Vedanta's Corporate Structure Rejig, Government's Privatisation Plan, and Buzzing Stocks Today

Thu, 18 Nov Pre-Open

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Indian share markets ended on a weak note yesterday.

Benchmark indices ended near day's low for the second straight trading session amid concerns of rising inflation and the risk of immediate correction.

At the closing bell yesterday, the BSE Sensex stood lower by 314 points (down 0.5%).

Meanwhile, the NSE Nifty closed lower by 101 points (down 0.6%).

Maruti Suzuki and Asian Paints were among the top gainers.

UPL and Reliance Industries, on the other hand, were among the top losers.

The BSE Mid Cap index ended down by 0.2%, while the BSE Small Cap index ended up by 0.1%.

Sectoral indices ended on a mixed note with stocks in the energy sector, realty sector and oil & gas sector witnessing most of the selling pressure.

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

Shares of LUX Industries and Metropolis Healthcare hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading up by 0.1% at Rs 49,089 per 10 grams at the time of closing stock market hours yesterday.

Speaking of stock markets, Brijesh Bhatia talks about why every serious trader is thinking of learning Artificial Intelligence, in his latest video for Fast Profits Daily.

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Top Stocks in Focus Today

Among the buzzing stocks today will be M&M Financial Services.

Mahindra & Mahindra Financial Services yesterday launched its leasing and subscription business Quiklyz.

The venture is a digital platform for vehicle leasing and subscription, that aims to provide convenience, flexibility and choice to customers across cities, the company said.

Mahindra Finance said it sees this as a great opportunity to create value for its stakeholders with a profitable business model and build a strong balance sheet out of emerging opportunities in this adjacent business vertical.

In a statement the company said,

• Quiklyz is the first-of-its-kind digital journey on car usership with which the customer can access a brand-new car without all the hassles of car ownership.

In the initial phase, Quiklyz will launch its services in metro cities like Bengaluru, Chennai, Delhi, Gurugram, Hyderabad, Mumbai, Noida, Pune, and will further expand it to other cities across India, including tier-II cities, covering 30 locations over the next one year.

Quiklyz is also in discussions with several automotive OEMs and will announce partnerships with them on leasing and subscription shortly, Mahindra Finance said in its statement.

Quiklyz will be available for both corporate and retail customers.

ONGC share price will also be in focus today.

The government wants state-owned oil and gas explorer ONGC to carve out non-producing high-potential areas of the prolific Mumbai High and Bassein fields for privatisation, not privatise entire fields.

ONGC produces more than 60% of India's oil and gas output and has resisted several attempts at privatizing its fields over the past few years.

In the latest move, the oil ministry wrote to ONGC last month, asking it to give away 60% participating interest and operatorship in Mumbai High and Bassein fields to international players.

These two fields together account for half of domestic gas and more than 23% of oil production.

In the ministry's letter, lower recovery rates in the two ageing fields, slower project implementation by ONGC, and government rules that constrain a public-sector enterprise's functioning were cited as the key grounds for privatization.

Reports state that this letter has rattled ONGC executives. As per them, these suggestions were 'unfair' to the company and that the government should instead encourage foreign companies to bid for exploration acreages.

Now, the government is softening its stand. Oil Secretary Tarun Kapoor said the proposal of a 60% stake sale would not apply to producing areas of the two fields.

Kapoor also said that the government will no longer insist on ONGC hiving off its drilling and well services arm.

Vedanta Considers Complete Overhaul of Group to Unlock Value

Anil Agarwal's Vedanta unveiled plans for a complete overhaul of the corporate structure and the company is planning to list its aluminium, iron and steel, and oil and gas businesses as seperate entities.

The board has decided that, considering the scale, nature, and potential opportunities for various business verticals of the company, it should undertake a comprehensive review of the corporate structure and evaluate a full range of options and alternatives including demergers and spin-offs for unlocking value and simplification of corporate structure, the company said in a filing.

The board has also constituted a committee of directors to evaluate and recommend such options and alternatives.

Vedanta Chairman Anil Agarwal said,

• Over the past few years, the group has materially improved the operational performance of the businesses, increased cash flows, reduced debt whilst concomitantly focusing on accelerating investments in energy transition, health and safety, diversity and ESG in general.
  
  This step, which we announced, whilst pending a detailed evaluation, is designed to create independent, industry-leading, global public companies, where each can benefit from greater focus, tailored capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors, and employees.

Centre Aims to Privatise 5-6 State Owned Companies in Fiscal 2022

The central government is aiming to complete the privatisation of five to six state-owned firms, including Bharat Petroleum Corporation (BPCL), in the current financial year, secretary of the department of investment and public asset management (DIPAM), Tuhin Kanta Pandey said at the CII Summit today.

The DIPAM Secretary also said that the Centre is aiming to close the privatisation of BEML and Shipping Corp of India and to list state-owned LIC on local bourses in the year to March 2022.

Mr. Pandey said BPCL divestment is in due diligence stage. The sale of the Bharat Petroleum would fetch about US$13 bn for the exchequer and other shareholders.

'While financial bidding of BEML, Shipping Corp, Pawan Hans, Central Electronic and Neelanchal Ispat can take place in December to January and expecting their transaction in the current fiscal', he added.

Also, the central government is targeting December for handing over Air India to Tata Group.

We will keep you updated on the latest developments from this space. Stay tuned.

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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