Zomato's IPO, Adani Group to Refinance Airport Debt, and Buzzing Stocks Today

Fri, 9 Jul Pre-Open

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Indian share markets ended on a negative note yesterday.

Benchmark indices witnessed a sharp selloff across all sectors in the afternoon session yesterday with Sensex declining more than 600 points in intraday deals, while Nifty fell below 15,750 level.

Investors turned cautious followed by a private report stating that the India's retail inflation likely to accelerate to seven-month high in June on rising food and fuel prices, staying above the Reserve Bank of India's comfort zone for a second straight month.

Some anxiety also came as Fitch Ratings cut India's growth forecast to 10% for the current financial year, from 12.8% estimated earlier, due to slowing recovery post-second wave of covid-19.

At the closing bell yesterday, the BSE Sensex stood lower by 486 points (down 0.9%).

Meanwhile, the NSE Nifty closed lower by 152 points (down 1%).

Tech Mahindra and SBI Life Insurance were among the top gainers.

Tata Motors and JSW Steel, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended down by 0.4% and 0.1%, respectively.

Sectoral indices ended on a negative note with stocks in the metal sector, banking sector and finance sector witnessing most of the selling pressure.

Power stocks, on the other hand, witnessed buying interest.

Gold prices for the latest contract on MCX were trading up by 0.4% at Rs 48,115 per 10 grams at the time of closing stock market hours yesterday.

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Top Stocks in Focus Today

Among the buzzing stocks today will be Adani group stocks.

The Adani Group is planning to refinance its debt at lower rates with overseas funds.

Adani Airport Holdings, which will formally own a majority in Mumbai International Airport (MIAL), is now in talks with a global consortium of foreign lenders, including Standard Chartered Bank, Barclays, Deutsche and JP Morgan, to raise more than US$1 bn in offshore loans.

Reports state the proceeds will be used to repay public and private banks.

According to the latest annual report of Adani Enterprises, the total debt of MIAL taken over by Adani was Rs 111.4 bn as of March 2021.

Of that, Adani is aiming to refinance Rs 82.5 bn.

Adani Enterprises owns 100% of its airports holding company, Adani Airport Holdings.

Adani Airport Holdings has already acquired 23.5% of Mumbai International Airport Ltd (MIAL) from shareholders Bidvest and Airports Company South Africa.

PNB Housing Finance share price will also be in focus today.

PNB Housing Finance shares hit upper circuit of 5% yesterday after Punjab National Bank (PNB) asked its housing finance arm to restructure Rs 40 bn capital infusion deal with Carlyle.

On Wednesday, the company said its promoter PNB has asked it to consider restructuring the proposed Rs 40 bn capital infusion deal led by US-based Carlyle group.

The housing financier also said it will await the securities appellate tribunal's (SAT) order on the issue before taking a final decision.

The company said it received a letter from PNB on July 4 and subsequent to that the board of the company met on 5 and 6 July 2021.

The letter from the bank said,

• The board of directors of the company should take cognizance of the directive issued by the market regulator vide their letter dated 18 June 2021 and reconsider restructuring the contours of the deal/transaction of the capital raising in line with such the market regulator directive.

The watchdog had asked the company for revaluation of the issue price for the Rs 40 bn preference shares and warrants to be issued to the proposed investors at Rs 390 a piece.

The SAT will hear the case related to the PNB Housing Finance-Carlyle deal next Monday. The order in the matter was expected on July 5, however, it was adjourned for July 12.

Life Insurers Seek a Fix on Covid 3.0 Impact

Life insurers are assessing possibilities of increasing Covid-19 specific provisions in financial year 2022 to protect solvency margins in the event of a likely third wave.

A sudden spurt in Covid-19 cases in countries such Israel and the UK has created uncertainties among insurers on the extent of provisions to be made for a sudden increase in claims burden as seen during the second wave between April and June.

Some sections of the insurance industry also believe that the third wave of infections in India could also lead to a new round of price hikes for term premiums which have already been increased twice in the last 20 months owing to reinsurance pressures.

As per estimates shared by industry sources, India's life insurers settled around 25,000 death claims worth around Rs 15 bn in the first quarter of 2022, just on account of coronavirus.

This is more than what life insurers had settled in the first 12 months of the pandemic over financial year 2021.

An industry insider said that several companies that have been profitable for decades will be in the red for the first quarter of 2022.

This could see several insurers announcing fresh provisional reserves in the first half of FY22 beyond what they have already set aside. Kotak Life Insurance, for instance, was among the first companies to announce that it expects finances to be in the red for the first quarter.

Zomato IPO to Open Next Week

Zomato will launch its three-day initial public offering (IPO) on 14 July 2021, making the online food aggregator one of the first Indian startup unicorns to list on the stock exchanges.

The Gurugram-headquartered company is looking to raise as much as Rs 93.8 bn at Rs 72-76 apiece.

Zomato is likely to be valued at nearly US$9 bn at the upper end of this price band.

The company will raise Rs 90 bn through the issue of fresh equity shares, while investor Info Edge India will sell some stake worth Rs 3.8 bn.

Investors can make a bid for a minimum of 195 equity shares and in multiples thereof.

The issue closes on 16 July 2021 for subscription.

While 75% of the IPO will be reserved for qualified institutional buyers, non-institutional investors can bid for up to 15% shares on offer. Retail investors have 10% of the stock allotted to them.

Employees have access to up to 6.5 m shares.

Kotak Mahindra Bank, Morgan Stanley India and Credit Suisse Securities are global coordinators and book-running lead managers to the offering.

Bank of America (BofA) Securities and Citigroup Global Markets are the book-running lead managers.

How the IPO sails through remains to be seen. Meanwhile, stay tuned for more updates from this space.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

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