Indiabulls Housing Finance & More

Good morning, folks! Start your Thursday on a stress buster note watching this baby elephant go bananas playing soccer. Hindustan Times was kind enough to put out this video on the occasion of world elephant day yesterday. Yes, there really is a day like that.

MAIN STORIES

Change of guard at Indiabulls housing finance

It would seem that the lure of stock markets has found another taker. In a surprise move, co-founder Sameer Gehlaut has stepped down from his position as Executive Chairman of Indiabulls Housing Finance to take over as chief executive at the stock broking subsidiary, Indiabulls Ventures. Although he will continue as non-executive, non-independent director, he will be replaced by former deputy governor of RBI SS Mundra, an existing board member.

Bumpy road:  IBHF has been one of the companies in the news off late for all possible wrong reasons. Allegations of money being siphoned off to group companies? Check, to the tune of Rs. 98,000 Crore! Rejected merger with Laxmi Vilas bank? Check.  Continued downgrades latest being B3 with a negative outlook? Fall in operating profit by 90%? Check. May the change in leadership also lead to a change in fortune.

In other news: It is estimated that a lot of buried skeletons in terms of lending, may come to real light only once the final moratorium period ends this month. As the RBI allowed a one-time restructuring to stressed borrowers, a new report by India Ratings & Research claimed that this move would increase refinancing needs for NBFCs depending on the proportion of stress in their books.

Storm brewing in the tea cup

Weather elements, flooding, manual labour shortage and Kenyan competition are all colluding to play spoilsport in the Indian Tea Party this year.

Cloudy forecast: Estimates by Azam Monem, director at one of the country’s biggest tea growers, McLeod Russell, suggest that the country will witness 13% shrinkage in total output to 1.21 billion kilogram. Exports, on the other hand, are likely to drop by 16%. In the first half of 2020, already production has dropped by 26.4% YoY. While Indian tea prices have seen an upward streak due to reduced volumes, auction prices in Kenya registered a drop after a 40% increase in volume.

Battle on the home front: In light of increased prices, reports suggested that some tea marketeers were seeking duty free imports to not incur higher input cost. Southern India’s main organisation Upasi or United Planters’ Association of South India, strongly opposed the idea with the contention that there has been a simultaneous drop in demand, especially out of home, for the beverage as well. Additionally, to curb illegal imports, Tea Board has now made it mandatory for consignments to mention country of origin.

This recession has depth

While we may not be as sarcastic as CNN, alarm bells are ringing for the world leader of colonial times. On Wednesday, UK announced the grave fact that it’s economy registered a contraction of 20.4% in the Apr to June quarter, the biggest drop ever since recorded numbers starting 1955 and the highest contraction for any covid-hit developed economy. However, all months were not equal with June showing more of a fight than the utter collapse in April.

Why UK? There are a number of factors being attributed to this severe economic jolt. Ranging from the late start and end to the lockdown and school closures leading to estimated 8% parents having to stay home and look after them. However, most importantly UK is heavily dependent on retail and services which have taken the biggest hit from this crisis. Sample some numbers. Food and drink sector fell by 84.7% with car sales and retail activity shedding 63%. As per a CNN report, there has been a loss of 730,000 jobs since March!

The elephant in the numbers: Yes, Brexit has made it worse. On 23rd June 2016, the country chose to separate from Euro Zone. Till that date, average annual growth of the economy for the past three years had been 2.4%, which has now dropped post vote to 1.6%. Ironically, the brexit agreement is still going back and forth with nothing firmed up and indications are UK may not be in the strongest position to negotiate, especially with these numbers.

IN SNIPPETS

Clinical trials for covid treatment: Mankind Pharma has partnered with South Korean firm (yep, not Chinese) Daewoong Pharmaceutical Co to test efficacy of Niclosamide in treating Covid patients in India. Currently, the drug is used for tapeworm infections but pre-clinical trials seem to suggest a tweaked variant could be effective against coronavirus. Hence, the clinical trial.

Cash and carry mode on: Remember those old Bollywood movies which signalled tough times for the hero when the neighbourhood bania refused to give him goods on credit for non-payment of dues? Such times are here for Go Air as it needs to make payments for all services like landing, parking and navigation upfront to AAI.

MSME sector will take some time to recuperate: As per an estimate by Global Chief Economist at Dun & Bradstreet Arun Singh, backbone of the economy aka MSME’s (contributing 29% to the GDP) will take atleast 7-8 months to recover from the coronavirus sucker punch. This too is not expected to be uniform, depending on sector of operation and digitsation efforts.

Juicy Brooks Brothers suit, anyone? If you have always dreamed of owning a sharp, well-cut Brooks Brothers suit, beware that it could well come with Juicy written you-know-where. SPARC, a partnership between retail management firm Authentic Brands Group and mall owner Simon Properties, has come forth to buy the distressed Brooks Brothers. The collaboration is on a shopping spree with options galore of bankrupt retailers, and currently owns brands like Juicy Couture, Forever 21 and Aeropostale in it’s portfolio.

Tesla stock becomes more affordable: Announcing a 5 to 1 split on the Tesla stock, Elon Musk seems to have a good handle on investor psyche. The price had recently zoomed to a heights of $1643. With this split, it is bound to get more investors to the fray only pushing it’s alredy euphoric valuation of $256 billion even further.

MARKET PULSE

After four straight days of gains, Indian equities put a brake to the upward streak and remained in a very narrow range. While pharma and metal stocks saw considerable decline, PSU bank stocks became the darlings of the investor gaining about 4%, with possible news of the government granting the title of ratna to them.

Gold prices still kept everyone confused and guessing.

WILD CARD

Like us you might have lost count of the number of celebrities you have googled. If Google’s people cards experiment in India is successful, it could well add civilians to the fray of being very google-able through their own virtual visiting card. So, what are you waiting for? Type add to search, make a Twitter-like bio and get yourself a people card.

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