Raghuram Rajan discusses NPA issues with bankers and other top Banking news of the day

Round up of the major headlines that dominated the Banking sector, nationally and internationally.

Non-banking financial companies (NBFCs) have asked the Reserve Bank of India (RBI) to consider extending provisions of the strategic debt restructuring (SDR) scheme to them as many of them lend to the infrastructure sector where stress levels continue to be high, said two people familiar with the development.

Reserve Bank of India (RBI) governor Raghuram Rajan and other senior officers on Monday met lenders, non-banking financial companies (NBFCs) and asset reconstruction companies (ARCs) to discuss effectiveness of stress resolution methods such as strategic debt restructuring (SDR), 5/25 and the joint lender forum (JLF).

Kotak Mahindra Bank Ltd on Monday said its net profit rose 36.5% from a year ago to Rs.634.7 crore in the quarter ended December as it earned higher interest income and benefited from increased commissions and fees.

Billionaire Ajay Piramal is all set to float one of the biggest funds for distressed assets in the country with a corpus of Rs 6,000 crore.

The Reserve Bank of India (RBI) said on Monday it will buy up to Rs.10,000 crore worth of government bonds through an auction to infuse long-term liquidity in the banking system, the second such auction in fiscal year 2016.

Banks and finance companies have suggested to the Reserve Bank of India several measures that can be taken to stem the rising levels of bad loans, which are eating into bank profitability and eroding investor confidence.

The Press Council of India (PCI) pulled up UCO Bank for having distributed cash to journalists at a press conference addressed by BJD MP and chairman of the Parliamentary Standing Committee on urban development Pinaki Mishra at Puri last year.

Balaji Wafers to sell 10% stake via IPO

The company decided on the IPO about 8-9 months ago, but became busy with the construction of the new plants, co-founder Chandu Virani told the financial newspaper.

Balaji Wafers Pvt. Ltd. will sell a 10% stake through an initial public offering (IPO) in six months, but it is waiting for the completion of work on its new plants in Indore, reports a business daily.

The company decided on the IPO about 8-9 months ago, but became busy with the construction of the new plants, co-founder Chandu Virani told the financial newspaper. 

“These plans are getting delayed as the company management is busy with ongoing expansion,” said Virani, adding that the company is seeking to raise Rs. 300 crore through the IPO.

Late last year, Balaji Wafers had raised a loan of INR 100 crore from lenders, including Kotak Mahindra Bank.

“We need Rs. 225 crore to fund our expansion plans in the coming year,” Virani told the paper, adding that some of the money will come from internal accruals.

Balaji Wafers expects to end the current financial year with revenue of INR 1,400 crore, an increase of 16.6% from Rs. 1,200 crore topline recorded in FY15. 

Net profit has been in the range 10-12% of revenue for the last five years and will be in line with that in FY16 also, Virani said.

Hindustan Oil Q3 net profit at Rs.4.26 cr; sales dips 30.2%

The company's sales decreased by 30.2% to Rs. 6.71 crore for the quarter against Rs.9.61 crore in the corresponding quarter of the previous year.

Hindustan Oil Exploration Company Ltd reported its Q3 net profit at Rs.4.26 crore. The company had reported a net profit of Rs.118 crore for the corresponding quarter last year, it  said in a filing to the BSE.

The company's sales decreased by 30.2% to Rs. 6.71 crore for the quarter against Rs.9.61 crore in the corresponding quarter of the previous year.

Stock Commentary:

Hindustan Oil Exploration Company Ltd ended at Rs. 28.7, down by Rs. 1.5 or 4.97% from its previous closing of Rs. 30.2 on the BSE.

The scrip opened at Rs. 30.35 and touched a high and low of Rs. 30.45 and Rs. 28.5 respectively. A total of 475496(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 374.51 crore.

The BSE group 'B' stock of face value Rs. 10 touched a 52 week high of Rs. 54.5 on 25-Feb-2015 and a 52 week low of Rs. 28.65 on 25-Aug-2015. Last one week high and low of the scrip stood at Rs. 34.3 and Rs. 30 respectively.

The promoters holding in the company stood at 47.18 % while Institutions and Non-Institutions held 2.61 % and 50.21 % respectively.

The stock traded above its 200 DMA.

Sensex, Nifty to open on a weak note

The short term outlook for market remains negative till Nifty trades below 7540 levels. The current downfall could extend up to 7250-7200 levels. The mid-cap and small-cap stocks which were out performing till the previous week are also showing signs of fatigue.

The world economies and markets will be afraid after China’s economy slowed down to a 25-year low clocking growth of 6.9% in the fourth quarter of 2015. The markets which are already on tenterhooks have one more reason now to stay subdued. During the day, the World Economic Outlook from the IMF is expected. The usual noise from Davos will also be heard. Among the big numbers, RIL, HCL Tech and Reliance Power will be in focus.

The outlook is a weak start. Asian markets are flat for now. The short term outlook for market remains negative till Nifty trades below 7540 levels. The current downfall could extend up to 7250-7200 levels. The mid-cap and small-cap stocks which were out performing till the previous week are also showing signs of fatigue. We see further pain here. The main indices could always twist around after a weak start as has been the case. However, any short-term pullback must not be seen as an end to recent woes. India’s Dec trade gap has risen 27.1%yoy to $11.7 bn. The weather could cause issues with winter being milder. Oil prices have hit lowest level since 2003. Though it should be good news for the country but collateral damage could mean less inflows and remittances into India.
 

HCL Tech Q2 net profit at Rs. 1920 crore; up 11% QoQ

The Board of Directors of the Company has declared an Interim Dividend of Rs. 6/- per equity share of Rs.2/- each of the Company for the Year 2015-16.

HCL Technologies Ltd posted results for the second quarter ended 31st December 2016.

The net profit for the quarter stands at Rs. 1920 crore.

EBIT Margin stood at 20%.

The Board of Directors of the Company has declared an Interim Dividend of Rs. 6/- per equity share of Rs.2/- each of the Company for the Year 2015-16.

“HCL has always been at the forefront of changing market dynamics. As a company with good corporate governance practices and robust financial performance we continue to create exceptional value, both for businesses as well as communities in which we operate. We are proud to launch HCL Grant – an initiative to empower, enhance and instutionalise the work being done by NGOs in India, by offering them strong governance frameworks and management capabilities”, said Shiv Nadar, Chairman & Chief Strategy Officer, HCL Technologies Ltd.

“As part of HCL's 21st Century Enterprise blueprint, our investments and focus on BEYONDigital, Next–Gen ITO and IoT WoRKS is enabling us to stay ahead of the curve and achieve a healthy business growth and financial performance. We have achieved a revenue growth of 13.5% YoY in constant currency terms this calendar year”, said Anant Gupta, President & CEO, HCL Technologies Ltd. “Earlier this quarter, we faced the challenging Chennai situation. Our resilient business models, robust business continuity and disaster recovery practices, coupled with tremendous support from all our clients and employees helped us face the challenge extremely well.”

“Our performance in this quarter continues to reflect the return from the investments we have been making. The return on equity for calendar 2015 at 29% has been amongst the best in the Industry”, said Anil Chanana, CFO, HCL Technologies.

Transformational and blue chip customer acquisition

Continuing its momentum of deal wins, HCL booked business in excess of USD 1 billion in TCV this quarter, including 8 transformational deals. The broad–based business wins, across service lines and industry verticals were driven by our next–generation offerings – Next-Gen ITO, BEYONDigital and IoT WoRKS.

IIFL estimates the Q2 FY16 net revenue of the company to be at Rs. 10,377 crore, a growth of 11.8% y-o-y and 2.8% q-o-q. EBIDTA Margin is expected to be at 21.9%, a change of 3.1 bps y-o-y while no change q-o-q. Talking of the net profit, it is estimated at Rs. 1877.7 crore, 2.0% increase on y-o-y basis and 3.0% growth on q-o-q basis.