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Market Today with EZWealth – 11 Nov 2021
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QCBS Norms: India Targets To Cut Project Delays, Improve Quality
India has included quality and technical criteria while selecting final winners for select government tenders instead of just picking the lowest financial bidder, a move aimed at improving execution, and avoiding delays and cost overruns. The method, called quality and cost-based selection or QCBS, is a combination of quality scores and technical weight along with financial bids, according to guidelines issued in October end by the Department of Expenditure. These give 30% weight to non-financial parameters.
The QCBS can be used for “quality oriented procurement” as defined in the guidelines and for procurement of non-consulting services of up to Rs 10 crore. While the department also outlined an alternative fixed-budget method for consultancy services, it’s the QCBS that’s being hailed that’s being hailed as a major reform. Current norms call for selecting the lowest bidder, or L1, from among shortlisted parties. But delays plague about a third of the nation’s public sector projects. Building roads to tunnels on time within the approved cost and quality remains a challenge.
An earlier analysis by Crisil Ratings Ltd. showed that among the delayed projects, nearly two-thirds were being executed by a few weak sponsors with constrained liquidity. And most of them doubled up as contractors, hurting execution pace. The new method to add quality parameters to selection of bids will be very beneficial since it will ensure timely execution and participation of only serious bidders, according to Rajeshwar Burla, co-group head and vice president, corporate ratings, at ICRA Ratings Ltd.
Centre asks states to allow automatic pass through of costs to discoms
The Central government has asked states to allow their electricity distribution companies to pass on increase in costs to power tariffs, which can later be vetted by regulatory commissions. Presently, there is no automatic pass through as tariff revisions need approval of the state commissions, which seldom leads to delays.
“It may be changed to provide for automatic pass through in tariff change in costs on account of change-in law or power purchase costs. This will result in less working capital requirements by the discoms, leading to less costs of power for the consumers,” the Union power ministry has written to the states. Power sector has been witnessing issues relating to availability of fuel, mainly coal and gas for the power plants. Recently there was a sudden spike in the price of coal and gas in the international markets, it said.
For the lack of robust mechanism of timely automatic pass through of fuel cost and transportation costs the generating companies face constraints in maintaining stock of fuel during such periods. This results in shortage of supply in the grid which may affect the power supply to the consumer, it said.
China and the US agree to work together to tackle climate change
The US and China announced a joint agreement Wednesday to “enhance ambition” on climate change, saying they would work together to do more to cut emissions this decade while China committed for the first time to reduce methane, a potent greenhouse gas.
The pact between the world’s two biggest polluters came as a surprise to the thousands of attendees gathered here for a United Nations climate summit. China and the United States, rivals that face growing tensions over trade, human rights and other issues, spoke as allies in the fight to keep global warming to relatively safe levels.
“We both see the challenge of climate change is existential and a severe one,” said Xie Zhenhua, China’s climate change envoy. “As two major powers in the world, China and the United States, we need to take our due responsibility and work together and work with others in the spirit of cooperation to address climate change.”
Scientists have said that nations need to cut global emissions from fossil fuels roughly in half this decade to keep average global temperatures from rising beyond 1.5 degrees Celsius (2.7 degrees Fahrenheit) compared with preindustrial levels. Beyond that threshold, the risks of deadly heat waves, droughts, wildfires, floods and species extinction grow considerably. The planet has already warmed 1.1 degrees Celsius.
Sapphire Foods IPO: Issue subscribed 5.43 times, QIB portion booked 6.16 times on final day
The initial public offering of Sapphire Foods, YUM’s largest franchisee operator in the Indian subcontinent in terms of revenues for FY20, has been subscribed 5.43 times, so far, on November 11, the final day of bidding, garnering bids for 5.24 crore equity shares against offer size of 96.63 lakh equity shares.
Qualified institutional buyers have bought 6.16 times of the shares set aside for them, while the reserved part of non-institutional investors was subscribed 2.16 times. Retail investors have put in bids 8.13 times the portion reserved for them. The Rs 2,073 crore initial public offering was subscribed 1.07 times till the second day of bidding on November 10. The offer was opened for subscription on November 9. It is entirely an offer for sale issue, so the company will not get any money from the public issue. All the money, excluding issue expenses, will go to selling shareholders including promoters and investors.
TPG, Sequoia, KKR-backed Five Star Business Finance files draft papers to raise Rs 2,752 crore via IPO
Non-banking financial company, Five Star Business Finance (FSBFL) has filed preliminary draft papers with capital markets regulator Sebi for fund raising via initial public offering. The company intends to garner Rs 2,751.95 crore through offer for sale by several marquee investors. SCI Investments V will offload shares worth Rs 257.10 crore. Matrix Partners India Investment Holdings II and Matrix Partners India Investments II Extension will sell Rs 568.92 crore and Rs 9.56 crore worth of shares, respectively.
Among others, Norwest Venture Partners X – Mauritius will offload Rs 385.65 crore worth of shares, and TPG Asia VII SF Pte Ltd will sell Rs 1,349.78 crore of shares, while Deenadayalan Rangasamy and Varalakshmi Deenadayalan, who are part of promoter group, will also sell Rs 180.93 crore worth of shares via offer for sale (OFS). The company will not receive any proceeds from the offer since it’s completely an OFS. Promoter & promoter group own 44.31 percent shareholding in the company, and the remaining is held by investors.
Go Colours IPO to open for bidding during November 17-19
Go Fashion, the women’s bottom-wear products maker under Go Colours brand, has decided to launch its initial public offering for subscription on November 17. This would be second public issue getting launched next week after Tarsons Products. The price band and the lot size for IPO will be disclosed by the company in coming days. The offer comprises a fresh issue of Rs 125 crore and an offer for sale by promoters and investors.
Promoters PKS Family Trust and VKS Family Trust will sell up to 7,45,676 equity shares each via offer for sale. Among investors, Sequoia Capital India Investments IV will offload 74,98,875 equity shares, India Advantage Fund S4 I will sell 33,11,478 equity shares, and Dynamic India Fund S4 US I has put up 5,76,684 equity shares for sale in OFS. The net proceeds from fresh issue will be utilised for funding roll out of 120 new EBOs (exclusive brand outlets), and working capital requirements.
China’s Xi Wins Backing for Doctrine Enabling Third Term
President Xi Jinping delivered the first doctrine on Communist Party history by a Chinese leader in 40 years, giving him a mandate to potentially rule for life as a major meeting wraps up in Beijing. The approval of the landmark document was announced in a communique Thursday, the official Xinhua News Agency said, as the four-day plenum at a military hotel in Beijing closed. Only Mao Zedong and Deng Xiaoping have authored a so-called historical resolution, and both went on to dominate party politics until they died. The full text of the resolution hasn’t been released yet.
The Central Committee called on the country to “unite around the party with Xi at the core,” implement his doctrine and realize “the great rejuvenation of the Chinese nation,” the communique said, according to Xinhua. Still, the communique also gave nods to the contributions of former leaders including Mao Zedong, Deng Xiaoping, Jiang Zemin and Hu Jintao — an indication that Xi had yet to fully eclipse the status of his more recent predecessors among the party elite. Getting the party’s Central Committee — a group of 400 mostly male political elites, including state leaders, military chiefs, provincial bosses and top academics — to endorse his vision sends a strong signal Xi has the power base to clinch a precedent-defying third term.
Germany reports another COVID-19 record: 50,196 new cases
Germany reported a record 50,196 new cases of coronavirus on Thursday, the fourth day in a row it has posted a fresh daily high, as a wave of COVID-19 infections sweeps the country. The total number of confirmed coronavirus cases is now 4.89 million and total deaths rose 235 to 97,198, according to the Robert Koch Institute public health authority.
The institute reported a rise in the coronavirus seven-day incidence rate – the number of people per 100,000 to be infected over the last week – to 249 from 232 on Wednesday. The three German parties in talks to form a coalition government by early December have agreed not to extend a nationwide state of emergency, despite a fourth wave of infections. Instead, they presented a draft law on Monday that would amend existing legislation to allow for measures such as compulsory face masks and social distancing in public spaces to continue to be enforced until next March.
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Stocks in the news
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Plug and play design-led platform PDS Multinational Fashions announced over 272 percent jump in its net profit for the second quarter ended September (Q2) to Rs 67 crore as compared to Rs 18 crore reported in the year ago period. The company’s revenue from operations during the quarter also climbed 18 percent to Rs 2,195 crore as compared to Rs 1,856 crore in Q2 FY21. Its earnings before interest, tax, depreciation and amortization (EBITDA) stood at Rs 84 crores (3.8 percent) versus Rs 35 crore (1.9 percent) in Q2 FY21. Commenting on the results, Sanjay Jain, Group CEO, PDS Multinational Fashions said, “We are truly excited to have reported our strongest quarterly performance in the last five years with a topline of Rs 2,195 crore. In line with our strategy to expand beyond the predominant markets of UK and Europe, we have deepened our presence in the North American markets with H1 FY22 achieving 90 percent of full year FY21 sales.”
Thermax share price jumped 12 percent intraday on November 11, a day after the company declared its Q2 earnings. The energy and environment solutions company on November 10 reported a 183 percent YoY spike in profit after tax (PAT) to Rs 88 crore for the quarter ended September 30. It had reported a profit of Rs 31 crore in the corresponding quarter of FY21. The company posted a 29 percent YoY rise in consolidated operating revenue to Rs 1,469 crore during the September quarter. It said last year, exceptional items including a voluntary retirement scheme, impairment of certain assets of Boilerworks A/S and provision for closure of German subsidiary claims had impacted the results during the second quarter of FY21.
Tata Steel share price added 2 percent intraday on November 11 ahead of the company’s scheduled earnings announcement for the second quarter of FY22 later today. Tata Steel is expected to post a sevenfold increase in net profit from a year ago and a 60 percent rise in revenue in the three months ended September, aided by higher volumes and realisations, analysts said. On a quarterly basis, profit may improve by 25-30 percent while revenue could increase by about 13 percent, they said.
HCL Technologies has announced its apprenticeship programme in the US, focused on hiring high school graduates for full-time technology jobs that would otherwise be inaccessible. Upon successfully completing the program, apprentices will be offered full-time employment at HCL Technologies and have the opportunity to concurrently pursue a debt-free college education, a statement on late Wednesday said. HCL’s apprenticeship programme provides full pay and benefits, enabling candidates to begin their technology career in software development and testing, digital and cloud services, infrastructure delivery and engineering — with positions available at multiple global innovation and delivery centers in California, Connecticut, Michigan, North Carolina, Ohio, Pennsylvania, and Texas, it added.
Oberoi Realty: Net Sales at Rs 754.25 crore in September 2021 up 138.64% from Rs. 316.06 crore in September 2020. Quarterly Net Profit at Rs. 266.59 crore in September 2021 up 93.55% from Rs. 137.74 crore in September 2020. EBITDA stands at Rs. 387.41 crore in September 2021 up 97.95% from Rs. 195.71 crore in September 2020. Oberoi Realty EPS has increased to Rs. 7.33 in September 2021 from Rs. 3.79 in September 2020.
Emami Realty: Net Sales at Rs 73.54 crore in September 2021 up 1076.87% from Rs. 6.25 crore in September 2020. Quarterly Net Profit at Rs. 8.85 crore in September 2021 down 74.12% from Rs. 34.19 crore in September 2020. EBITDA stands at Rs. 53.23 crore in September 2021 down 59.33% from Rs. 130.88 crore in September 2020. Emami Realty EPS has decreased to Rs. 2.34 in September 2021 from Rs. 12.24 in September 2020.
Rail Vikas Nagar Nigam: Net Sales at Rs 4,025.82 crore in September 2021 up 26.5% from Rs. 3,182.57 crore in September 2020. Quarterly Net Profit at Rs. 279.24 crore in September 2021 up 48.71% from Rs. 187.77 crore in September 2020. EBITDA stands at Rs. 282.81 crore in September 2021 up 22.67% from Rs. 230.54 crore in September 2020. Rail Vikas EPS has increased to Rs. 1.34 in September 2021 from Rs. 0.90 in September 2020.
Wonderla: Net Sales at Rs 17.21 crore in September 2021 up 9385.12% from Rs. 0.18 crore in September 2020. Quarterly Net Loss at Rs. 9.28 crore in September 2021 up 41.24% from Rs. 15.80 crore in September 2020. EBITDA stands negative at Rs. 2.38 crore in September 2021 up 68.52% from Rs. 7.56 crore in September 2020.
Alembic Pharmaceuticals: Alembic Pharmaceuticals share price fell over 4 percent intraday to Rs 757 after the company reported a weak set of numbers for the quarter ended September 2021. On November 10, Alembic Pharmaceuticals reported 49.2 percent fall in its Q2 net profit at Rs 169.29 crore against Rs 333.37 crore and revenue was down 11.3% at Rs 1,292.32 crore versus Rs 1,457.10 crore, YoY. Earnings before interest, tax, depreciation and amortization (EBITDA) was down 42 percent at Rs 257.2 crore versus Rs 443.5 crore and margin was down at 19.9% versus 30.4%, YoY.
JSW Paints, part of the USD 13 billion JSW Group, aims to achieve its goal of a Rs 1,000 crore revenue in the current fiscal year, on the back of strong economic recovery and improved demand conditions. The company, a relatively new entrant into the segment, has crossed a monthly sales of Rs 100 crore in October this year, a company statement said. “The Rs 100 crore monthly sales milestone puts JSW Paints firmly on track to achieve its goal of crossing Rs 1,000 crore revenue in FY22,” said JSW Paints
Kotak Mahindra Bank on Wednesday said it has completed the acquisition of a nearly 10 per cent stake in KFin Technologies for around Rs 310 crore. In September, the bank had informed about subscribing to 1,67,25,100 equity shares in KFin Technologies Pvt Ltd for a consideration of approximately Rs 310 crore, translating into an equity shareholding of 9.98 per cent.
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