has recommended a final dividend of Rs 1.5 per share. Its board has also approved the fundraising of up to Rs 200 crore via debt securities. 

Read more here.

Infosys Finacle launches digital banking SaaS offering for urban co-op banks

Infosys Finacle has launched a digital banking software-as-a-service (SaaS) platform to help Indian urban cooperative banks (UCBs) modernize their business and operations. The company is a part of EdgeVerve Systems, a wholly-owned subsidiary of Infosys Ltd. The platform has already been adopted by three leading UCBs in India— Vidya Sahakari Bank, Urban Co-operative Bank, Bareilly, and Zoroastrian Cooperative Bank

Read more here.

IPO Updates: 

Dodla Dairy

The Rs 520-crore IPO of Dodla Dairy Ltd was subscribed 3.3 times on the second day of bidding. The portion reserved for retail investors was subscribed 6.18 times. The portion set aside for non-institutional investors (NIIs) saw a subscription of 6% and that of qualified institutional buyers (QIBs) 28%. You can learn more about the IPO here.

KIMS 

The Rs 2,144-crore IPO of Krishna Institute of Medical Sciences Ltd was subscribed 56% on the second day of bidding. The portion reserved for retail investors was subscribed 1.95 times. The portion set aside for non-institutional investors (NIIs) saw a subscription of 9% and that of qualified institutional buyers (QIBs) 32%. You can learn more about the IPO here.

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Market News Top 10 News

India to Target 20% Ethanol Blending in Petrol by 2025, says PM Modi – Top Indian Market News

petrol prices

India advances 20% ethanol blending in petrol to 2025: PM Modi

Prime Minister Narendra Modi, on Saturday, said the target date for achieving 20% ethanol-blending with petrol has been advanced by five years to 2025 to cut pollution and reduce import dependence. The E100 pilot project related to the production and distribution of ethanol was also launched in Pune today. Ethanol extracted from sugarcane and damaged food grains is less polluting and its use will also provide farmers with an alternate source of income. 

Last year, the Central government had set a target of reaching 10% ethanol blending in petrol (10% ethanol mixed with 90% diesel) by 2022 and 20% doping in 2030.

Read more here.

VA Tech Wabag Q4 Results: Net profit at Rs 32 crore

VA Tech Wabag Ltd reported a standalone net profit of Rs 32.82 crore for the quarter ended March 2021 (Q4 FY21). It had posted a net profit of Rs 1.38 crore in the corresponding quarter last year (Q4 FY20). Total income rose 39.2% YoY to Rs 701.09 crore in Q4 FY21. For the financial year ended March 31, 2021 (FY21), net profit rose 24.3% YoY to Rs 73.03 crore. VA Tech Wabag is a water treatment company based in Chennai.

Read more here.

IOL Chemicals Q4 Results: Net profit declines 16% YoY to Rs 75 crore

IOL Chemicals and Pharmaceuticals Ltd reported a 16.63% YoY decline in net profit to Rs 75.25 crore for the quarter ended March (Q4). Net profit has declined by 35.5% when compared to the previous quarter. Its revenue from operations rose 4% YoY to Rs 467 crore during the same period. Net profit for the financial year ended March 31, 2021 (FY21) rose 23.05% YoY to Rs 444.46 crore. The company’s board has recommended a final dividend of Rs 2 per share.

Read more here.

GST collection declines in May; still holds above Rs 1 lakh crore mark 

The gross Goods and Services Tax (GST) revenue collected in May 2021 stood at Rs 1,02,709 crore, as per data released by the Ministry of Finance. This marks the eighth month in a row that GST revenue has stayed above the Rs 1 lakh crore mark. GST collection took a severe hit in May due to lockdowns and other restrictions imposed by states to curb the second wave of Covid-19 infections. The total GST revenue in May 2021 stands 65% higher than the corresponding month last year. GST collections in April 2021 stood at a record high of Rs 1.41 lakh crore.

Read more here.

PNB targes 3-fold rise in profit at nearly Rs 6,000 crore in FY22 

Punjab National Bank (PNB) announced that it is expecting a nearly three-fold jump in net profit to Rs 6,000 crore during the current financial year (FY22). The lender said this target will depend on credit growth and overall demand in the economy. It projects a loan growth of 8-10% for the banking industry on the assumption that the economy will grow at 9.5% in 2021-22. PNB has also identified bad loans (NPAs) worth Rs 8,000 crore, which will be transferred to the National Asset Reconstruction Company Ltd (NARCL).

Read more here.

REC subsidiary transfers two project specific SPVs to PowerGrid

REC Power Distribution Company Ltd, a wholly-owned subsidiary of REC Limited, has handed over two project-specific Special Purpose Vehicles (SPVs) to Power Grid Corporation of India. The SPVs include Fatehgarh Bhadla Transco Ltd and Sikar New Transmission Ltd. The selection of PowerGrid was carried out through Tariff Based Competitive Bidding (TBCB) conducted by the Ministry of Power, Government of India.

Read more here.

Dynemic Products Q4 Results: Net profit declines 27% YoY to Rs 5.8 crore

Dynemic Products Ltd reported a 27.72% YoY decline in consolidated net profit to Rs 5.79 crore for the quarter ended March (Q4). Net profit has declined by 30% when compared to the previous quarter. Its revenue from operations rose 29.43% YoY to Rs 56.56 crore during the same period. Net profit for the financial year ended March 31, 2021 (FY21) rose 17.87% YoY to Rs 28.49 crore. Dynemic Products is a leading manufacturer of food colours.

Read more here.

IPO-bound Paytm reports loss of Rs 1,701 crore in FY21

One97 Communications Ltd, the parent company of Paytm, reported a consolidated loss of Rs 1,701 crore for the financial year ended March 31, 2021 (FY21). It had posted a loss of Rs 2,942 crore in FY20. Its total revenue declined by 10% YoY to Rs 3,186 crore. Expenses fell 22% YoY to Rs 4,782.95 crore. Last week, Bloomberg reported that Paytm is planning to raise ~Rs 21,800 crore via an initial public offering (IPO). The digital payments provider is targeting a valuation of $25 billion to $30 billion.

Read more here.

NHPC to lease electric vehicles, fast charging devices from EESL

NHPC Limited has signed an agreement with Energy Efficiency Services Ltd (EESL) for leasing 25 electric vehicles (EVs) and three fast-charging devices to be used by its officials. With the induction of these EVs, NHPC will have the biggest fleet of zero-emission cars among all major public sector undertakings (PSUs). EESL has been procuring EVs from automakers such as Tata Motors and Mahindra & Mahindra (M&M) and supplying them to different ministries and PSUs.

Read more here.

IFGL Refractories Q4 Results: Net loss at Rs 2.53 crore

IFGL Refractories Ltd reported a consolidated net loss of Rs 2.53 crore for the quarter ended March 2021 (Q4 FY21). It had posted a net loss of Rs 13.93 crore in the corresponding quarter last year (Q4 FY20). Its revenue from operations rose 27.66% YoY to Rs 283.52 crore in Q4 FY21. For the financial year ended March 31, 2021 (FY21), net profit jumped 237.22% YoY to Rs 65.59 crore. The company’s board has approved a total dividend of Rs 10 per share.

IFGL Refractories is a manufacturer of specialised refractories (materials that can withstand very high temperatures) used in steel plants.

Read more here.

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Editorial

PowerGrid InvIT IPO: All You Need to Know

A new initial public offering (IPO) has hit the markets, and it is unlike anything we have covered in the past. PowerGrid Corporation of India has launched an InvIT IPO to raise funds for its power transmission assets. Let us take a closer look into PowerGrid InvIT, learn more about the IPO, and check whether you should subscribe or not.

What is an InvIT?

Firstly, we must understand what an Infrastructure Investment Trust (or InvIT) is. An InvIT is an investment scheme that allows institutional investors and small retail investors (like you and me) to directly invest funds in infrastructure projects. It is similar to the concept of mutual funds. Through InvITs, we can invest small amounts of money in specific income-generating assets such as transmission lines, gas pipelines, and road projects. Using this scheme, there are a few companies in India that monetise such infra projects in order to repay their debt obligations or to maintain a steady cash flow. marketfeed had published a detailed article on InvITs a while ago. 

Company Profile – PowerGrid InvIT

PowerGrid Infrastructure Investment Trust (PowerGrid InvIT) owns, constructs, operates, maintains, and invests in power transmission assets in India. It was registered as an InvIT with market regulator SEBI on January 7, 2021. Power Grid Corporation of India Ltd (PGCIL or PowerGrid) is the sponsor of this particular InvIT. [A sponsor of an InvIT is similar to the promoter of a company] The state-owned firm is also the project manager of the trust and is responsible for the execution and competition of all transmission projects. Most of us are familiar with PGCIL, as it is the largest power transmission company in our country. 

PowerGrid Corp is awarded specific projects under tariff-based competitive bidding (TBCB) by the government. Through its subsidiaries, PGCIL establishes and operates these transmission projects at various locations throughout India. Out of the projects secured by its sponsor, PowerGrid InvIT has initially acquired five projects with a total network of 11 power transmission lines. This consists of approximately 3,698.59 circuit km and three substations that have 6,630 megavolt amperes (MVA) of aggregate transformation capacity. The initial portfolio assets (IPA) of PowerGrid InvIT are PowerGrid Vizag, PowerGrid Kala Amb, PowerGrid Parli, PowerGrid Warora, and PowerGrid Jabalpur.

IDBI Trusteeship Services Ltd (ITSL) is the trustee of this InvIT. ITSL is certified by SEBI and inspects the performance of the trust. PowerGrid Unchahar Transmission Ltd (a subsidiary of PGCIL) is the investment manager of the InvIT. It supervises all the operational activities of the trust. 

Dividend Policy of the InvIT

As a unitholder of the InvIT, you will essentially be investing in the transmission assets mentioned above. The income generated from these assets will be distributed to all unitholders. PowerGrid InvIT will distribute ~90% of the net cash available for distribution to the unitholders once at least every quarter in a financial year. [Net cash is all expenses subtracted from the total income] As a unitholder of the trust, you will be eligible to receive a dividend during all four quarters. The first dividend will be given out within six months from the date of listing and trading of PowerGrid InvITs’ units.

About the IPO

PowerGrid InvIT aims to raise Rs 7,735 crore through the initial public offering (IPO). This will be the first InvIT IPO to be floated by a state-owned company in India. The public issue opens on April 29 and will close on May 3. The price band for the IPO has been fixed at Rs 99-100 per unit. Similar to shares of a company, you will be receiving or holding ‘units’ of the InvIT. The fresh issue of units aggregates to Rs 4993.48 crore. Individual investors can bid for a minimum of 1,100 units (1 lot). This means that you will have to pay Rs 1,10,000 to apply for the IPO. 

The proceeds from the IPO will be provided as loans to initial portfolio assets for repayment or pre-payment of debt, including any accrued interest. The remaining amount will be utilised for general corporate purposes.

Ahead of the IPO, PowerGrid InvIT raised over Rs 3,480 crore from around 47 anchor investors on April 28. Some of these anchor investors are SBI Mutual Fund (MF), HDFC MF, Tata MF, Tata AIG General Insurance Company, ICICI Prudential MF, etc.

Structure of PowerGrid InvIT

The table below shows the proposed structure of PowerGrid InvIT after it gets listed on the stock exchanges.

Source: PowerGrid RHP, Elara Securities Research

Through the IPO, PowerGrid Corporation of India would maintain a 26% stake and offload 74% ownership of the InvIT.

Financial Overview

*31 March 2018 (FY18)31 March 2019 (FY19)31 March 2020 (FY20)31 Dec 2021 (9M FY21)
Revenue3449771,324992
Profit After Tax114248379337
Net Debt5,9585,7655,2164,996
(Values in Rs crore)

From the table, it is clear that PowerGrid InvIT has shown a stellar increase in revenue and profits over the past four years. Total revenue has grown at a CAGR of 96% from FY18 to FY20. During the same period, net profit has grown at a yearly rate of 82%. The trust has realised maximum revenue from mainly two of its IPAs— PowerGrid Warora and PowerGrid Parli Transmission. They have also been successful in steadily reducing their overall debt. After the IPO, we could see a sharp decline in total debt, as a major portion of the proceeds will be used to repay them.

An important point to be noted is that the InvIT will continue to receive fixed tariffs due to long-term transmission service agreements (TSAs). It would obtain a fixed rate for every unit of power transmitted to various entities. This ensures steady cash flows in the years to come. Moreover, the trust is well-positioned to capitalise on increasing power transmission capacities across India.

Risk Factors

  • PowerGrid InvIT is a newly settled trust with no established operating history. This makes it difficult to accurately assess its future growth prospects.
  • The revenue derived from payments by designated inter-state transmission system customers and delays in payments of such billed transmission charges can affect cash flows and operations. 
  • Charges under transmission service agreements (TSAs) are fixed and may not be able to offset the increase in costs (such as operational and maintenance costs). This may impact its business and financial performance. 
  • The success of the InvIT primarily depends upon the investment and project managers, and the management and personnel they employ.
  • The company intends to distribute at least 90% of the net cash available for distribution to its unitholders once at least every quarter in every financial year. However, such income can fluctuate due to various risk factors mentioned above.

IPO Details in a Nutshell

IPO DateApril 29, 2021 – May 3, 2021
Issue TypeBook Built Issue InvIT IPO
IPO PriceRs 99 to Rs 100 per unit
Lot Size1100 units
Issue SizeAggregating up to Rs 7,734.99 crore
Fresh IssueAggregating up to Rs 4,993.48 crore
Offer for Sale Aggregating up to Rs 2,741.51 crore
Allotment DateMay 10, 2021
Listing DateMay 17, 2021
Listing AtBSE, NSE

ICICI Securities, Axis Capital, Edelweiss Financial Services, and HSBC Securities are selected as the book-running lead managers to the public issue. PowerGrid Corporation of India had filed draft papers for the InvIT IPO earlier this year. You can read it here.

Conclusion

Due to a relatively large application amount, most retail investors are likely to stay away from this IPO. It received a very muted response from investors on the first day of bidding, with only 10% of the issue subscribed (so far). 

However, even if you cannot apply for this IPO, it would be a great pick for the long term. PowerGrid and its InvIT are well-positioned to meet the rising power consumption demands of India in the years to come. The sponsor’s experience provides the InvIT with a competitive advantage within the power transmission industry in India. Through the transmission assets it operates across our country, the InvIT has been able to post amazing financial performance over the years. They are likely to post even better revenues and cash flows in the future. Since transmission charges are fixed for a certain period (even up to 35 years), there is minimal price risk. This ensures stable and consistent cash flows. The prospects of a good yield (or dividend) for unitholders make it all the more favourable to invest.

As always, do consider the risks associated with PowerGrid InvIT and come to your own conclusion. What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

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Editorial

Why You Should Look Into Power Distribution and Transmission Companies

Ever wondered about how the power sector in our country works? And what are the opportunities that lie in the industry? For the first time since the liberalization policy in 1991, India’s power sector is going to change for good, in a way that could benefit both consumers as well as power companies. The Finance Ministry is pushing for privatization and delicensing of the power sector which could change the way the power sector works in India.

The total installed capacity of power stations in India stood at 373.43 GW as of October 2020. The transmission lines in India are 4,98,651 km long. According to India Brand Equity Foundation (IBEF), between 2000 and 2020, the power sector attracted Rs 1.11 Lakh Crores in Foreign Direct Investment (FDI), which is close to 3% of the total Foreign Direct Investment(FDI) inflow in India.

Currently, the power distribution companies(Discoms), transmission companies(Transcos), and generation companies(Gencos) are distressed financially due to reduced electricity demand along with unfair pricing and power policy.

With the Budget 2021 and the Electricity Amendment Bill 2020, the power sector is in for a revolution. If the bill is passed in the parliament, it could change the face of the industry. In this piece, we explore how the power sector fairs in the stock market and the listed power companies that have a potentially good investment perspective.

The Companies in the Sector

Power Grid

With a market cap of Rs 96,496 crore, Power Grid is India’s largest state-owned power transmission company in India. It is classified as a Maharatna PSU.  It has an annual Return on Equity of 17%, which means that for every Rs 100 invested in the company, one makes another Rs 17 on it. The company has a Return on Capital Employed(ROCE) of 5.44% and Return on Asset(ROA) of 4.3% which means that it is utilizing its capital and infrastructure pretty efficiently. With 5G coming in and the rising electric vehicle market, the need for additional transmission grids are also likely to increase. Power Grid has also filed for an InvIT or an Infrastructure Investment Trust IPO. The IPO is likely to put the company in a favorable position in the markets. 

Adani Transmission Ltd

Adani Transmission Ltd is the subsidiary of the Adani Group. It is the largest power transmission company in India. Adani Transmission Ltd. has:

  •  A 27,000+ megavolt ampere of transmission capacity. 
  • 3,000,000+ distribution customers
  • 15,400 in transmission line length

Adani Group companies are almost intensively fuelled by debt, but it has a reputation of repaying and gaining a position with time. Adani Transmission over the years took huge debt burdens but managed to pay it back all in time. Most of its debt now is forex debt, which according to the company is cheaper than domestic loans. 

The company transmits electricity to Mumbai, the financial capital of India along with holding assets in 8 other major projects. Adani Transmission has returned 1131.5% in the last 5 years. This means that Rs 1 lakh invested would have turned into 11 lakhs in a period of 5 years, from 2016 to 2021. 

Torrent Power

Torrent Power is a power generation, transmission and distribution company based in India. Torrent’s stronghold is the state of Gujarat where it transmits and distributes electricity to major cities. Apart from Gujarat, the company holds its presence in Bhiwandi(Near Mumbai), Agra(Uttar Pradesh) and other cities in Maharashtra. It has a total generating capacity of 3191.6 MW.

Some electricity that is produced isn’t able to reach the right customers through transmission and distribution lines in case of theft, damage or heat dissipation. This is known as T&D Loss. Torrent Power’s T&D loss is one of the lowest in the country, which is ~4.5% as compared to India’s average T&D loss of 20%. This means that Torrent Power has the right technology, surveillance and assets to supply electricity seamlessly.

Speaking from a financial perspective, the company has constantly rising Profit After Tax(PAT) and Sales Volumes. Over the past 5 years, the company has returned 31.2% on investment. The company’s Return on Equity stands at 12.82% as compared to Industry ROE of 9.5%.

Torrent Power Adjusted Profit and Net Sales(Source:Edelweiss)

CESC or Calcutta Electric Supply Corporation Limited

CESC Ltd. is a power generation, transmission and distribution in and around the city of Kolkata and a few districts of West Bengal. Along with West Bengal, the company also holds generation and distribution businesses in Rajasthan and Maharashtra. 

The company did not fare well in the past 3-4 years, however, there have been recent changes in volumes. The sales volumes in West Bengal has crossed pre-COVID levels and their generation businesses in Rajasthan are likely to turn profitable pretty soon. Loses in the distribution business has reduced significantly. The company is likely to get a push with the Rs 3 Lakh crore stimulus package for electricity distribution companies. The company also offers one of the highest dividends to its shareholders in the power sector. Shares have gained 14.2% in the past 6 months since August 2020.

CESC Price Performance(Source: ICICIDirect)

Tata Power

Tata Power specializes in both generation and power supply. Close to 60% of Tata Power’s revenue comes from power generation, whereas the other 40% comes from transmission and distribution. Tata Power supplies electricity to the cities of Mumbai, Ajmer, and Delhi. It caters to around 26 lakh consumers in Mumbai and Delhi distribution areas, having close to 21,000 circuit kilometers in transmission and distribution grids. The company also holds ~10% market share in the rooftop solar(RTS) energy market in India.

During COVID-19 lockdown, like the rest of the sector, Tata Power too saw a reduction in transmission and distribution revenue segment. Tata Power has been focusing on reducing debt by selling non-core assets or assets that do not add to the core revenue of the company. It has managed to reduce close to ~14% of its debt in the past 1 year. The company’s debt to equity ratio has been decreasing constantly which signifies that the company has been cutting down on debt and catching up on equity in the company.

Privatisation and Delicensing of the power sector will indeed be a positive sign for Tata Power considering that it is the third largest power producing company in India.

IEX

The Indian Energy Exchange or IEX is an electronic power trading marketplace for electricity corporations and boards to trade contracts related to energy. In simple terms, just like how individuals can trade in the stock market to gain profit, electricity corporations can trade on the IEX to increase profitability and have better price discovery. All the three, i.e. Power Generation Companies(Gencos), transmission companies(Transcos) and Distribution Companies(Discoms) can trade on the IEX. IEX has recently seen a spike in volume due to volatility in electricity prices. marketfeed has dedicated two special articles on IEX.

To know more about how the company functions internally and the process of power trading, Click Here.

To know about, IEX as a stock to invest in, financial analysis, profitability and future prospects, Click Here. 

Budget 2021

Budget 2021 has received a positive response from the power sector. Finance Minister(FM) Nirmala Sitharaman allowed a much expected Rs 3 lakh crore to the power sector with the intention of reviving stressed discoms. The distribution of the fund will be over a period of 5 years. It will help in reducing losses and also improve efficiency along with increasing rural penetration. The FM also announced developing a framework for allowing the consumers to have their choice of electricity supplier. This will promote healthy competition and allow for healthy price discovery. 

The FM also announced the aspects of the Electricity(Amendment) Bill 2021, wherein the power sector will be ‘delicensed’ and thereby give smaller power companies a greater opportunity to expand. Apart from this, the government has also announced a Rs 2,606 crore allocation specifically for the solar power sector and also laid emphasis on shifting from using coal as a fuel to renewables.

Invest In Power

The Budget 2021 was indeed a historical one as it addressed a needed boost after the impact of COVID-19. It addressed not only the problems of the distressed power distribution companies but also hinted that the renewable energy sector is taking off. India currently is undergoing a coal crisis. Coal resources are being depleted and renewable energy is relatively more expensive. 

The Indian Power Sector is undergoing a major change, in a way that will change the market outlook for the first time in decades. The power policies in India are made in a way that politically benefits the governments of respective states. They are addressed to benefit the common man. This impacts the power companies as they are faced with reducing demand, falling profits, and increased costs. The power sector was given a ‘Negative Outlook’ by  ICRA, a renowned credit rating agency. Due to the COVID-19 pandemic, the demand for power took a fall and dented the power sector. 

The focus of power companies right now is to increase rural penetration, boost profits and achieve maximum efficiency. ‘Delicensing’ of the power sector will ensure less government intervention and increase cash flows for the power companies. India’s infrastructure boom, rising electric vehicle industry and the 5G revolution shall definitely enhance demand for the power sector. The future of the power sector is bright indeed.