In this last week of 2023, we talk about the future and how India’s biggest companies are preparing for artificial intelligence technologies. We also talk about the improvement in banks’ asset quality and the continued rush among companies to float IPOs.
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In early 2017, Reliance Industries Chairman Mukesh Ambani made a comment that hinted at the conglomerate’s shift away from fossil fuels, its bread-and-butter business for decades. “Data is the new oil,” India’s richest man said. Since then, Ambani has explained his statement multiple times. And this week, more than six years after he made that comment, he added a slight twist in the tale.
“We need to be at the forefront of using data, with AI as an enabler for achieving a quantum jump in productivity and efficiency,” Ambani said in his year-end address to Reliance employees.
To be sure, Reliance has already launched an array of ventures and partnerships in artificial intelligence, including one with IIT Bombay to develop Bharat GPT. It also signed a deal with Nvidia for developing cloud infrastructure, generative applications and language models.
These initiatives will help India’s biggest oil refining and petrochemical company transform into a technology-led conglomerate across telecom, retail, digital services, media and entertainment, and renewable energy sectors.
What does it mean for other companies? Well, Ambani has managed to establish his dominance in all the new sectors that he has entered over the past decade using all tools available – from disruptive marketing to backdoor acquisitions. Hence, it queers the pitch for all AI players, whether startups or grownups. Because when Reliance goes shopping, it does it in style and scale.
Ambani, however, isn’t the only Indian billionaire who has set his sights on AI. Gautam Adani, who has grown his conglomerate rapidly through acquisitions over the past few years, also wants a foothold in the AI industry.
In fact, Adani announced his foray into AI on the same day when Ambani spoke about AI and data.
Adani Enterprises said one of its units will form a venture with Sirius International, a subsidiary of Abu Dhabi’s International Holding Company (IHC), to develop digital platforms that will leverage artificial intelligence.
To be sure, IHC was one of the White Knights that came to Adani’s aide during the Hindenburg saga in early 2023. The Abu Dhabi group has invested $2 billion in Adani Green Energy, Adani Transmission Ltd and Adani Enterprises.
Adani Enterprises said it will own 49% in the JV while Sirius will hold 51%. The JV will deploy digital platforms by leveraging AI, Internet of Things (IoT) and secured blockchain products across infrastructure industries and extending to areas that include fintech, healthtech and Greentech, Adani said.
With both Ambani and Adani making big bets on AI, it’s only a matter of time that they shake up this market.
AI disruption
As Ambani and Adani look to dominate AI, several other companies are also preparing for the disruption these technologies will cause.
Tata Sons Chairman N. Chandrasekaran this week told group companies to focus on artificial intelligence to tackle looming global disruption. “Our group’s aim should not be merely to adopt or adapt to technology. We need to shape it and make it,” he said in his New Year message to employees.
“This New Year I urge each company to appoint an AI champion to proactively pursue the benefits of AI – economically, operationally and socially,” he said. “Looking ahead to 2024 we must be prepared for more disruption and volatility. The complexity of global governance will reach new heights as the world finds new rules to protect data privacy, curb inflation and reduce carbon emissions and perceptions of AI risk.”
Meanwhile, Infosys said this week that a client terminated a $1.5 billion AI deal. India’s second-largest software services exporter had announced the deal in September. The $100-million-per-year deal was to run for 15 years.
The termination underlines the headwinds many IT companies have warned of recently amid cutback in spending by clients. Some of them have also hinted that hiring in the new year may not be was as rosy as before.
The adverse effects of AI on the job market are also becoming evident with Paytm parent company One 97 Communications saying this week it is laying off several employees.
Paytm is said to have cut over 1,000 jobs, and Reuters cited a Paytm spokesperson as saying that the company intends to save 10-15% in employee costs as AI “has delivered more than we expected it to”.
Banking cleanup
In some good news, the Reserve Bank of India said this week that the asset quality of banks hit a decadal high.
Gross non-performing assets (NPA) of scheduled commercial banks fell to 3.2% as of end-September 2023, the RBI said in its financial stability report. For the entire banking sector, which include the likes of cooperative banks, the figure was at a seven-year low of 5%. Net NPAs, which take provisions into account, were at a 10-year low of 1.3%. “The Indian banking system is well positioned to improve further, with better asset quality, high capital adequacy and robust profitability,” the RBI said.
The central bank has similar assurance for the NBFCs sector. It said that financial indicators of NBFCs are set to strengthen further, underpinned by adequate capital, increased provisions and improved asset quality.
The RBI also said that the consolidated balance sheet of scheduled commercial banks expanded by 12.2% in in 2022- 23, driven by credit to retail and services sectors. Deposit growth also picked up, although it trailed credit growth.
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IPO pipeline
Did you miss out on cashing in on the IPO boom in 2023? Don’t fret. As many as 25 companies have filed draft documents in Q3, indicating a strong pipeline of IPOs in 2024 as well.
Four prominent companies filed for IPOs over the past week. These are Ola Electric, baby products retailer FirstCry, office space provider Awfis and solar modules maker Waaree Energies.
Ola Electric aims to mop up Rs 5,500 crore, FirstCry plans to raise Rs 1,816 crore, Awfis is seeking Rs 160 crore and Waaree intends to raise Rs 3,000 crore in their respective IPOs. These IPOs will also provide an opportunity to several private equity and venture capital investors such as SoftBank to take some cash off the table.
In 2023, almost five dozen companies have already floated IPOs on the main board and more than 150 on the SME exchanges. In total, these companies have raised more than Rs 50,000 crore, stock-exchange data show.
Market Wrap
The benchmark Sensex and Nifty ended marginally in the red on the last trading day of 2023, as investors booked some profit. Overall, the bull rally continued this week as the indices hit record highs, aided by unbated foreign portfolio inflows. The BSE Sensex and the NSE Nifty 50 rose 1.8% and 2%, respectively, during the week.
In 2023, the Sensex gained 18.7%, compared with 4.4% in 2022 and 22% in 2021. The Nifty 50 jumped almost 20% in 2023, compared with 4.33% in 2022 and 24% the year before.
Among the Nifty 50 companies, the biggest gainers during the week were Tata Consumer, Hindalco, Tata Motors, Bajaj Auto, Wipro, Hero MotoCorp, Divi’s Lab, Tata Steel and M&M.
The bull grasp on the market can be gauged from the fact that only four stocks ended the week in the red – Tech Mahindra, Adani Ports, TCS and Infosys.
Other headlines
- Adani Energy to spend $360 million to build Gujarat power transmission line
- Adani family to invest Rs 9,350 crore in Adani Green to expand renewable capacity
- India, Russia sign pact for future units at Kudankulam nuclear power plant
- Disney, Reliance sign non-binding term sheet to merge India media operations
- Enforcement Directorate arrests two senior executives of Chinese firm Vivo
- Aditya Birla Capital to invest Rs 850 crore in Aditya Birla Finance
- RBI allows ICICI Mutual Fund to acquire up to 9.95% stake in Federal Bank
- Punjab National Bank to raise Rs 7,500 crore via QIP or follow-on public offering
- NSE shifts Bank Nifty monthly, quarterly expiry to Wednesday
- Mitsui invests in EV maker EKA Mobility, plans to jointly invest Rs 850 crore
- Zomato gets Rs 401.7 crore notice on GST liability
That’s all for this week. Until next week, happy investing!
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