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Dull End to the Week
Fri, 19 Aug Closing

After trading flat during the noon session, Indian equity markets witnessed some selling pressure and finished just below the dotted line amid weak European markets. At the closing bell, the BSE Sensex stood lower by 46 points, while the NSE Nifty finished down by 6 points. Meanwhile, the S&P BSE Mid Cap and S&P BSE Small Cap finished up by 0.5% and 0.4% respectively. Sectoral indices finished mixed with metal and consumer durable stocks leading the gains. While losses were largely seen in realty & auto stocks.

Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.36% and the Shanghai Composite rose 0.13%. The Hang Seng lost 0.37%. European markets are trading lower today with shares in France off the most. The CAC 40 is down 0.86%, while Germany's DAX is off 0.62% and London's FTSE 100 is lower by 0.21%.

The rupee was trading at 66.93 against the US$ in the afternoon session. Oil prices were trading at US$ 48.23 at the time of writing.

Shares of Taj GVK Hotels and Resorts surged 20% in today's trade after it was reported that Indian Hotels Co Ltd (IHCL) is planning to merge Taj GVK Hotel & Resorts with itself as the GVK Reddy family wishes to exit the business.

Indian Hotels, which currently holds around 25.5% in Taj GVK and Reddy family which holds about 50% stake, are in the process of negotiating swap ratio for the merger. Taj GVK, which has debt of roughly Rs 3.62 billion on its books, will cease to exist as separate listed entity if the merger goes through.

In another development, IHCL recently announced plans to raise Rs 7 billion through issue of non-convertible debenture (NCDs) on private placement basis to fund renovation of its hotels, debt repayment and other operational expenses. At present, IHC has an approved borrowing limit of Rs 50 billion and as on March 31, 2016, the total debt of the company was Rs 26.1 billion. This includes NCDs of Rs 17.96 billion.

Meanwhile, IHCL's net loss in the June quarter widened to Rs 1.69 billion from Rs 723.9 million a year ago due to a loss on the sale of its US property. Revenues rose 5% to Rs 9.46 billion from Rs 8.96 billion a year ago. The company recently divested its entire stake in IHMS (Boston) LLC which owned Taj Boston, to AS Holding LLC, Boston, for US$125 million. Indian Hotels also finished the day on an encouraging note (up 2.4%) on the BSE.

Moving on to news from the power sector. According to an article in The Economic Times, Power Grid Corporation of India plans to expand its consultancy services in states but it is keener to participate in projects as a joint venture partner to different states. The company even plans to take up projects on ownership basis as a developer. The company is targeting to have projects worth Rs 150 - 200 billion in states over the next two or three years.

The power ministry recently stated that there are orders totaling Rs 3 trillion in the pipeline over the next four years for the power transmission sector. So far, the company has executed transmission projects connecting states, but now it wants to tap into the opportunity in projects within states. The company presently has a joint venture with Bihar for Rs 16 billion and the company hopes to do another project worth Rs 15 billion with the state.

Reportedly, the company commissioned projects worth Rs 300 billion and bagged 40% of the projects that came up under competitive bids, beating the private sector.

The central government has launched the Ujwal Discom Assurance Yojana or Uday to facilitate revival of distribution companies which have been struggling with losses and mounting debt. The industry expects that this will improve their ability to pay and also boost investment in transmission sector. Early signs are visible, with some states already announcing big ticket power transmission projects, which have even attracted private sector companies such as Larsen & Toubro. The states are also looking to develop projects under the build-operate-own model. Power Grid finished the day down by 0.7% on the BSE.

Power stocks finished the day on a positive note with Torrent Power Ltd and Neyveli Lignite leading the gains.

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Feb 23, 2018 (Close)