1. Adani Comeback
Adani Group rebounds, Gautam Adani back in Forbes' global billionaire list
Billionaire Gautam Adani has re-entered the Forbes' global billionaires list with a net worth of $61.4 billion. Adani Group's recovery in the stock market contributed to Adani's re-entry to the top 20 billionaires list. Shares of Adani Enterprises surged 16.06%, while Adani Ports and ACC also rallied after the recent market volatility.
Adani Group repays $1.11 billion in debt ahead of its maturity
Adani Group's promoters have paid $1.11 billion to prepay their debt that was set to mature in September 2024. This move to reduce overall promoter leverage backed by Adani Listed Company shares resulted in the release of promoters' stakes in Adani Ports, Adani Green Energy, and Adani Transmission. This repayment shows the promoters' commitment to reduce their leverage and stabilize the company's financial position.
Our Opinion: The Adani group has a long uphill battle ahead of it to restore credibility amongst various stakeholders and while there may not be any material negative credit event for the next few years, shareholders definitely have a cause for concern as despite the steep fall in stock prices, valuations across most group entities are nowhere near palatable levels. Further, in the aftermath of the Hindenburg storm, the management has been forced to materially scale back on its growth ambitions which will further cap stock prices.
2. Indian banks raise FD rates
RBI increases repo rate leading to hike in lending and fixed deposit rates
The Reserve Bank of India increased the repo rate by 25 basis points, leading several commercial banks in India to increase their lending interest rates and fixed deposit rates. The repo rate is the rate at which the central bank lends money to commercial banks. This is the latest in a series of hikes that have increased the rate by 250 basis points since May 2022. The private sector lenders, Axis Bank, ICICI Bank, and Kotak Mahindra Bank, have all hiked their fixed deposit interest rates.
List of banks that recently hiked fixed deposit interest rates
Axis Bank has hiked its interest rates on fixed deposits with effect from February 11, 2023. Deposits with terms ranging from 7 days to 45 days now earn an interest rate of 3.50 percent. Kotak Mahindra Bank revised its fixed deposit interest rates by up to 25 basis points across select amount and tenor buckets. ICICI Bank announced a hike in interest rates on bulk fixed deposits of Rs 2 crore to less than Rs 5 crore, effective from February 7, 2023.
Several Indian Banks Increase Fixed Deposit Interest Rates
The revised fixed deposit interest rates will be in effect for new ICICI Bank fixed deposits and renewals of existing or current fixed deposits. The lending interest rates and fixed deposit interest rates have increased across tenors, including deposits with maturities ranging from 7 days to 10 years, and these rates are available for senior citizens too.
Tweet this story: Indian Banks Raise Fixed Deposit Rates in Response to RBI's Repo Rate Hike
Our Opinion: Great news for savers! Banks enjoyed surplus liquidity and a benign interest rate regime for the last few years till mid 2022. However, after initially resisting any hike in deposit rates so as to maintain their net interest margins, post continued hiking cycle adopted by the RBI that finally began last year, banks have had to finally bite the bullet and take sharp hikes in their deposit rates. Judging by the recent RBI stance, there may be a few more deposit rate hikes in the offing in the months ahead.
e3. Indian non-BFSI earnings decline
Non-BFSI firms suffer Q3 earnings decline
The corporate results for Q3FY23 indicate a significant slowdown in economic activity for non-financial services, including manufacturing. The non-BFSI (banking, financial services, and insurance) companies' net profits have been adversely affected by a combination of a slowdown in revenue growth and a faster rise in expenses.
Indian banks drive net sales growth
Listed companies excluding banks, finance, insurance, and stockbroking saw a decline in net sales growth to an eight-quarter low of 17.1% YoY in Q3FY23, a sharp drop from 29.2% in Q2FY23 and 28.4% in Q3FY22. Meanwhile, banks accounted for most of the incremental growth in India's earnings.
Our Opinion: Corporates have been struggling with inventory management since the onset of the pandemic. Post the Russia-Ukraine conflict coupled with persisting lock-downs in China had deeply affected global supply chains and caused significant inflationary pressures leading to Companies buying and holding higher than usual inventory to meet demand. As normalcy returns globally, the high cost inventory that Companies are saddled with, is now slowly passing through their P&L, leading to margin pressures that is likely to continue into H1CY2023.