BQuick On Feb. 11: Top 10 Stories In Under 10 Minutes

This is a roundup of the day's top stories in brief.

1. SUUTI Plans To Sell Up To 3% Of Axis Bank

The Specified Undertaking of the United Trust of India proposes to sell up to 5.1 crore shares, or a 1.98 percent stake, in Axis Bank Ltd. via an offer-for-sale on the stock exchanges on Feb. 12 and Feb. 13, according to a stock exchange filing.

• SUUTI has the option to additionally sell 2.63 crore shares, or a 1.02 percent stake.
• The floor price has been set at Rs 689.52 apiece, a 3 percent discount to Monday's closing price.
• The sale would fetch the government a little less than Rs 5,500 crore, a government official told BloombergQuint on the condition of anonymity.

The offer will be open for retail investors on Feb. 13

2. Debt Moratorium On IL&FS Subsidiaries Lifted

The National Company Law Appellate Tribunal today directed 22 domestic subsidiaries of Infrastructure Leasing & Financial Services Ltd. to service their operational and financial debt obligations.

• Additionally, it lifted the moratorium on debt repayments by 133 offshore group entities.
• On Oct.15 last year, the NCLAT had allowed IL&FS and its 348 group entities to halt debt repayments until a resolution plan was worked out. The newly appointment board of IL&FS had subsequently decided to stop servicing debt across entities, including those that had the cash to support such repayments.
• This decision alarmed investors who feared that the ring-fenced special purpose vehicle structure commonly used in infrastructure financing was being challenged.
• To calm investor nerves, IL&FS proposed a new repayment structure to the courts which included categorising group entities into three categories — Green (firms that can meet all debt obligations), Amber (firms that can meet some debt obligations), and Red (firms that can't meet any debt obligations).
• On Monday, the NCLAT gave IL&FS the go-ahead to proceed with this repayment structure.

Here are the details of the plan.

3. IT Sector Is Making A Comeback

What a comeback. Barely two years ago, market and technology pundits were writing off the Indian information technology services sector. Aggregate revenue growth of the top five companies had dropped to single digits and by the first quarter of financial year 2017-18 had troughed to 5 percent.

• Compare that with the quarter gone by. In which the total revenue of India's five largest listed IT companies grew at its fastest pace in 18 quarters on the back of a strong order book and deal wins.
• Tata Consultancy Services Ltd., Infosys Ltd., Wipro Ltd., HCL Technologies Ltd. and Tech Mahindra Ltd. together saw their aggregate revenue in rupee terms rise 18.8 percent year-on-year.

Here are the factors that led to the robust growth of IT companies.

4. Oil Marketers Take A Hit

India's state-run fuel marketers suffered their highest inventory loss in at least five years in the December-ended quarter due to a sharp fall in crude oil prices.

• The combined inventory loss incurred by the three listed oil retailers—Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd. and Bharat Petroleum Corporation Ltd.—rose to Rs 17,500 crore in the three-month period.
• That was largely due to Brent crude, the Asian benchmark, declining from its peak of $86.29 per barrel to $50.47 per barrel in the quarter due to oversupply concerns amid tepid demand growth.
• Oil refiners import and stock crude oil for processing and incur inventory losses when prevailing prices fall below that at which stocks were purchased.
• That squeezed oil refiners and marketers who generally do business on wafer-thin margins.

Adjusting for inventory losses, however, Ebitda grew at least four-fold.

5. Sensex Drifts Lower

Indian equity benchmarks ended lower for the second consecutive session.

• The S&P BSE Sensex Index closed 0.41 percent lower at 36,395.
• The NSE Nifty 50 Index ended below 10,900, down 0.5 percent.
• The market breadth was tilted in favour of sellers.
• About 1,232 stocks fell and 528 shares advanced on the National Stock Exchange.

Follow the day's trading action here.

6. Apollo Hospitals' Pledged Shares Scare

India's largest hospital chain's stock fell the most in more than seven years as a rise in shares pledged by the promoters with lenders spooked investors.

• Shares of Apollo Hospitals Enterprise Ltd. tumbled as much as 13.3 percent, the most since December 2011.
• “The additional pledged shares were created due to the unwinding of the deal with KKR and Co.,” Managing Director Suneeta Reddy told BloombergQuint over the phone.
• KKR had invested Rs 550 crore in PCR Investments Ltd.—the holding company of Apollo Hospitals—in October 2013.

The promoter's pledge has been rising for the past six quarters.

7. Inadequate Early Warning System

The persistent rise in bank frauds has had Indian authorities worried for some time now. At last count, in 2017-18, banks lost over Rs 41,000 crore to frauds, shows data from the Reserve Bank of India.

• Ninety percent of these frauds took place at public sector banks.
• To better prepare banks to deal with the rising instances of fraud, the RBI, in 2015, had prescribed a framework for putting in place ‘early warning signals'.
• As a start, the regulator prescribed a list of 45 early warning signals that banks need to map by putting in place the requisite technology and systems.

Three years later, it looks like most banks are taking a patchwork approach.

8. The Hour Of Reckoning For Corporate Banking

The combined effect of three major changes underway will alter the very fabric of Indian banking, writes Harsh Vardhan.

• The rational response of a company to the expectation of high inflation is to over-leverage the balance sheet. The new monetary policy framework changes this calculus profoundly.
• With the IBC, the cost of getting an investment calculus wrong has suddenly become very high.
• In response to the slowing demand for investment-related credit, banks will have to reorient their business towards consumer and small and medium enterprises.

The system may settle down at a lower return on equity.

9. Specialised Care In Demand

More than three-fourths of total claims under Prime Minister's free health insurance scheme came from the treatment for cancer and heart diseases, adding to the concerns of private hospitals at a time they are lobbying for raising the rates of medical procedures offered under it.

• Medical and radiation oncology accounted for 22 percent and 7 percent, respectively, of the total packages used by patients since the launch of the scheme, according to data provided by National Health Authority—the implementing body for Pradhan Mantri Jan Arogya Yojana—that aims to cover more than half-a-billion Indians.

About 65 percent of the treatments given under the scheme were through private hospitals.

10. Priyanka Gandhi's Maiden Roadshow

Congress President Rahul Gandhi trained guns at Prime Minister Narendra Modi over the Rafale deal at Priyanka Gandhi's maiden roadshow in Lucknow with the slogan “chowkidar chor hai”.

• Addressing the crowd at the party's Lucknow office, Rahul said that the ideology of the Rashtriya Swayamsevak Sangh and PM Modi needs to be defeated in the country.
• The newly-appointed Congress General Secretary in-charge of eastern Uttar Pradesh, Priyanka Gandhi kicked off the party's mega roadshow in Lucknow on Monday with her brother Rahul.
• The approximately 20-km roadshow started from the Amausi airport and will culminate at the Nehru Bhawan office of the Uttar Pradesh Congress Committee.

Here's detailed account of Priyanka's maiden visit to Uttar Pradesh after she formally entered politics.