December 9, 2021

A Bit More Love

Tale of the Tape

Hello, everyone. The weekend is almost here.

Nifty and Sensex extended gains for the third straight session despite volatility. Midcap (+0.6%) and Smallcap (+1.2%) fared better. 😌

Banks (-0.5%) and Real Estate (-0.3%) dragged the markets. However, gains were seen across other sectors. FMCG led the charge +1.4%. 💪

Vodafone Idea (+15%) hit a two-year high. Media reports say the company raised enough funds to repay its bondholders. Also, its Indian promoter pushed the government for a fresh set of policies. Read more below. 👇

TVS Motors (+0.3%) expanded its presence in South America. It signed a partnership with Active Motors for distribution of its products in countries like Costa Rica. 👊

Dr.Reddy’s Laboratories (+0.5%) rolled out Valsartan Tablets in the US. It is a therapeutic drug approved by the US Food and Drug Administration (FDA). 💊

Paytm (+2.6%) payments bank received Scheduled Bank status from the RBI. Paytm Bank can now participate in government-run financial schemes. Here’s Mint with more details. 🤓

IPO update. RateGain IPO was subscribed 17X on day 3. Shriram Properties was subscribed 1.6X on day 2. MapMyIndia IPO received almost 2X subscriptions on day 1. That’s not all. Metro Brands IPO will open tomorrow. Read more below. 👇

Cryptos largely traded lower. Bitcoin was down 2%. Ethereum down 0.5%. 😟 Terra up 9%.

Here are the closing prints:

Nifty	17,516	+0.3%
Sensex	58,807	+0.3%
Bank Nifty	37,082	-0.5%

Just A Little Bit More

Aditya Birla Group Chairman Kumar Mangalam Birla feels India’s telecom sector needs a bit more love from the government. 🤗 As a reminder, Aditya Birla Group owns 27% of Vodafone Idea.

The telecom sector has long battled high debt loads. Weaker players have exited. We now have three private players from a peak of 13! 👎 To help, the government recently released a relief package to change the adjusted gross revenue (AGR) definition. Plus, it includes a four-year moratorium on unpaid dues and 100% FDI via the automatic route. 🙏

Private telcos hailed the move. However, with the excitement now settling down, Birla is pitching for a fresh set of policies. 😲 He’s aiming to improve the ease of working with key government and regulatory bodies and hoping for better support from the banking sector.

Birla claims that India’s mobile industry will help us reach our goal of a $5 trillion economy by 2025. BUT, he claims the industry needs that extra bit of love. Let’s see if the government agrees! 🤔

$1 Billion Fix

Tata Motors plans to revamp its commercial vehicle (CV) business with a focus on electric vehicles (EV). 🔌🚗

Here’s the plan. Tata Motors plans to invest Rs 7,500 cr over the next five years. A big focus will be to migrate to a new-age architecture that helps deliver futuristic commercial EVs. We should also expect new vehicle roll-outs. It is currently pursuing a host of options, both for short range, and for long range CVs. Also, Tata Motors is working with various companies to understand their requirements. And the best part? A new commercial EV is set for launch soon! 🙌

Tata Motors is no stranger to EVs. It leads the passenger EV segment with a 80% share, and intends to recreate the magic in the commercial space. FWIW: Tata Motors topped the CV sales in November. It has a 44% market share (vs 35% last year). 🚌

So, what’s the takeaway? The Indian government set a 70% target for all commercial vehicles to be EV by 2030. Tata Motors is well-positioned to lead the way. But, it may not be a smooth ride as close competitors like Ashok Leyland also see the opportunity. Look forward to tracking this for you guys. 👊

More Upside on Reliance

Good news for all you Reliance Industries bulls. Goldman Sachs thinks the stock could rally another 30% from current levels. 📈

Goldman sees the company’s renewable energy business to be its third growth driver, alongside retail and telecom. It plans to invest Rs 75,000 cr over the next three years to transition into a full-fledged green company. 🍃

Over the next few years, they expect RIL to invest most of its capex on solar energy, battery, and hydrogen. FWIW, Reliance is in fact making serious moves. They recently acquired REC Solar ($771 million), and acquired minority stakes in Sterling & Wilson ($380 million) and NextWafe ($29 million). 💪

But, there’s more. In Goldman’s “bull case scenario”, they think the stock could rise 80% from current levels! To hit that price target, three big things must happen: 1) Earnings growth from Retail, Telecom, Energy; 2) successful new product launches like the upcoming Android phone; 3) success in e-commerce. Well, now you know what to watch for. Let’s see how this one goes!🤞

One More Incoming

Rakesh Jhunjhunwala backed Metro Brands IPO will open on Dec 10. The price band is fixed at Rs 485-500 per share. The company plans to raise Rs 1,367 cr from the markets. 💸

Metro Brands is amongst the top 5 footwear brands in India. They operate and sell products under Metro, Mochi, Walkway and Crocs brands. It secures products through outsourcing agreements so they don’t have their own manufacturing facilities. Metro Brands currently operates 598 stores across 136 cities across the country. They plan to use IPO proceeds to scale up its presence across India. 🥾

Financial Snapshot:

FY21 revenue: Rs 800 cr; -38% YoY
FY21 Net profit: Rs 64 cr; -60% YoY

Bulls will focus on the huge market opportunity, e-commerce as a growth driver, and their overall leadership position. Bears will cite intense competition from peers like Bata India, Liberty Shoes and Relaxo Footwear, and dependence on third parties for manufacturing, and Covid-related issues. ⚖️