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Zombie stocks defy bankruptcy logic as meme traders bid them up

June 12, 2021 - 2:24pm
By Katherine Doherty and Tom ContilianoIt’s looking more and more like corporate-finance textbooks need a chapter on memes.Being on the brink of bankruptcy no longer seems to matter much in the U.S. stock market. While that might sound like the beginning of a cautionary tale about the state of investing in 2021, the reality is far stranger. Redditors have bid up shares of AMC Entertainment Holdings Inc. and GameStop Corp. so much that it’s saved them -- for now, at least -- from deep trouble.They’re not the only troubled companies where social-media users are trying to conjure magic. In a broad benchmark of U.S. stocks known as the Russell 3000 Index, there are 726 companies whose earnings don’t cover their interest payments, a red flag to pros, according to data compiled by Bloomberg. These zombies are up an average of 30% in 2021 -- trouncing the 13% return for the whole index -- and 41 of them have doubled since New Year’s Eve.83456778Even explicitly dire warnings don’t seem to register. A bankruptcy plan under consideration by GTT Communications Inc. would wipe out shareholders, which is typical in Chapter 11 cases, Bloomberg reported May 24. Nevertheless, the company’s stock is up about 69% since then.Wall Street is starting to factor in the impact of traders drumming up enthusiasm for stocks on social media and Reddit threads. Theater operator AMC, which was on the brink of bankruptcy last year, now has a “path to a sustainable capital structure,” according to S&P Global Ratings, in part because it’s been able to sell new shares amid huge demand from retail investors. Video-game retailer GameStop is now debt-free for the same reason.“When looking at the debt of certain issuers, it’s becoming difficult not to take into account equity valuations that may seem inflated by Reddit-driven trading, especially as companies such as AMC are able to monetize these valuations,” said Ben Briggs, a credit analyst at StoneX Financial Inc.In bankruptcy, shareholders are the last to recover value, only after all debt holders are paid. Still, investors are piling into shares of troubled names -- and even companies already in bankruptcy proceedings. Medley Management Inc. has soared this month. The firm’s private-debt business filed for Chapter 11 protection in March with plans to repay its debt with new stock.83456783The Reddit optimists can point to more than just AMC and GameStop. Rental-car company Hertz Global Holdings Inc.’s survival was in question a year ago. It tried to sell shares to prop itself up, but admitted they could be worthless, prompting the Securities and Exchange Commission to block the offering. But its Chapter 11 restructuring ended up returning value to shareholders, which almost never happens.Rallies in AMC and GameStop’s stocks have captured the public’s attention, but credit markets have been moved, too. GameStop no longer has debt, but AMC’s bonds have recovered dramatically. Its 12% note due in 2026 was deeply distressed in November at 5 cents on the dollar. An incredible turnaround has put them just above par now.It’s no coincidence that some of the most troubled companies are now the ones benefiting the most from retail-driven rallies. Their massive debt loads, coupled with the devastating impact that Covid-19 had on their ability to generate revenue, were among the reasons their stocks are so heavily shorted in the first place. Redditors have specifically targeted stocks with huge bets against them.“The Reddit rallies are slightly changing the way we approach investments,” said George Schultze, chief executive officer of Schulte Asset Management. “The dynamic of these rallies is certainly interesting and is clearly a sign of excess liquidity sloshing around in the market.”GTT, an internet infrastructure company, spiked to an intraday high of $4.75 on June 3 after sinking toward $1. The company caught the eye of Reddit traders, who pointed to its small market capitalization, high short interest and the CEO’s previous business turnarounds.The company has repeatedly extended its forbearance agreement with lenders, something that’s been interpreted in online forums as a lifeline -- not a routine part of restructuring negotiations, which it is.Washington Prime Group Inc., the owner of shopping malls reeling from the pandemic, has also attracted retail traders. Like GTT, it has a forbearance pact with lenders and appears headed for bankruptcy court.“WPG Announcing deal this weekend??” Reddit user dbede5 wrote this week. “Forbearance agreement extended to Monday at midnight, not the usual 1 week extension!!”Its stock is up 118% the past two weeks.“A lot of retail investors are very smart,” said Christian Lawrence, a strategist at Rabobank in New York. “They aren’t given enough credit. But without a doubt many don’t understand the exact mechanics surrounding bankruptcy.”How this all ends is anyone’s guess. But even as pros start factoring in the meme-stock craze, it’s clear the gap between old-style finance and the new ways is wide.“Wall Street & Main Street aren’t even on the same continent anymore,” Reddit user baddfish2 posted Thursday on WallStreetBets.
Categories: Business News

A plan to take Delhi on digital highway

June 12, 2021 - 11:24am
Universal broadband access to every home in Delhi and connectivity at speeds of up to 1 Gbps to all its citizens through Wi-Fi hotspots through a network of ‘smart poles’ across the city, infrastructure for 5G network, data centres — the draft Master Plan for Delhi 2041 has prepared a digital roadmap for the city.The draft MPD41 notes that digital infrastructure and services are emerging as key enablers to Delhi’s growth, with the internet driving the app-based economy and services. In 2019, Delhi had over 5.7 crore phone connections, of which 5.4 crore were wireless connections, apart from 3.2 crore internet subscribers.The draft plan states that Delhi needs to align its telecommunication infrastructure and targets to the National Digital Communication Policy of 2018 (NDCP) and the Telegram Right of Way Rules, 2016 (ROW). It, accordingly, proposes strategies for a digitally enabled and connected city.83452827MPD41 notes that Delhi requires adequate infrastructure provisions to support higher service levels like 5G and above, full city fibre coverage and integration of the city’s digital systems with IoT (Internet of Things), artificial intelligence (AI), cloud computing and Big Data, among others.The document suggests that ‘smart poles’ may be installed in public areas, which apart from acting as Wi-Fi hotspots, would also have CCTV cameras, air pollution monitoring sensors, telecom antenna, solar lighting, public address and messaging systems and emergency call boxes. This network of smart poles across the city will be connected to the digital systems of civic agencies.As per the 'perspective plan for infrastructure service for Delhi 2041' of Delhi government, which forms an annexure to MPD41, at present a rental model to provide free Wi-Fi to Delhiites has been adopted. As part of this scheme, around 4,000 bus stops will be covered with a per user data limit of 15 GB.By 2041, Delhi government can plan to cover the entire city with Wi-Fi, including access in all public vehicles and public places like schools, colleges, hospitals, etc., with the bandwidth at Wi-Fi hotspots of up to 1 Gbps per user. The government considers smart poles as the way forward to accelerate the growth.The draft MPD recommends that data centres may be set up to meet the need for data storage and server management and digitally unified command and control centres may be set up by the local bodies as key drivers for effective urban management, especially traffic, safety, disaster response, etc.The document also states that connectivity through fibre-optics is considered to be more efficient in terms of internet speed and reliability of services and ‘Fibre First Initiative’ of NDCP and regulations of ROW policy will facilitate augmentation of telecom infrastructure.The state government also plans to establish Delhi as a hub for cloud computing, data communication systems, services and content hosting and delivery, apart from establishing centres of excellence including in spectrum management, telecom security and next generation access technologies.
Categories: Business News

US push big overhaul of antitrust against tech cos

June 12, 2021 - 11:24am
US House lawmakers on Friday introduced sweeping antitrust legislation aimed at restraining the power of Big Tech and staving off corporate consolidation. If passed, the bills would be the most ambitious update to monopoly laws in decades.The bills — five in total — take direct aim at Amazon, Apple, Facebook and Google and their grip on online commerce, information and entertainment. The proposals would make it easier to break up businesses that used their dominance in one area to get a stronghold in another, would create new hurdles for acquisitions of nascent rivals and would empower regulators with more funds to police companies.The legislation could reshape the way the companies operate. Facebook and Google, for instance, could have a higher bar to prove that any mergers aren’t anti-competitive. Amazon could face more scrutiny when selling its own branded products like toilet paper and clothing. Apple could have a harder time entering new lines of business that are promoted on its App Store.“Right now, unregulated tech monopolies have too much power over our economy. They are in a unique position to pick winners and losers, destroy small businesses, raise prices on consumers and put folks out of work,” said Rep. David Cicilline, D-R.I., chair of the antitrust subcommittee. “Our agenda will level the playing field and ensure the wealthiest, most powerful tech monopolies play by the same rules as the rest of us.”The introduction of the bills, which have some bipartisan support, is the most aggressive challenge yet from Capitol Hill to Silicon Valley’s tech giants, which have thrived for years without regulation or much restraint on the expansion of their business. Last year, the antitrust subcommittee released a scathing report about the industry after a 16-month investigation, declaring that Amazon, Apple, Facebook and Google engaged in a variety of monopolistic behavior. The proposals released on Friday try to address the concerns detailed in the report.Over the past decade, dozens of bills addressing data privacy, speech liability and children’s online safety have failed. But efforts to curb the dominance of the biggest tech companies have gained broad support in recent years. The Justice Department and the Federal Trade Commission during the Trump administration accused Google and Facebook of anticompetitive practices and filed lawsuits that are expected to be fought for years. Democrats and Republicans point to the dominance of a handful of firms as a root cause for the spread of disinformation, inequality in labor and wages, and haphazard rules for speech across the internet.The tech giants face similar challenges to their power across the globe, including antitrust investigations in Europe and new legislation in Australia and India to curb their power.“These are just the type of new laws we need to really address the problem of gatekeeper power by dominant digital platforms,” said Charlotte Slaiman, the competition director for Public Knowledge, a public interest group. “Big tech firms have so many powerful tools to protect their monopolies. These bills would give antitrust enforcers a few more powerful tools to open up digital platform markets for competition.”The bills set up a showdown with the tech industry’s powerful influence armies. Over the past decade, the industry has assembled the largest group of lobbyists in Washington, and the companies sponsor think tanks, fund academic papers and employ top antitrust litigation firms to defend their businesses.Some of the proposals are likely to gain widespread support among lawmakers, including one focused on getting more funding for antitrust agencies through higher merger fees; the Senate recently passed a similar bill. Another bill that could gain traction would give consumers the ability to take their digital history to other websites, which would weaken the stranglehold that large companies like Facebook have over personal data.But other bills will be harder to pass. One would make it illegal for a company like Google, which has a dominant search engine, to own another business that relied heavily on online search. For example, the company would not be allowed to favor search results for its YouTube video service under the new law, and it could be required to spin off the video business if it favored it over competitors. Another bill would prohibit a dominant company from using its weight to exclude rivals and from demanding conditions, like buying goods and services from the company, of others that wanted access to its platform.Adam Kovacevich, the head of Chamber of Progress, a lobbying group with Big Tech members, said consumers would be deprived of popular products if the bills succeeded.“Banning conveniences like Amazon Basics brand batteries, Apple’s Find my Phone tool or Google Maps appearing in Google search results are ideas that would spark a consumer backlash,” he said.Facebook and Google declined to comment. Amazon and Apple didn’t immediately respond to requests for comments.Some smaller tech companies hailed the bills.Roku, the online streaming device maker, said in a statement that the largest tech companies “flagrantly ignore” existing antitrust laws and harmed consumers.“An aggressive set of reforms is needed to prevent a future where these monopolists further abuse consumer choice and hamper access to innovative and independent products,” the company said.Antitrust experts say the bills would embolden enforcers, who have become constrained by court decisions that have narrowed interpretations of century-old antitrust laws.“This is a reaction to the fact that our antitrust laws have been construed so narrowly by the Supreme Court,” said Eleanor M. Fox, a professor of law at New York University. “Because of this problem, it is very appropriate for Congress to be stepping in to prohibit and determine what’s bad and what’s good for markets.”Republicans are divided on aspects of the bills. Rep. Ken Buck of Colorado, a Republican on the subcommittee, has been a consistent critic of the power of Big Tech. But he has also insisted on narrowing aspects of the laws to ensure that smaller companies aren’t swept up in the changes.Buck, like other Republicans, has been particularly critical of the power of social media firms over speech and has alleged censorship of conservative political figures by Facebook and Google.“This legislation breaks up Big Tech’s monopoly power to control what Americans see and say online,” he said, “and fosters an online market that encourages innovation and provides American small businesses with a fair playing field. Doing nothing is not an option. We just act now.”
Categories: Business News

View: Technology’s mystique must be challenged

June 12, 2021 - 11:24am
Perhaps the greatest one-page science fiction ever written is ‘Answer’, by Fredric Brown. It’s set in the future where humanity has tamed nature, conquered the galaxies, and is hooking up a giant supercomputer that will contain all the knowledge in databases across the galaxies, linked through a kind of interplanetary internet.When it’s finally plugged in, one of the assembled humans puts to it a question puzzling humanity through the ages: “Is there a God?” The supercomputer doesn’t hesitate a moment to answer: “Yes, now there is.” The full import of this answer strikes another of the assembled humans. He blanches in fear and rushes to unplug the supercomputer. But a bolt of lightning from a cloudless sky strikes him down, and fuses the switch shut, assuring the supercomputer of endless power for its operations.Many visionary writers have intuited the future. If the coronavirus was indeed created in a Wuhan research lab – and an article by science journalist Nicholas Wade, appearing in Bulletin of the Atomic Scientists, puts together very compelling evidence why we should think so – the obvious literary parallel that occurs is Mary Shelley’s Frankenstein, with Dr Frankenstein’s foul creation in this case being not so much a monster but a tiny virus. But Fredric Brown’s little story would be even closer to the mark. After all, even Frankenstein’s monster has some feelings, and is not nearly so destructive – while the coronavirus, like the supercomputer, becomes a pure artefact of technology.Irrespective of whether Covid-19 actually came out of a Wuhan lab, what’s indisputable is that virologists have for some time engaged in dangerous ‘gain of function’ experiments – whereby viruses are engineered to become more efficient in spreading disease. Shi Zhengli, the infamous “Bat Lady” from the Wuhan Institute of Virology, teamed up with Ralph S Baric of the University of North Carolina to enhance the ability of bat viruses to attack humans. Other American virologists have engaged in such work too; curiously, Shi and Baric’s work was part funded by the US National Institutes of Health (NIH).If you’re wondering what the NIH is doing by funding experiments like these, which translate into the opposite of its mission as they could promote disease on a vast scale, the only plausible answer is a fetish for technology, or a worship of technology for technology’s sake. Virologists’ defence is that the scientific knowledge gained through them will somehow enable us to get ahead of a pandemic. As Wade correctly argues, exactly how far have they enabled us to stay ahead of the Covid pandemic, which has claimed millions of lives already?Those performing ‘gain of function’ experiments, in fact, come close to the ‘idiot savant’ prototype, if not the ‘mad scientist’ caricatures that popular fiction abounds in. And technology comes close to religion in the modern world, with few of its converts – often more powerful and persuasive than the high priests of orthodox religions – willing to answer or raise questions about how far it serves human purposes.Indeed futurists like Yuval Noah Harari project a dark future for humanity, with technology in control: “Soon authority might shift again – from humans to algorithms. Just as divine authority was legitimised by religious mythologies, and human authority was justified by the liberal story, so the coming technological revolution might establish the authority of Big Data algorithms, while undermining the very idea of individual freedom” (21 Lessons for the 21st Century).Signs of technology running amok aren’t restricted to engineered viruses, or unregulated big data. They’re all around us. Take climate change. Its consequences could be far bigger, and even more unstoppable – once the genie is out of the bottle – than the coronavirus. Take the development of killer robots. Technically known as LAWS (lethal autonomous weapons systems), they could soon become laws unto themselves if they materialise on the battlefield. Stephen Hawking, and 4502 AI/ robotics researchers, signed an open letter calling for a ban on these slaughterbots – to no avail.Where scientists don’t want to go, the politicians want to go (scientists may be more aware of the Janus-faced nature of their vocation). Thus, Terminator prototypes could soon move from the movie theatres to an actual war theatre near you, promising unlimited mayhem.Humanity’s ambiguous situation, however, is that it takes more technology to heal the problems created by technology. For example, if Covid-19 came out of a virology lab, the unprecedented pace of development of vaccines offers an antidote to it. No romantic, Luddite escape from technology is really possible. If we’re trapped in a technological maze, only more science and tech can show us the way out.But regulating science and tech – especially in emergent fields such as genetics and AI – is now even more urgent than regulating big data. Ethics, and the search for human purpose, must loom large in every field of scientific activity, and be integrated into every scientific curriculum. Such fields of activity as engineering pathogens or killer robots must be outlawed outright. China and US, as the two nations with the strongest tech fetishes (in that order), must lead the way.Covid has led to more deaths and suffering than good-sized religious wars already – and we don’t know what horrors its future trajectory holds. The only way suffering on Covid’s massive scale can be redeemed is if, thanks to it, humanity were to come to an understanding of the growing dangers of technological fetishism, and develop the politics and institutions necessary to move beyond it and towards a more humble, and humane, science.(Swagato Ganguly edits “The Times of Ideas”, the editorial page of the Times of India. Views expressed are the author's own.)
Categories: Business News

Food firms see demand spike from small towns

June 12, 2021 - 11:24am
Online food delivery platforms have seen a spike in demand from tier 2 cities and onboarded more restaurants over the last two months, amid the second Covid-19 wave.Restaurant aggregator Swiggy said tier 2 and tier 3 cities, including Tirupur, Jodhpur, Belgaum, Agartala and Jamshedpur, saw greater adoption of online food delivery.Some tier 2 cities saw a 50% increase in users in the last month, while others “recorded their highest growth numbers to date”.“Even after the first wave in 2020, these cities showed faster recovery, with many crossing pre-Covid-19 order values a few weeks after the movement restrictions were eased. One of the reasons for this was the migration of the working population back to their hometowns,” a spokesperson for Swiggy said.During the first wave, food delivery order volumes dropped by 75% in March 2020 compared to January of that year, according to an expert who tracks the industry.Zomato and Swiggy reported significant recovery in order volumes towards the end of last year.According to the industry watcher cited above, food delivery companies were prepared to deal with lockdowns, and had Covid-safety protocols in place, unlike the first wave.83453408Reverse migration from metros helped friends and family in non-metro cities get acquainted with food ordering, which contributed to increased interest in these regions, the person said.Food demand in tier 2 cities outstripped demand in metros over the last two months, said Raghav Joshi, chief executive India Business unit of Rebel Foods, which houses brands like Behrouz and Ovenstory across 340 cloud kitchens in more than 40 cities.“Tier 2 cities' kitchens have grown really well and there is definitely a pent-up demand for premium brands,” Joshi said.This has given Rebel Foods the confidence to add kitchens in Ludhiana, Bhubaneswar and Patna. Joshi said delivery demand overall has surpassed pre-Covid-19 levels in the last two months. Rebel Food brands saw an overall growth of 25% in May over April, as consumers’ confidence in safety around food delivery returned.Swiggy is currently ramping up hiring to meet increased demand in non-metro cities, its spokesperson added.According to recruiting platform Teamlease, hiring by e-commerce, food delivery partners, and quick chain restaurants in non-metro cities shot up by 14% in the last two months, and has increased by 28% since March 2020.Of the total restaurants onboarded on direct ordering platform Thrive, 75% were in non-metro cities including Kochi, Jammu and Dehradun, in the last two months.The platform has expanded from 15-20 cities to over 100 cities since March this year, said cofounder and CEO Krishi Fagwani.Swiggy has seen an average increase of 20% in the number of restaurants being onboarded monthly compared to the pre-Covid-19 period.Thrive too has doubled deliveries and the number of restaurants onboarded since March this year, according to Fagwani.Gurugram-based DotPe witnessed an increase in food delivery demand and restaurant onboarding in the last two months for single outlets, regional chains and eateries inside hotels that may have been on the fence about the delivery model.“The second wave cemented for restaurants that delivery is here to stay,” said DotPe’s cofounder Anurag Gupta. “There has been a phenomenal focus on delivery,” he said.DotPe counts Google and the investment arm Info Edge -- which has also backed Zomato -- as its investors.In the last two months, Thrive has onboarded restaurants from Marriott, Novotel, and the Leela group.“I think the mindset has shifted there because they've also realised that they are sitting on that space, they need to start generating revenue out of it. They are coming on board now to get their own online ordering platform set up,” Fagwani said
Categories: Business News

Ships skip Singapore due to China congestion

June 12, 2021 - 11:24am
Delays from congestion at southern Chinese ports triggered by fresh Covid-19 outbreaks are rippling through global supply chains, threatening to inflate costs and exacerbate disruptions.A cargo vessel operated by Cosco Shipping Lines Co. will skip a scheduled port stop in Singapore this month because of delays in China, according to alliance partner Ocean Network Express Holdings Ltd. One of CMA CGM’s vessels heading to China in July will also not call at the Southeast Asia trans-shipment hub.“The delays have already resulted in pressurizing soaring shipping prices within China due to a lack of containers and increased export demand,” said Josh Brazil, vice president of marketing at project44, a supply-chain intelligence firm. “These high shipping costs are just one factor that may contribute to an additional looming threat to global inflation.”Waiting LongerA virus outbreak at Yantian in Shenzhen has already inflated spot freight rates globally, with Drewry’s World Container Index increasing 10% in the past three weeks, said Simon Heaney, senior manager of container research at Drewry Shipping Consultants Ltd.“It feels inevitable that rates will climb higher as we head into the third-quarter peak season,” he said. “Both importers and exporters will suffer if delays and waiting times extend.”The disruption is causing further pain for global shippers already struggling with interruptions to supply chains from the pandemic, and the Ever Given’s grounding in the Suez Canal earlier this year. Trans-shipment dwell times in Singapore are at about eight to nine days now, up from roughly five days a year ago, according to estimates from project44.Vessel schedules and carrier service levels have been disrupted by delays at Yantian port, and congestion has spilled over to the nearby Shekou and Nansha terminals, PSA Singapore said in an emailed response to queries. “We expect vessel arrivals in Singapore to be affected as well.”However, container vessels calling at PSA Singapore’s terminal aren’t facing longer wait times as a result of the delays in Yantian yet, the container operator said.
Categories: Business News

2 PSU bank stocks for aggressive investors

June 12, 2021 - 11:24am
Go for SBI if you want to play safe but if you want to be aggressive, Bank of Baroda and Punjab National Bank are your best bets, says Sudip Bandyopadhyay of Inditrade Capital. Edited excerpts:How are you playing the IT space?We have been very bullish on IT. We believe there is a rerating happening in Indian IT sector. This space will probably last for the next two-three years. What we were expecting to happen over a decade is now happening over a very short span of time, predominately on the back of COVID. Digital has got a significant impetus. Work-from-home has accelerated the pace. You can play safe by going with Infosys, TCS, HCL or even Wipro. I think that is a very standard recommendation. Even now you can now buy these stocks for stable returns over the next one year. If you want to be a little aggressive and focus on digital and emerging segments like robotics, AI, machine learning, etc, my pick would be Happiest Minds Technologies. I think they have a very experienced management. By the virtue of starting late, they are focussing on the right segments. A significant part of their business is already digital and they are moving into newer and newer technologies. I will look at Happiest Minds even at current levels.Where within banks are you finding comfort to add fresh positions?If you are a little aggressive investor, you should look at some of the PSU banks now. There are asset quality challenges and a lot of other niggling issues regarding management, etc, but capex and loose monetary policy works in favour of public sector banks. They are grossly undervalued. I would like to point out two leading PSU banks - PNB and Bank of Baroda. Their asset quality has always been a concern. With NCLT and regulatory action coming in, we should see some recoveries happening. The second COVID wave may not be as harmful to their asset quality as was the first wave.It makes sense to acquire PNB and Bank of Baroda at current levels for significant upsides. But you need to be a little aggressive investor. Some market movement may bring them down even further, but if you take a 6-12 month time horizon, these are probably the best picks at this stage. If you want to play safe, I will recommend SBI. It has moved up quite a bit. Beyond its own balance sheet, SBI's strength is in its subsidiaries, whether it is life insurance or general insurance or asset management. All their businesses are performing exceedingly well. Strategic divestments or public offers may lead to further gains for SBI. So I think if you want to play safe, SBI; if you want to be aggressive, BOB and PNB.In the last week, media has been one of the best performing sectors. What are your thoughts?I think it is interestingly positioned. I would like to mention Sun TV and Zee; both look good to me. Sun TV has moved up from its earlier lower levels and I believe there is a significant opportunity considering that Sun Next has started doing exceedingly well. The kind of library they have in Tamil should hold them in good stead as far as their OTT platform is concerned. Their ad revenues have started pouring in now and with the unlock happening and economy picking up, this will gather further momentum. As far as Zee is concerned, I think concerns regarding the promoter and management have been addressed to an extent. But there are lingering doubts on the role of management. I think Zee can move up even further. Overall, the channels are doing well. There are certain concerns on their OTT platform and the costly acquisition they have made in the recent past. In spite of that, it does look attractive at current levels on a valuation basis. The only question mark or risk factor is the clarity on promoter and the management's stand.
Categories: Business News

IT stocks may outperform Nifty by a wide margin

June 12, 2021 - 11:24am
The opening up of the US economy should augur well for most IT companies, says Mahantesh Sabarad, SBICAP Securities, in this interview with ET Now. Edited excerpts:The Street seems to be believing that metals remain in a super cycle. Do you think it is a no-brainer to buy the dip in metal stocks?I think most of the metal stocks are doing really well. It is a commodity rally that is shaping up quite well. It is not limited only to metals. You will find oil-related and even agri commodity-related stocks going up. I would rather call it a broad-based commodity rally. It is happening not just due to prices going up, but also because activity levels are getting boosted. There was little capex in the last few years. Now the ultilisation levels are up and that is really helping the commodity rally in a big way. I am sure it will continue for a few more months.There is a renewed optimism in the IT pack after TCS management said they continue to be in a multi-year tech cycle.What surprised us last year was IT companies trying to digitalise their revenue flows in a big way. We have not seen such deal wins. For the full year, the typical growth rate of deal wins would have been 4-7%, but it was about 14-15% or even 17% in same cases. That gives a lot of revenue visibility for most IT companies. They have upped their EBITDA margins and EBIT margins quite substantially over the past couple of years. The upcoming year will be a good one for most of these IT companies. They have also done some capital restructuring in terms of buybacks, which helped in bringing greater EPS visibility and not just profit visibility. So I would share the optimism that the management has been talking about. I look forward to IT stocks outperforming the index by a wide margin.Let me just bring one perspective about the IT index that has really surprised us in the past one year. I have never seen an Infosys double within a year in the recent past. It used to rally quite sharply more than a decade ago or so, but for the past one year it is one stock that has really given fantastic returns. And it is a frontline stock, mind you. So from an outlook perspective, when we find that IT companies are upbeat in terms of their guidance and transformation, it gives us a great deal of confidence about where these companies can go. I am sure that while we may not see Infosys doubling again, but we will surely see Infosys riding the rally quite smartly. And I am not limiting my discussion to Infosys alone. You have the other largecap IT names also following suit. Wipro has also done phenomenally well in the past one year, if I were to single out any other IT company. And the opening up of the US economy should augur really well for most IT companies who are US facing. I would suggest investors to be overweight on the sector.What is your take on platform companies?Platform companies which are offering consumer-facing platforms are set to do well. You will have to be very careful. Are digital revenues adding to their existing revenue streams or are they just doing revenue cannibalisation? ICICI Securities is one such company which is perhaps doing cannibalisation of its own revenue stream. I would be very careful about such platform companies but the rest are really doing well.
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Kerala CM announces 100-day action plan

June 12, 2021 - 11:24am
Kerala Chief Minister Pinarayi Vijayan-led LDF government on Friday announced a 100-day action plan to advance the achievements of health, education and social security amid the COVID-19. The plan will be implemented from June 11 to September 19."Economic stimulus and job creation schemes were included in the 100-day programme implemented in two phases last year to address the impact of Covid-19. Now when the second wave of the pandemic is in full swing, we need construction activities and job creation to accelerate economic growth. The emphasis will be on policies and schemes to advance the achievements of health, education and social security," Vijayan said.The 100-day action plan includes projects worth Rs 2,464.92 crore through the Public Works Department, Rebuild Kerala Initiative and KIIFB. "K-DISC is completing an ambitious project of providing employment to 20 lakh educated people in the state. All Local Self Governments will prepare a draft plan to create employment for five persons out of 1,000 people," he said.Approximately 77,350 direct and indirect job opportunities will be created in 100 days under various departments.He also informed that loans worth Rs 5,898 crores have been sanctioned from international financial institutions such as the World Bank, German bank KFW and Asian Infrastructure Investment Bank (AIIB) for the Rebuild Kerala Initiative (RKI)."When the state share is added, Rs 8,425 crores will be available for RKI projects. In the next 100 days, nine road projects worth Rs 945.35 crores will be started using RKI funds." In addition, the Public Works Department will complete projects worth Rs 1,519.57 crores in these 100 days. KIIFB funded road-bridge projects worth Rs 200.10 crores will be inaugurated within these 100 days.Meanwhile, the Agriculture Department has started the distribution of seeds for cultivating vegetables for Onam. "Organic farming will be started on 25,000 hectares. 100 Urban Street Market will be opened during this period. 25 lakh fruit and vegetable saplings will be distributed and 150 Farmers Producers Associations will be set up. The Cashew Board will provide 8,000 MT of cashew nuts and take steps to create 100 working days," the CM said.The state government also aims to distribute 12,000 land title deeds during these 100 days. "Several IT initiatives will be launched for accessing government services. Life Mission will complete 10,000 more houses. 50,000 laptops will be distributed under the Vidyasree scheme. The Nilav project will be started in 200 gram Panchayats."Stating that this is not a complete list of projects to be implemented within 100 days, he said: "All the projects under the 100-days action plan and their details will be published by the respective departments."On services from Village Offices, he said: "All services from Village Offices will be made available online by 2 October. 126 of 1,666 Village Offices are currently Smart. 342 are currently becoming Smart. All Village Offices in Kerala will become Smart over the next 5 years."
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Brokerages remain bullish on GAIL India, see up to 23% upside post Q4 earnings

June 12, 2021 - 11:24am
Mumbai: Brokerages have maintained a bullish view on GAIL India and raised price targets by 17-23% after the state-owned gas utility company reported a 28% jump in March quarter profit. The company reported a net profit of ₹1,907.7 crore compared with ₹1,487.33 crore net profit in the same period a year ago. Strong performance of petrochemicals business and turnaround on rise in international prices boosted the fourth quarter earnings. Shares of GAIL ended up 0.15% at ₹163.70 on Friday. Edelweiss, CLSA, IIFL, Emkay and Kotak Institutional Equities have maintained buy ratings. Edelweiss, which raised target price the highest by 23%, said the stock’s current valuation is attractive, with growth likely to be driven by transmission or marketing volume growth and higher petchem capacity. CLSA has raised earnings estimates for FY22 and FY23 by 2-3% due to GAIL’s positive leverage to crude prices, receding worries on gas trading as well as volume tailwinds in core gas transmission.
Categories: Business News

Auto sales shrink in May as showrooms and factories remain closed on Covid curbs

June 12, 2021 - 11:24am
New Delhi: Automobile sales in the local market in May shrank to just over a third of the previous month, as showrooms and factories remained closed or operated at reduced capacities due to lockdowns in several states.As many as 88,045 passenger vehicles were sold last month, compared with 261,633 units in April, according to data released on Friday by the Society of Indian Automobile Manufacturers (SIAM). In May last year, sales were lower at 33,546 units, as unlocking had just started for the industry after the nationwide lockdown of over a month.The SIAM numbers are of dispatches from factories to dealerships and not the retail sales, and exclude the volume data of Tata Motors that has stopped reporting to the industry body every month. Sales of three-wheelers last month fell to 1,251 units from 2,437 units in May 2020. Wholesale volumes of two-wheelers totalled 352,717 units, higher than 279,682 units a year earlier. While sales of motorcycles rose to 295,257 units from 197,378, those of scooters fell to 50,294 units from 69,196.Several leading automakers had advanced annual maintenance shutdowns or temporarily suspended operations at their manufacturing units last month, due to the lockdowns and to divert oxygen for medical purposes amid a surge in Covid-19 cases.“Most of May was under lockdown in many states, thus impacting overall sales and production. Many members had shut down their manufacturing plants to divert oxygen from industrial use for medical purposes,” said SIAM director-general Rajesh Menon. Since both May 2020 and May 2021 were abnormal months because of the Covid-19 situation and lockdowns, a comparison of these two months holds no meaning, he said. From May 2019, which was a normal month, sales in May this year fell more than 61% for passenger vehicles and nearly 80% for two-wheelers, Menon said. Three-wheeler sales last month were just about 2.5% of the volume in May 2019.
Categories: Business News

Death recount not peculiar to India alone

June 12, 2021 - 8:24am
In June three states — Maharashtra, Bihar and Goa — reported around 8,000 fatalities not recorded earlier, pushing up the death count. However, such late reporting of deaths or cases is not peculiar to India alone-At least 8 states have reported unusually high fatality figures on some days83452066-Even the Covid test number was revised up 7.6 millionRevision after aggregate numbers were reconciled with state data83452080-Reasons for delay in reportingLate reporting of deaths by hospitals and clinicsDelay in updating of data or reconciliationData not reported regularly-Happens elsewhere too 1,500 more deaths reported in US count after adding Indiana backlogLast month Oklahoma & Maryland added backlogged deathsIn April, Oklahoma added many deaths from previous monthsIn Oct, UK reported more than 12K covid infections, including unspecified number of deaths
Categories: Business News

Life goes on, it's just tennis: Nadal after loss

June 12, 2021 - 8:24am
Rafael Nadal shrugged off his epic loss to Novak Djokovic at the French Open insisting "life goes on" as the 13-time champion suffered just his third ever defeat in 108 matches in Paris over 16 years. In their 58th career clash, world number one Djokovic triumphed 3-6, 6-3, 7-6 (7/4), 6-2 in the semi-final and stays on course to capture a 19th major and become the first man in over 50 years to win all four Slams twice. Nadal, the defending champion and chasing a record-setting 21st Grand Slam title, refused to dwell on the consequences of his 4-hour 11-minute loss. "I am sad to have lost in the most important tournament of the year for me, but life goes on, it is nothing more than a defeat on a tennis court," said 35-year-old Nadal. "If everything goes well, tomorrow I will be at home with my family and friends, and then we will see what is next." Nadal said he plans to be back in 2022 although admitting that time is not on his side if he wants to re-establish his Paris dominance. Had he made Sunday's championship match, he would have been the oldest Roland Garros finalist in the modern era. "Although it is a very important tournament for me, I am aware that you cannot win it 15 or 16 times," he added. "Next year I will come again, God willing, with the belief and with the necessary work to be able to give myself another chance." In their 58th career meeting, and ninth at the French Open, Nadal had looked comfortably on course for victory when he raced to a 5-0 lead in the first set. But 2016 champion Djokovic, the man now responsible for two of Nadal's losses in Paris having also triumphed in the 2015 quarter-finals, hit back.'Did not hurt him' As the match progressed into the later heavier, humid and slower conditions, the world number one flourished. He claimed a titanic 92-minute third set which had seen him serve for it at 5-4 and then have to save a set point in the 12th game. In the fourth set, he was 0-2 down before racing away with the next six games for his second win in Paris over Nadal in nine meetings. That sequence also included defeats in the 2012, 2014 and 2020 finals. Djokovic will now be playing in his sixth Roland Garros final and 29th at the Slams. "In the end, of course, if you win the third set you can say that was the key, because it changes the dynamic," said Nadal. "At times, my ball did not hurt him. You have to give him credit, congratulate him, but I know I can play better on this court." When asked if he had faced the best Djokovic performance of their 15-year rivalry, he was adamant. "No, that's what I feel. He has not faced my best self either. "There were games on the limit, games that anyone could win, and today it was for him." Despite that, there is a degree of evidence that Nadal is beginning to lose more epics than he wins at the Slams. At the Australian Open in February, he lost to Stefanos Tsitsipas from two sets up in a five-set quarter-final defeat. Tsitsipas, who faces Djokovic in Sunday's final, is 13 years younger than Nadal. In the Wimbledon semi-finals in 2018, Nadal lost a final set 10-8 to Djokovic after quitting injured in the fifth set of his Australian Open semi against Marin Cilic earlier that same year. Even Gilles Muller of Luxembourg beat him at Wimbledon in 2017, courtesy of a 15-13 final set. "It doesn't matter," added a rueful Nadal. "That's tennis. The player who gets used to the conditions better is the player who deserves to win."
Categories: Business News

IL&FS founder Ravi Parthasarathy arrested

June 12, 2021 - 8:24am
Ravi Parthasarathy, the former chief executive and chairman of debt-ridden Infrastructure Leasing & Financial Services Ltd (IL&FS), has been arrested by the Chennai police in connection with a cheating and fraud case registered by its Economic Offences Wing (EOW).Multiple agencies, including the Directorate of Enforcement (ED), the Serious Fraud Investigation Office (SFIO) and Delhi police, have been investigating IL&FS and its erstwhile board for alleged financial fraud.The Chennai police said in a press note that the EOW registered the case based on a complaint by financial services company 63 Moons Technologies Ltd, which had alleged a fraud worth ₹200 crore.The EOW also received complaints from various other depositors. The arrest came after the Madras High Court dismissed Parthasarathy’s anticipatory bail plea. He has been remanded in judicial custody.
Categories: Business News

Government on dosage interval of Covishield

June 12, 2021 - 8:24am
The government Friday said there is no need to panic on the need for an immediate change in the dosage interval of Covishield vaccine, underlining that reducing the time gap requires proper scientific study in the Indian scenario. In the context of some media reports quoting recent studies that it would be better to shorten the gap between two doses of Covishield vaccine, in light of the variants in circulation, Dr V K Paul, member (Health) at NITI Aayog, said there is a need to balance such concerns. Addressing a media briefing on COVID-19, he said, "There is no need for any panic, suggesting need for immediate switchover or change in the gap between the doses. All these decisions must be taken very carefully. We must remember that when we increased the gap, we had to consider the risk posed by the virus to those who have received only one dose. But the counterpoint was that more people will then be able to get the first dose, thereby giving a reasonable degree of immunity to more people." "We need to balance these concerns. So, please remember, that we need to necessarily have this debate and discourse in the public domain; however, the decision has to be taken by appropriate fora comprising eminent people who are knowledgeable about this," he said. Paul said in the National Technical Advisory Group on Immunisation (NTAGI), there are quite a few people who have been a part of WHO panels and committees and are globally renowned and recognised for their eminence. Moreover, NTAGI is regarded as a standard when it comes to global and national immunization programmes. "So, please respect their decisions," he said. Welcoming a discourse on this topic, Paul highlighted the need for due scientific process in arriving at such decisions. He appealed to the public to respect the decision taken by NTAGI, a body of globally renowned experts. Let the decision regarding dose interval be examined by NTAGI, according to due process. The UK must have adopted due process and examined data scientifically, to revise their previous decision regarding the gap. The UK had earlier kept the gap at 12 weeks, but as per data available to us, we did not consider it safe at that point, he said. "So, let us entrust this to our scientific fora, they must be addressing it already. They will review it based on the pandemic situation in our country, depending on the extent of prevalence of the delta variant in our country and then take a comprehensive view. Whichever decision is taken by our scientific community, we will honour it," Paul stated. PLB ZMN
Categories: Business News

Some using vaccines as geopolitical tool: UK

June 12, 2021 - 8:24am
British foreign minister Dominic Raab said on Friday there was no doubt some countries were using vaccines as diplomatic tool to secure influence, and that Britain did not support so called 'vaccine diplomacy. Asked in a Reuters interview whether he was concerned that China and Russia could use vaccines in exchange for influence in parts of the world, he said: "There's no doubt there's some of this is going about, and we don't support vaccine diplomacy, let alone blackmail. "We think that we've got a moral duty, but also a strong vested interest in getting the world vaccinated," he said, speaking on the sidelines of a G7 summit in Cornwall, England. "We would only think it was responsible to be promoting vaccines that the WHO has sanctioned as safe to distribute. "But it's a team effort. And we want the countries like China and Russia to come together to tackle the problems of pandemic, but also climate change, and also to respect the basic principles of international law." China currently has two WHO-approved COVID-19 vaccines, while a Russian-developed shot is waiting approval. Russia said last week it expected that approval in the next couple of months. British Prime Minister Boris Johnson expects the G7 to agree to donate 1 billion COVID-19 vaccine doses to poorer countries during its summit, and help inoculate the world by the end of next year. The United States has promised to donate 500 million doses with no strings attached. Raab said Britain's contribution would also come with no strings attached, with at least 80% being distributed by the COVAX international vaccine initiative. He said the rest would be provided to "strategic close countries where we have a particular relationship, and no, we don't insist on conditionality." Raab also said he would be speaking to Russian Foreign Minister Sergei Lavrov 'shortly', without giving a specific date for the meeting. He declined to comment on issues he would raise at that meeting. Nevertheless Raab criticised Russia as a leading proponent of cyber attacks, calling for the G7 to take a united stand against all such incidents, whether conducted by state or non-state actors. "These activities are contrary to international law, many of them, and they're very damaging, some of them are done for pure theft, or for profit, others are done just to create havoc," he said. "We ought to be clear as an international community that cyber attacks on hospitals, on schools, on critical national infrastructure - that's wrong. That's unjustifiable, it's beyond the pale." Asked about the recent forced landing of a civilian aircraft in Belarus, Raab said the country was slipping "into pariah status". "We need Belarus to step up and live up to the basic, fundamental, cardinal rules of international law," he said.
Categories: Business News

Bharat Bio to conduct Covaxin clinical trials in US

June 12, 2021 - 8:24am
Hyderabad-based Bharat Biotech said on Friday that it will be carrying out a clinical trial in the US to support the marketing application for Covaxin in that country. The company didn’t disclose details regarding the possible number of participants or whether it would be a local bridging trial, among other details.On Thursday the US partner for Bharat Biotech’s Covid-19 vaccine, Ocugen, said that it would pursue submission of a Biologics License Application (BLA) for the jab, instead of seeking Emergency Use Authorisation (EUA) as originally planned. Ocugen, a Pennsylvania-based eye disease company, had to change its application at the USFDA, following a recommendation from the regulator. Analysts say this means that subject to regulatory approvals, it could take longer for Covaxin to be launched in the US. Submission of a BLA represents the pursuit of full approval for the vaccine, rather than a provisional approval under an EUA “The USFDA had earlier communicated that no new EUAs will be approved for Covid vaccines,” Bharat Biotech said in a statement. “All applications have to follow the BLA process, which is the standard process for vaccines. No vaccine manufactured or developed in India has ever received EUA or full licensure from the USFDA.”
Categories: Business News

Protesting farmers announce dharnas on June 26

June 12, 2021 - 8:24am
Protesting farmer unions Friday announced they will organise dharnas at governor houses across the country on June 26 to mark the completion of seven months of their agitation against the three new Central agri-marketing laws. The Samyukta Kisan Morcha, an umbrella body of over 40 farmer unions, said they will show black flags during their June 26 protest and send memorandums to President Ram Nath Kovind. Farmer leader Inderjit Singh of SKM told a press conference that the day will be observed as "Kheti Bachao, Loktantra Bachao Diwas (save farming, save democracy day)". "We will protest by showing black flags at Raj Bhavans and giving memorandum to the President through the governor of each state, who is the President's representative. "It (June 26) is also the day when Emergency was declared in 1975 and we will complete seven months of our protest. Along with farming, democratic rights of the people have also been attacked in this environment of dictatorship. This is an undeclared emergency," Singh said. Thousands of farmers, mainly from Punjab, Haryana and western Uttar Pradesh, have been camping at Delhi's borders for more than six months now in protest against the three laws that they say will leave them at the mercy of big corporates and end the MSP regime. The government has said all these concerns are baseless and that the new laws are pro-farmer. The Supreme Court has put on hold the implementation of the laws till further orders and set up a committee to examine the issues. Addressing the concerns of women protestors, farmer leader Suman Hooda said special committees will be formed by Saturday evening which will be dedicated to the women at the protest sites. "We received some complaints from our women protesters. I want to assure them that these committees will only work to address any problems faced by them. Their contact numbers will also be shared by Sunday," he said.
Categories: Business News

India 'moved mountains' to control second wave

June 12, 2021 - 8:24am
Indian External Affairs Minister S Jaishankar on Thursday assured the worried diaspora in Kuwait that the second wave of COVID-19 was receding in India and the government "really moved mountains" to contain the pandemic. Jaishankar, who arrived here on his first bilateral visit to the oil-rich Gulf nation early on Wednesday, addressed the Indian community here at the conclusion of his meetings in the country. "The second wave of the COVID-19 has started to recede. The daily number of new infections is less than what it was in early May. The positivity rate has also come down dramatically," he said. "A large part of it has been made possible by very very vigorous government response to the second wave. The kind of effort and energy that I saw, the long hours that people put in. People really moved mountains to respond to what was an unprecedented situation," he said. The minster said the government ran hundreds of oxygen trains to ferry oxygen from the production centres to the major cities. "All our planes were mobilised, including the Air Force planes for the oxygen cylinder tanks to be moved, both within the country and from abroad to India," he said. "We procured medicines which were essential for COVID treatment. Many of them came from abroad. We also ensured the domestic production of the medicines was enhanced," he said. On the vaccination programme, the minister acknowledged that it was a "big issue" and 3 million people were being vaccinated daily and its pace will pick up in the coming days. "As the production of the vaccines scales up, as the year progresses, we will be able to vaccinate all our people," he said. Jaishankar said the economy has started to make a strong recovery, asserting that there is a sense that the economic impact of the second wave would be less than what happened in the last year. "The belief we have is that India will pick up. India will recover rapidly, that a lot of what we have seen in the past - the steady rise of India and its economy and influence in the world - that will continue," he said. Jaishankar lauded the contributions of the Indian community, saying it in many ways defines India abroad. "The contribution you make, the respect you earn, the support that you provide and the bridge you constitute is what makes India's interaction with the world unique... Keep the Indian flag flying high here in Kuwait," he said. Earlier, Jaishankar held a meeting with India's envoys to the Gulf nations to discuss a host of issues, including encouraging speedy resumption of flights to this region and facilitating reuniting families separated by COVID disruption. He held "productive discussions" with his Kuwaiti counterpart Sheikh Ahmed Nasser Al-Mohammad Al-Sabah on Thursday during which the two sides discussed a range of issues including health, food, education, energy, digital and business cooperation.
Categories: Business News

Dominica HC denies bail to Mehul Choksi

June 12, 2021 - 8:24am
In a major setback to fugitive diamantaire Mehul Choksi, Dominica High Court has denied bail saying that he has no ties to Dominica and the court cannot impose any conditions which will assure it that he wouldn't abscond.Dominica High Court also pointed out how Choksi proposed that he will stay with his brother in the hotel, but that is not a fixed address. The court also noted that his trial has not started yet.Judge Wynante Adrien-Roberts of Dominica High Court decided not to grant bail to Mehul Choksi after conclusion of the submissions made by both the sides. The court also highlighted that Mehul Choksi didn't offer any strong surety before the court while he sought bail and he's a flight risk too, Antigua Newsroom reported.Currently, Choksi has got interim relief from immediate repatriation to India by the Dominican court.Choksi's Counsel while argued for bail citing medical grounds and not at flight risk.The court verdict comes a few days after Dominica Prime Minister Roosevelt Skerrit termed Choksi as an "Indian citizen" and stated that the courts will decide what happens to the fugitive. He added that the government will protect the rights of Choksi as he awaits trial."The matter with this Indian citizen is before the courts, the courts will decide what happens to this gentleman and we allow the court process to go through," Loop Jamaica News quoted that Dominica PM as saying.Choksi had gone missing from Antigua on May 23 after going out for dinner and was soon caught in Dominica. He was charged with illegal entry by the police in Dominica after he allegedly escaped from Antigua and Barbuda in a possible attempt to evade extradition to India.The 62-year-old fugitive is wanted in India in connection with a Rs 13,500-crore fraud in the Punjab National Bank (PNB).According to the Writeups 24, Choksi's disappearance from Antigua and Barbuda and his apparent attempt to escape to Cuba, was unlike the Hollywood drama that it was made out to be. The Caribbean newspaper said that the whole planning was to manipulate the entire scenario into an abduction story, and the media was trapped in a hoax created by Choksi's family on the advice of his lawyers.Responding to such media reports, Mehul Choksi's brother on Monday sent a legal notice to Caribbean-based media outlet Associate Times, for publishing an article, what they termed as "fake, unsubstantiated, false and with unverified facts. "The media outlet had recently reported that Chetan Chinubhai Choksi, the elder brother of Mehul met with the leader of opposition Lennox Linton at the latter's home for two hours and had promised to pay for election donation in exchange of support from the opposition to press the matter in the parliament.Chetan Choksi's lawyer Ayush Jindal, said his client has sought an unconditional apology and issuance of a corrigendum clarifying the correct facts, in all print and digital media, and other social media platforms.
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