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Banking Stocks Outperform
Wed, 2 Mar 11:30 am

After opening the day on a positive note, the Indian markets continued to maintain their momentum and are presently trading in the green. Most sectoral indices are trading firm with stocks from the banking and realty spaces leading the gains.

The BSE Sensex is trading up 410 points (up 1.7%) and the NSE Nifty is trading up 130 points (up 1.8%). The BSE Mid Cap index is trading higher by 2.2%, while the BSE Small Cap index is trading up 2.4%. The rupee is trading at 67.69 to the US$.

As per a leading financial daily, Indian banks are said to reap benefits from the JP-UltraTech deal. As stated, banks will receive about Rs 40 billion from the sale of Jaiprakash Associates' cement units to UltraTech Cement.

Lenders such as State Bank of India, IDBI Bank and ICICI Bank have played an active role in the sale of the cement plants at an enterprise value of Rs 165 billion. Further, banks have agreed to transfer about Rs 120 billion of Jaiprakash Associates' loans to UltraTech Cement. Transferring this debt to UltraTech means that lenders now have exposure to a business group that's regarded as being financially more sound than many others. This in turn has reduced the risk of defaults for banks.

UltraTech Cement recently agreed to buy Jaiprakash Associates Ltd's cement plants in six states. The deal is pegged at an enterprise value of Rs 165 billion. Jaiprakash has a total capacity of 22.4 million tonnes in the state of Madhya Pradesh (MP), Uttar Pradesh (UP), Himachal Pradesh (HP), Uttarakhand, Andhra Pradesh (AP) and Karnataka. This acquisition will enable UltraTech to access the newer markets of MP, UP, HP and coastal AP wherein the company does not have any presence. Further, the purchase will also enable the company to increase UltraTech Cement's capacity to 90.7 million tonnes.

Stocks in the engineering space are trading on a positive note with TRF and BHEL witnessing maximum buying interest. In another news update, Bharat Heavy Electricals (BHEL) has bagged a major order for setting up 1,600 megawatt (MW) coal-based thermal power project in Tamil Nadu. The company has received a Letter of Award (LoA) for setting up of the main plant package for the 2x800 MW Uppur Supercritical Thermal Power Project (TPP) from the Tamil Nadu government.

The order is valued at around Rs 56 billion. This is the second 800 MW rating supercritical order awarded to BHEL from TANGEDCO (Tamil Nadu Generation and Distribution Corporation) in less than a month.

The project is slated to be commissioned by September, 2019 and the power generated from this 1,600 MW power project will help foster growth in Tamil Nadu and provide easy access of electricity to the people (subscription required) of the state.

Today, BHEL has a significant share of 83% in TANGEDCO's cumulative coal-based generating capacity, including two 600 MW sets commissioned in 2013 at North Chennai TPP.

BHEL is an integrated power plant equipment manufacturer and one of the largest engineering and manufacturing company of its kind in India. Presently its stock is trading up by 7.8%.

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Jan 19, 2018 (Close)