Midnight News – Jul 23rd 2020

unnamed Midnight News – Jul 23rd 2020

 

Larsen & Toubro reported a 79% fall in net profits for the Jun-20 quarter at Rs.303 crore, which was approximately along street expectations. Total revenues for the quarter at Rs.21,260 crore was also down 28% on a YOY basis, largely on account of the COVID impact. The lockdown had literally brought most of the capital investment activity to a standstill and that has just commenced from June 2020. L&T reported fresh orders worth Rs.23,574 crore in the June quarter, albeit 39% lower on a YOY basis. Most of the government investments have already started while private outlays may still take time.

It was a day of peaks for gold and also for the Reliance stock. The RIL stock crossed Rs.2000 mark for the first time as its market capitalization scaled close to Rs.12,80,000 crore. RIL is already the most valuable company in the world by a margin. Meanwhile, gold also hit a life time high in the Indian market at Rs.51,500 per 10 grams. The global price of gold is yet to reclaim the peaks of September 2011 but the spurt in Indian gold is more due to the post COVID uncertainty and the fear over monetary debasement by central banks. RIL stock has been celebrating its Jio monetization and its move to zero debt.

As one looks at the worsening relations between the US and China, the decision by Xi Jinping to fast track the Star Board market in China in 2018 appears to be a prescient move. Back in 2018, the trade war was escalating and as a backup measure, China had launched the Star Board market where stocks could list in China with minimal red tape and procedures. That is now becoming the attraction as big names like Ant Financial, part of Alibaba, prefer to launch their IPOs in the Chinese and Hong Kong markets. Over time, other large Chinese names like Tencent and Baidu are expected to follow suit.

Morgan Credits, the investment company owned by Rana Kapoor and family, has been downgraded to the lowest speculative grade by CARE. Total debt to the tune of Rs.106 crore of Morgan Credits has been downgraded from BB to D. The downgrade was after CARE raised doubts over the ability of the company to repay the debt in the light of stretched liquidity conditions. Rana Kapoor is currently under judicial custody over money laundering charges in tandem with DHFL. This could create a problem for Nippon Mutual Fund as 4 of its schemes have an exposure to bonds issued by Morgan Credit.

Even as Bajaj Finance presented the results for the Jun-20 quarter and reported a sharp fall in revenues and profits, there was something larger that concerned analysts and shareholders. A large chunk of its term loans were bunched and converted into flexi-loans allowing customers to defer payments. Bajaj Finance had also charged a fee to these customers for this service. This product has been in existence and typically attracts a higher rate of interest and also a switch fee. It is more of the timing of this move that has raised eyebrows as Bajaj Finance also reported a sharp reduction in customers under EMI moratorium. Loans worth Rs.8600 crore have been moved to this flexi category, in some cases even where there was no stress. Such flexi loans are normally used to extend the duration of the loan.

Google India has told the Delhi High Court that Google Pay (GPAY) does not require RBI authorization as it not a payment system operator (PSO) but simply a third party application provider. Google does not have a wallet of its own. This was in response to a PIL filed stating that Google was facilitating financial transactions without RBI authorization. Google has argued that in this case, NPCIL is the PSO and Google Pay is only a service provider or enabler. Google has also confirmed that as per RBI’s latest circular, it is ensuring that all the data pertaining to this activity is only stored in Indian jurisdiction.

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