Divestment Bound PSU Stocks, Reliance Industries' Acquisition Spree, and Buzzing Stocks Today

Tue, 12 Oct Pre-Open

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Indian share markets ended on a flat note yesterday.

Benchmark indices scaled fresh peaks with the NSE Nifty hitting the 18,000 mark for the first time ever, shrugging off weakness in other Asian markets.

Gains in automobile, metal, financial and power stocks pushed the market higher, though sharp losses in IT shares such as TCS and Infosys limited the upside.

At the closing bell yesterday, the BSE Sensex stood higher by 77 points (up 0.1%).

Meanwhile, the NSE Nifty closed higher by 51 points (up 0.3%).

Tata Motors and Coal India were among the top gainers.

TCS and Tech Mahindra, on the other hand, were among the top losers.

Both, the BSE Mid Cap index and the BSE Small Cap index ended up by 0.6%.

Sectoral indices ended on a positive note with stocks in the power sector and auto sector witnessing most of the buying interest.

IT stocks, on the other hand, witnessed selling pressure.

Shares of Avenue Supermarts and Solar Industries hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading down by 0.1% at Rs 46,980 per 10 grams at the time of closing stock market hours yesterday.

Speaking of precious metals, India's #1 trader Vijay Bhambwani discusses whether you should buy silver ETFs, in his latest video for Fast Profits Daily.

Tune in to the video below to find out more:

Top Stocks in Focus Today

Among the buzzing stocks today will be Reliance Industries.

Reliance Industries (RIL) share price touched its 52-week high of Rs 2,724.7 adding 2% in the early trade yesterday amid stake acquisition in REC Solar, Sterling & Wilson.

Reliance New Energy Solar, a wholly owned subsidiary of Reliance Industries, has acquired REC Solar Holdings from China National Bluestar Co.

According to a statement, the transaction is for an enterprise value of US$771 m.

This is the first major renewable energy deal where an equipment manufacturing facility has been acquired.

In other recent deals, such as the ones between Adani and SB Energy Corp., renewable energy projects or companies that have installed power generation capacity were involved.

The RIL-REC deal is in line with what Ambani had said at his company's 44th annual general meeting.

While REC Group is based out of Norway, it was controlled by the Chinese government-owned China National Chemical Corporation (ChemChina) that holds 79.5% stake in China National Bluestar Co.

This deal is not the only one that Reliance made in the last couple of days. Reliance is on an acquisition spree.

Within hours of announcing acquisition of REC Solar Holdings, Reliance Industries announced on Sunday that its subsidiary will acquire a 40% stake in Sterling & Wilson Solar through a combination of primary investment, secondary purchase and open offer for around Rs 28.5 bn.

Reportedly, this acquisition will help Reliance to make inroads into middle east markets where Sterling & Wilson Solar has a strong presence.

TCS share price will also be in focus today.

Shares of Tata Consultancy Services fell over 6% on the exchanges yesterday after the company reported a 16.8% year on year (YoY) growth in revenue for the September 2021 quarter, which was slightly below analysts' expectations.

Overall, the country's largest IT services company by market capitalization reported a 29% YoY growth in net profit.

The company's board also approved a dividend of Rs 7 per for the shareholders of the company.

Commenting on the results, Chief Executive Officer and Managing Director Rajesh Gopinathan said,

• The strong and sustained demand environment is a once-in-a-decade opportunity to position ourselves as the preferred growth and transformation partner for our customers.

The quarter saw strong demand for growth and transformation services as customers took a longer-term view of their businesses, driven by improving vaccination levels and business outlook.

TCS said that it added five new clients in the US$ 100 m bracket and 17 new clients in the US$ 50 m category reflecting the strong demand environment.

Over Dozen PSUs on the Block After Air India Privatisation

The government's final move to privatize national carrier Air India has given a fresh lease of life to its strategic disinvestment plan.

The Department of Investment and Public Asset Management (DIPAM), which oversees the disinvestment policy, is now planning to cede management control over a dozen public sector undertakings (PSUs) in the next six months.

Sources said the successful culmination of the Air India disinvestment process has upped investor interest in picking up management control of PSUs put on the block for privatisation.

Overseas investors are also looking at the country's disinvestment plan with interest.

As a result, the strategic disinvestment proposals of companies such as Ferro Scrap Nigam (FSNL), Rashtriya Ispat Nigam, Container Corporation of India, IDBI Bank and Neelanchal Ispat Nigam may get a fresh lease of life.

The government is also seeing an increased interest of foreign investors in the proposed IPO of the Life Insurance Corporation (LIC), which is likely to be floated soon.

The government has a list of 34 PSUs that have been given 'in principle' approval for disinvestment. These include Scooters India, Bridge and Roof Co., Cement Corporation of India and Pawan Hans.

Blackstone may get 5x Returns on Fino Investment

US private equity (PE) major Blackstone Group is likely to make more than five times return on its investment in Fino Payments Bank when the latter goes ahead with its public listing planned for next month.

The Navi Mumbai-based scheduled commercial bank is a fully-owned subsidiary of Fino Paytech, which is backed by marquee investors such as Blackstone Group, Mauritius-based Headland Asian Ventures Fund 3 (HAV 3 Holdings), Intel Capital, World Bank unit and global development finance institution international finance corporation (IFC), ICICI Group and Bharat Petroleum (BPCL).

The decision on shareholding dilution will be decided by November.

New York-headquartered Blackstone Group had first invested Rs 1.5 bn (approximately US$33 m) in Fino Limited, now Fino Payments Bank, for a significant minority stake in July 2011.

With an expected valuation of Rs 53 bn for the upcoming initial public offering (IPO), its 15.13% stake in the company is now valued at more than Rs 8 bn.

Thus, the investor is set to make annualized returns of close to 18% with its initial investment growing by more than 5.3 times.

Besides, Fino has already expressed its intent of looking to raise a pre-IPO round and a rights issue of Rs 750 m at the holding company level (Fino Paytech).

According to a media report, the proceeds of this rights issue will go to a microfinance subsidiary, Fino Finance.

If the listing goes ahead as planned, it will be the third IPO for a Blackstone portfolio company this year after Sona Comstar and TaskUS.

How this pans out 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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