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Think Ahead with EZWealth – 11 Nov 2021
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Cabinet raises ethanol procurement prices effective December 1
The central government on Wednesday increased the procurement price of all three categories of ethanol produced from different sources by 1.27-2.55 per cent for the 2021-22 season, which begins from December 1. For ethanol produced from second generation sources that include grain-based sources, such as broken unused rice, wheat or corn, the Cabinet Committee on Economic Affairs (CCEA) decided to leave it to the oil public sector undertakings (PSUs) to determine the price at which they would want to purchase it.
“It is important to note that grain-based ethanol prices are currently being decided by oil marketing companies (OMCs) only,” according to an official statement released after the meeting of the CCEA. Apart from fixing the new price for ethanol, the CCEA also approved a Rs 17,408.85 crore “committed price support” for the Cotton Corporation of India (CCI) for seven cotton seasons from 2014-15 to 2020-21. The expenditure was approved for reimbursing losses under MSP operations for cotton during the cotton season (October-September) 2014-15 to 2020-21.
To achieve the 20 per cent blending target by 2025, India will need to produce 10-11 billion litres of ethanol, of which 6-6.5 billion litres will come from sugarcane, while the rest will have to be contributed by corn and grain-based sources. To produce this quantity, a capacity of 12 billion litres of ethanol will have to be installed, of which 6.5-7 billion litres would be from sugarcane and the rest from corn-based distilleries. At present, the total ethanol production capacity is just about 6 billion litres, of which that produced from sugarcane sources is 5.25 billion litres, while that from corn-based distilleries is just 0.75 billion litres.
India better placed now than in 2013 to face taper tantrum: RBI Governor
India is much better prepared now to face a taper tantrum kind of situation than it was in 2013, Reserve Bank of India (RBI) Governor Shaktikanta Das said on Wednesday at the finale of the Business Standard-BFSI Summit. The country’s growth prospects remain strong despite several headwinds, and the RBI will support the government to bring growth back, Das said. The RBI is confident of its 9.5 per cent growth projection for the Indian economy this fiscal year, even as the global economy may struggle, said the RBI governor. He was in discussion with Business Standard’s Consulting Editor Tamal Bandyopadhyay at the RBI headquarters.
“Definitely, the growth impulses have become stronger. The fast-moving indicators are looking very, very positive. We are on the path of reaching our 9.5 per cent gross domestic product (GDP) growth assessment for the economy this year. It seems to be quite achievable at this point of time,” Das said, notwithstanding some global headwinds originating from the external sector. Das said the recent excise duty cuts on fuel were “significantly positive for inflation”. Food inflation now looks to be under control even as the government addressed supply side issues.
However, “core inflation has remained elevated and that is a policy challenge and we are keeping a very close watch over the evolution of the core inflation and fuel inflation,” he said. Still, the RBI governor expects its projection of 5.3 per cent on inflation for the year will be met while the central bank remains “very careful” in a “fast developing scenario”. The central bank’s actions are in sync with the evolving situation, and it is now rebalancing the liquidity available in the system. The RBI governor felt “unwinding” the easy policy measures taken during the pandemic had been “much misunderstood”.
U.S. Inflation Hit 30-Year High in October as Consumer Prices Jump 6.2%
U.S. inflation hit a three-decade high in October, delivering widespread and sizable price increases to households for everything from groceries to cars due to persistent supply shortages and strong consumer demand. The Labor Department said the consumer-price index—which measures what consumers pay for goods and services—increased in October by 6.2% from a year ago. That was the fastest 12-month pace since 1990 and the fifth straight month of inflation above 5%.
The core price index, which excludes the often-volatile categories of food and energy, climbed 4.6% in October from a year earlier, higher than September’s 4% rise and the largest increase since 1991. On a monthly basis, the CPI increased a seasonally adjusted 0.9% in October from the prior month, a sharp acceleration from September’s 0.4% rise and the same as June’s 0.9% pace. Price increases were broad-based, with higher costs for new and used autos, gasoline and other energy costs, furniture, rent and medical care, the Labor Department said. Food prices for both groceries and dining out rose by the most in decades. Prices fell for airline fares and alcohol.
Paytm’s Rs 18,300-crore IPO muted at 1.9x subscriptions
The Rs 18,300 crore initial public offering (IPO) by One97 Communications, parent of Paytm, scraped through on the final day of bidding on Wednesday with the help of foreign institutional and domestic retail investors. Domestic institutional investors and high net worth individuals mostly stayed away from the issue, India’s biggest IPO, beating state-owned Coal India Ltd’s Rs 15,200 crore share sale in 2010. The share is likely to be listed on the bourses on November 18.
The institutional investor portion of the issue was subscribed 2.8 times; The wealthy investor share saw only 24 per cent subscription; And the retail part was subscribed 1.7 times. According to data provided by stock exchanges on Wednesday, domestic institutions, including mutual funds, placed bids for just Rs 155 crore.
The Paytm IPO received the lowest demand among tech startups that have gone public recently – Rs 19,653 crore, excluding the anchor book, compared with Rs 2.44 lakh crore for Nykaa or Rs 2.09 crore for Zomato. The Policybazaar IPO received demand worth Rs 56,000 crore.
Bitcoin hits new all-time high above $69,000; multiple factors drive gains
Bitcoin has continued its fine performance in November by setting a new all-time high above $69,000 despite dipping below the $66,000 level earlier on Wednesday. The leading cryptocurrency has added more than $3,000 to its value today and hit a new all-time high at $69,044.77. Other coins also rose, with the Bloomberg Galaxy Crypto Index — which tracks major cryptos — gaining as much as 2.4 per cent to its highest level since May.
The rise in the token can, at least partly, be explained through the fundamental argument — which has gained traction in recent months — that Bitcoin can act as an inflation hedge. Crypto backers argue that, unlike dollars or any other traditional currency, the digital coin is designed to have a limited supply, so it can’t be devalued by a government or a central bank distributing too much of it. “Bitcoin continues to enjoy the rally that began in August and accelerated through September and October,” said Sui Chung, chief executive of CF Benchmarks, a cryptocurrency benchmarks administrator.
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Stocks in the news
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Results on November 11: Tata Steel, Balkrishna Industries, Bharat Dynamics, Engineers India, Godrej Consumer Products, HUDCO, Natco Pharma, NHPC, NMDC, Power Finance Corporation, Prestige Estates Projects, RailTel Corporation, Suryoday Small Finance Bank, and Zee Entertainment Enterprises among 376 companies that will release September quarter earnings on November 11.
India Cements has posted a 57 per cent dip in net profit for the second quarter of the current financial year ended September 30, to Rs 30 crore from Rs 69 crore during the July to September quarter of 2020-21. The company’s revenue from operations was up 13 per cent to Rs 1,235 crore during the period under review, from Rs 1,090 crore during the second quarter of the previous fiscal. During the period under review, power and fuel costs zoomed 57 per cent to Rs 359 crore. Total expenses during the period rose 23 per cent to Rs 1,202 crore from Rs 981 crore last fiscal. Though the quarter saw cost pressure due to the spike in fuel and petroleum product prices, India Cements turned out a decent show with an increase in volumes in the extended marketing zones, the firm said on Wednesday.
Strides Pharma saw its revenue for the September quarter drop 8 per cent year-on-year to Rs 736 crore as Covid-led manufacturing disruptions and pricing pressures on acute drugs in the US hurt sales. The pharma company registered a consolidated net loss of Rs 176 crore in Q2 of FY22 as compared to net profit of Rs 56.3 crore in the year ago period.
Eveready Industries India recorded a 45.75 per cent drop in consolidated net profit to Rs 31.04 crore in the September quarter. It was at Rs 57.22 crore in the same period last year. Revenue from operations were at Rs 357.49 crore, down 4 per cent. The company said that consumption reduced significantly in the Covid-related medical devices, which use higher-margin batteries, with the situation related to the pandemic improving significantly in the country. That impacted the battery turnover.
Online food delivery platform Zomato on Wednesday reported widening of its consolidated net loss to Rs 434.9 crore for the quarter ended September 30, 2021, mainly on account of investments in the growth of its food delivery business. The company had posted a net loss of Rs 229.8 crore for the corresponding period of the previous fiscal, Zomato Ltd said in a regulatory filing. Consolidated revenue from operations of the company stood at Rs 1,024.2 crore for the quarter under consideration. It was Rs 426 crore for the same period a year ago, it added.
Bank of Baroda posted a 24.4 per cent rise in net profit at Rs 2,088 crore in September 2021 quarter (Q2FY22) on robust rise in non-interest income including fees and and recoveries from written-off accounts. The lender had posted a net profit of Rs 1,679 crore in the second quarter of FY21. Sequentially, net profit rose from Rs 1,209 crore in the first quarter ended June 2021. The provision for tax fell to Rs 828 crore in Q2FY22 from Rs 872 crore a year earlier.
Oil India (OIL) reported a consolidated net profit of Rs 1,454.28 crore in the second quarter of FY22, up 37.45 per cent over the Rs 1,058.07-crore bottomline reported by the company in the same quarter a year ago. A company statement said that the OIL Board has recommended an interim dividend of Rs 3.50 per share for 2021-22. The consolidated total income during the period under review stood at Rs 7,420.13 crore, up from Rs 5,598.55 crore a year ago. The higher returns come on the back of improved crude oil price realisation despite flat lining production. According to OIL, crude oil price realisation improved to $71.35 a barrel in the second quarter of the current financial year from $42.74 a barrel in the same months of FY21. The company’s crude oil production during the quarter ended September 2021 stood at 0.76 million tonnes (MT), marginally up from 0.746 MT in the quarter ending September 2020.
Pidilite Industries: The company reported higher consolidated profit at Rs 374.6 crore in Q2FY22 against Rs 356.4 crore in Q2FY21, revenue surged to Rs 2,626.3 crore from Rs 1,880.3 crore YoY.
Metropolis Healthcare: The company reported lower profit at Rs 58.4 crore in Q2FY22 against Rs 60.5 crore in Q2FY21, revenue rose to Rs 302.6 crore from Rs 288.4 crore YoY.
MOIL: The company reported lower profit at Rs 60.23 crore in Q2FY22 against Rs 61.79 crore in Q1FY22, revenue increased to Rs 311.7 crore from Rs 293.3 crore QoQ. The company board approved buy back of shares for up to Rs 694 crore.
Berger Paints: The company reported lower profit at Rs 219.2 crore in Q2FY22 against Rs 221 crore in Q2FY21, revenue jumped to Rs 2,225 crore from Rs 1,742.5 crore YoY.
As fuel prices hit a record high, India’s largest carmaker Maruti Suzuki India (MSIL) launched the all-new version of its premium hatchback Celerio with a fuel efficiency of 26.68 kilometre per litre, making it the country’s most fuel-efficient petrol car. The new model, at a base price of Rs 4.99 lakh, strengthens MSIL’s position in the hatchback segment, which it dominates with more than 60 per cent market share.
Narayana Hrudayalaya: The company reported profit at Rs 99.39 crore in Q2FY22 against loss of Rs 3.4 crore in Q2FY21, revenue rose to Rs 940.3 crore from Rs 600.7 crore YoY.
Sansera Engineering: The company reported higher consolidated profit at Rs 51.76 crore in Q2FY22 against Rs 46.8 crore in Q2FY21, revenue rose to Rs 539.74 crore from Rs 432 crore YoY.
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