Market this week 18-11-2022

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Paytm block sales: Analysts remain bullish on the stock despite post-lock-in selling pressure

On November 17, after Softbank, a significant shareholder in the firm, started selling its interest, shares of One 97 Communications, the parent company of Paytm, experienced a new round of selling that brought the price to a level last seen in May 2022.

Around 29.50 million shares, or 4.5 percent of the firm, were traded in a series of block deals early in the morning, according to Bloomberg. According to sources, Softbank was the vendor. The stock, which was offered at a discount of 7-8% from its most recent closing price, was in high demand. According to CNBC-TV18, buyers included Norges Bank, Segantii, Millenium, LMR, and Ghisallo.

Similar dumping of shares of other new-age internet companies like Nykaa and Zomato in recent weeks precedes the current sale. These companies’ share prices have also been under stress.

Despite the fact that Paytm stock has been declining for some time—losing 35% of its value since mid-August—most analysts and fund managers advised investors not to make too much of Softbank dumping shares.

Review: LTI-Mindtree unlikely to reach Nifty50 in March 2023

By market capitalization and revenue, L&T Infotech (LTI) is now the sixth-largest IT provider in the nation following its merger with Mindtree. Contrary to market rumours, the combination is not anticipated to rank among the Nifty 50 in the March 2023 assessment.

The index provider (NSE) will view LTI as a separate firm up until the merger is finished and new shares are credited to the shareholders.

The share swap deal has been set up in accordance with the merger agreement at a ratio of 73 shares of LTI for every 100 shares of Mindtree. November 24, 2022, serves as the record date for determining eligible stockholders.

Nuvama thinks the combined market cap would not be eligible for the calculation period of August 2022 to January 2023 because shareholders of Mindtree (the target company) will not receive LTI (the acquirer) shares until after the record date.

The simple conclusion is that LTI’s average market cap will be taken into account with a 26% free float. The free float will be 31/32 percent once new shares have been credited (as indicated by management). In contrast to our position, the Street is assuming both entities’ market caps for the market cap review period.

The list of FIIs looking to exit the NSE keeps becoming longer.

According to dealers familiar of the transactions, several international investors, including Morgan Stanley, are reportedly looking for purchasers for their shares of India’s largest stock exchange, the National Stock Exchange (NSE), in the unlisted market. Despite not being listed on any bourses, NSE shares can be traded in the black market.

Market rumours claim that Morgan Stanley is looking for buyers for 7–10 lakh NSE shares through an auction process with a base price of Rs 2,750–2,800, which represents a significant discount of 9–15% from the most recent unofficial quote for NSE shares of Rs 3,300–3,300.

On behalf of a foreign institutional investor (FII), Ambit Capital is reportedly seeking buyers to sell some NSE shares in an over-the-counter transaction.

Modern tech firms shift their attention away from growth and toward profitability.

It hasn’t been long since PB Fintech, which operates the insurance distribution network Policybazaar, said that it was not aiming for profit. This sparked a flood of similar statements from other businesses, and it appears that for the majority of them, profitability is now their primary concern.

There has been a noticeable attitude change among the new-age corporations after some time spent subject to more public scrutiny over listing. Gaining profitability appears to be their main priority, based on the actions performed, management remark, and operating performance views.

Since their founding, businesses like Paytm, Zomato, and Policybazaar have never generated a profit. They have come under fire for prioritising growth over profits. The pressure to generate a profit is greater than ever before, yet it was good up until they were privately held and seeking capital from private equity investors at high prices.

The corporation has also concentrated on reducing expenses, abandoning strategies and plans that were ineffective, and improving policy disclosure, which is evident in an improved financial performance of the business. Zomato was able to significantly reduce its losses in the second quarter while also boosting contribution margin and profit.

Results for RCTC Q2: Net profit increases by 42% to Rs 226 crore, while revenue increases by 99%.

The Indian Railway Catering and Tourism Corporation (IRCTC) said on November 14 that its net profit for the three months ending September 30, 2022, increased by 42% to Rs 226 crore. In the same period last year, Indian Railways’ culinary division earned a net profit of Rs 159 crore.

However, the company’s net profit fell 7.7% from the Rs 245.5 crore reported in the prior quarter (Q1FY23).

From Rs 405 crore in the same quarter previous year, operating revenue increased by 999% to Rs 806 crore in the period under review. Additionally, IRCTC’s overall revenue increased by 105 percent to Rs 832 crore in Q2FY23 from Rs 405 crore in Q2FY22.

One of the main sources of income for IRCTC is its catering services, which saw a multi-fold boost in revenue to Rs 334 crore from Rs 71 crore as a result of the nation’s return to full-fledged train service and culinary operations during the COVID-19 pandemic.

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