Rating Agency ICRA And State Bank Of India Put Out GDP Projections
ICRA Ratings has said India's economic growth will accelerate to 8.5 per cent in the April-June period of the current fiscal from the 6.1 per cent growth rate witnessed in the preceding January-March quarter.
Our Top Reports For Today
- <00:56> Jio Financial stock gets hammered gain, hits a lower circuit on the bourses again
- <04:13> Rating agency ICRA and State Bank of India put out GDP projections for the April to June quarter. ICRA says 8.5%.
- <06:43> India’s Digital Lending Industry Grows 49% but 86% of all borrowers are male with Sugandh Saxena
- <15:56> What Is the Future For Petrol Sipping Two-wheelers with Hormazd Sorabjee
- <21:51> Visiting New York? AirBnB may not be an option as New York cracks down on short term rentals and listings start disappearing.
NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.
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Jio Financial & Market News
Jio Financial Services, recently demerged from parent Reliance Industries, was locked at the 5 per cent lower circuit for the second straight day. 5% is the maximum it can go.
The stock settled at Rs 239.20 on the BSE. Following the two successive lower circuits, BSE has deferred the removal of Jio Financial from its indices by another three days to August 29.
Website BQ Prime says there were no buyers for the stock for the second straight day and volumes remained tepid. The stock on Monday had 37 million shares in sell orders on the NSE which rose to over 110 million on Tuesday.
Passive funds or those tracking the benchmark Nifty 50 or S&P BSE Sensex and global indices are said to own up to 13.1 crore shares. And since JFS will not be part of these indices, all passive funds will have no option but to exit the stock in the next few days before the close of the month.
The 5% circuit on the stock isn't helping as passive funds will have no choice but to wait till they are able to sell their shares.
The stock is also listed under the 'T' series, which means only delivery based buying and selling can take place.
In a remarkably flat day on the bourses, the S&P BSE Sensex ended on a flat note at 65,220 – up four points. The NSE Nifty 50 ended at 19,396 – up three points. If you were wondering what to do in such times, a quick reminder, listen to fund manager Navneet Munot’s comments in Monday’s podcast. 76
Meanwhile, among other, well, conglomerate and potentially eco friendly news, copper and aluminium producer Hindalco Industries of the Aditya Birla Group said it will invest Rs 2,000 crore in setting up a copper and e-waste recycling facility.
"Your company is making an investment of Rs 2,000 crore to establish the first-of-its-kind copper and e-waste recycling facility in India," company's chairman Kumar Mangalam Birla told shareholders at the company's annual general meeting on Tuesday. He said this will also tackle the challenges posed by electronic waste.
And in aviation news which we have not visited for a while,
Tata SIA Airlines Ltd or Vistara said that its net loss for the year 2022-23 came in at Rs 1,393 crore around 31.4 percent lower than the Rs 2,031 crore net loss reported in 2021-22, the airline said in a regulatory filing with the Ministry of Corporate Affairs, according to a report in MoneyControl.
Vistara’s topline or revenue from operations doubled in 2022-23 compared to Rs 11,784 crore in the previous financial year, the airline said.
The combined loss of Tata Group airlines — Air India, AirAsia India and Vistara — stood at Rs 15,531.7 crore in financial 2022-23, the Tata Group had said in its annual report for 2022-23 earlier this month.
Not looking good and a new livery will not help Air India right now. But these are early days, at least relatively.
Growth Projection News
Elsewhere, among growth projection news, rating agency ICRA Ratings has said India's economic growth will accelerate to 8.5 per cent in the April-June period of the current fiscal from the 6.1 per cent growth rate witnessed in the preceding January-March quarter.
The rating agency attributed the faster growth to a supportive base and also a recovery in the services sector.
ICra’s rating is higher than the Reserve Bank’s forecast of 8.1 per cent.
Though ICRA has said that the second half of the fiscal is likely to witness headwinds, something most economists are predicting now.
The State Bank of India meanwhile claims it has developed an Artificial Neural Network (ANN) model with 30 high frequency indicators. What that exactly means I don’t know but I promise to find out.
SBI says ANN has been trained for the quarterly GDP data from 2011Q4 to 2020Q4.
The in- sample forecast performance of the model in the training period has been precise.Out of Sample Forecast Performance, of the last four quarters have been precise. On the basis of the ANN model, we forecast that the quarterly GDP growth for the Q1FY24 would be at 8.3%.
So let's see who is closest, the humans or the neural networks.
Speaking of projections
S&P Joins The US Bank Downgrade Party
Two weeks after Moody’s Investors Service rattled financial stocks by cutting the ratings for a slew of US banks, S&P Global Ratings is downgrading and dimming its outlook for several more — citing a similar mix of pressures making life “tough” for lenders, Bloomberg is reporting.
S&P lowered grades one notch for several banks noting the impact of higher interest rates and deposit moves across the industry.
Many depositors have “shifted their funds into higher-interest-bearing accounts, increasing banks’ funding costs,” S&P wrote in a note summarising the moves. “The decline in deposits has squeezed liquidity for many banks while the value of their securities — which make up a large part of their liquidity — has fallen.”
Moody’s lowered credit ratings for 10 US banks earlier this month and warned it may downgrade others as part of a sweeping look at mounting pressures on the industry.
Back at home, rating agencies have upgraded their ratings on Indian banks. Just saying.
Speaking of banks..
India’s Digital Lending Industry Grows 49% In Disbursements.
Digital Lending via fintech companies who work typically with banks is getting bigger in India. The number of disbursements through this route has grown 49% between 2021-22 and 2022-23. Fintech lenders gave out some 71 million loans worth Rs 92,000 crore. The number of recipients will not be as high since many are repeat borrowers.
The demographics are interesting.
Most importantly, some 86% of loan takers are male and 80% are less than 40 years of age. Breaking that down further, 40% is in the 30-40 years of age range, 25% in the 25 to 30 years range and 16% in the less than 25 years of age. Which is where, being less than 25 years, maybe there should be some focus.
As it turns out, many or most of these people do not have credit cards or lack access to other forms of borrowing. Remember, we are talking interest rates that are close to credit cards which could be in the region of 36% annually.
The top states are Maharashtra at 14%, Karnataka and Uttar Pradesh at 10% and 8% in Tamil Nadu and Telangana.
The top cities are Bangalore, Thane, Hyderabad, Mumbai Suburban and Pune. So three of the five top loan taking cities on fintech platforms are in Maharashtra.
The ticket sizes are as follows.
Roughly Rs 470,000 for a business loan, Rs 12,000 for a consumer loan and Rs 11,360 for a personal loan.
Delinquency levels are between 2.5% to 4.2%. Of course, the numbers here reflect the digital side of it and not the entirety of small ticket loans which could be flowing directly from banks and other institutions. More on that in a moment.
To understand how this space was growing and also why women ranked so low, I spoke with Sugandh Saxena, CEO of the Fintech Association of Consumer Empowerment, a body that represents most major fintech companies in India.
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WHAT IS THE FUTURE FOR PETROL-SIPPING TWO WHEELERS?
The founder of an electric two wheeler company said, not for the first time, that companies who manufacture internal combustion engine based two wheelers should shut down. Or words to that effect. He was of course referring to the giants like Hero Motors, Bajaj Auto and TVS, among others.
Before we come to the proposition in question. Let us look at what the numbers are. Some 51,299 electric two-wheelers were sold in July 2023, around 11% more than June’s 45,984 units.
Ola Electric led the pack by far with 18,333 units with a market share of 36 percent.
TVS sold a total of 9,599 iQube e-scooters, Ather Energy sold 6,198 units and Bajaj Auto, which has ramped up production of the Chetak scooter and is also expanding its network, sold 3,912 units.
All manufacturers grew.
In contrast, roughly 1.2 million two wheelers were sold in July. Within that around 0.8 million are motorcycles and scooters are around 0.4 million.
Growth slowed down for many, including market leader Hero Motors.
The reasons ascribed are many but it is not clear it is being caused by any definite shift away from 2-stroke petrol engines.
Moreover, electricity has some advantages, including the ability to charge with free electricity, as former Federation of Automotive Dealers of India president Nikunj Sanghi told me a few weeks ago.
To get a better sense, I reached out to Hormazd Sorabjee, Editor of Autocar India and asked him what he felt about petrol engine two wheeler companies shutting down.
And what it meant, figuratively if anything?
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The War Between Regulators and Big Tech Continues
You would think that regulators whether in ride sharing apps like Uber or home stays like AirBnB have made their peace and found a happy equilibrium, so to speak.
Not so.
Thousands of New York City Airbnb listings are vanishing from the market.
Hosts are removing listings in response to a city-mandated deadline, and Airbnb is blocking future dates for booking. Starting Sept. 5, city officials say they will enforce rules on short-term rentals more aggressively, the WSJ is reporting.
Hosts of short-term rentals need to register with the city to continue providing stays, and can only do so if they meet several requirements. These include not renting out an entire apartment or home, even if they own it. And hosts also must be present during their guests’ short-term stays.
There are about 38,500 Airbnb listings in the city, not counting hotels that list on the platform, according to a legal filing. The annual net revenue for these listings is $85 million.
The city estimates there are about 10,800 illegal short-term rentals citywide.
The new law prohibits booking platforms from processing payments for unregistered transactions. That means platforms like Airbnb, Vrbo and Booking.com face penalties, too, says the WSJ.
The larger question of course is if New York leads, will other cities whether in the United States or elsewhere follow.
Meanwhile, if you are headed to New York, know that you might not find an AirBnB. And with hotel rates being what they are, maybe think of visiting another city, or country.
Speaking of heading to New York or anywhere for that matter, I also know that Dubai International Airport, the world's busiest for international travel, has said it served 41.6 million passengers in the first half of this year — exceeding figures for the same period in 2019.
“Dubai International Airport has once again recorded for the ninth year running that it is the world’s busiest international airport with a very, very strong first half,” Paul Griffiths, the CEO of Dubai Airports, told The Associated Press. “The most important part of that is that we’ve reached 100% of our pre-pandemic numbers, the same numbers as recorded in the first half of 2019.”
More significantly, for tourism and aviation industry policy makers and players back home, Dubai’s passenger traffic, not surprisingly, has been driven by countries like India. Dubai remains one of the few places still open to Russians amid Moscow’s war on Ukraine, Bloomberg news is reporting.
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And before I go, an update on India’s lunar mission, Chandrayaan 3.
The spacecraft has reached closer to the Moon and is all set to soft-land on the lunar surface at 6:04 pm this August 23, Wednesday evening.
The ISRO said it successfully reduced the orbit of the Chandrayaan-3 mission's Lander Module (LM) on Sunday.
The mission objectives of Chandrayaan-3 are to demonstrate a safe and soft landing on the lunar surface, to demonstrate rover roving on the Moon, and to conduct in-situ scientific experiments.
That’s it from me for today. See you tomorrow at the same time, do reach out to us on www.thecore.in and subscribe to our newsletters and also do let us know if there is something else you would like to hear.
