In this edition, we talk about Bharti Airtel’s multi-billion-dollar acquisition of a stake in British Telecom. We also talk about why automakers are coming up with a slew of launches and what the latest inflation numbers look like.
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Fourteen years ago, in March 2010 to be precise, Sunil Bharti Mittal made his most audacious move. That month, the billionaire owner of Bharti Airtel struck a deal to acquire the African operations of Kuwaiti telecom company Zain for $10.7 billion. This week, Mittal took an equally bold step when his group announced it will acquire a 24.5% stake in British Telecom Group Plc, the UK’s largest mobile and broadband services provider.
The deal marks a full circle for the two companies, as BT owned a 21% stake in Bharti Airtel from 1997 to 2001.
Bharti said it has already bought 9.99% of BT from Altice and will get the remaining 14.51% after receiving regulatory clearances. Altice is owned by Israeli-French billionaire Patrick Drahi, who also owns the auction house Sotheby’s.
Bharti said it hoped to create new synergies in the areas of artificial intelligence, research and development on 5G, and core engineering, among others. “BT to my mind has a much brighter future ahead and they need to be following their strategy, if I may say, even more boldly,” Mittal said, adding that he had some “ideas” for management.
How big is this deal anyway? The 24.5% stake that Bharti is buying in BT is worth about $4 billion. That makes it Bharti’s second-biggest overseas bet and one of the largest acquisitions by an Indian company in Britain.
Other Indian companies that have made acquisitions in the UK include the Tata Group, Reliance Industries, and Wipro. Tata Group owns tea brand Tetley and luxury carmaker Jaguar Land Rover. Reliance bought British battery technology company Faradion Ltd in 2021 for $135 million and the 259-year-old British toy store chain Hamleys in 2019. IT firm Wipro acquired Capco, a UK-based management consultancy, for $1.45 billion in 2022.
Will Bharti move to take control of BT? Mittal has denied any such plan, though he doesn’t want to sell the stake either if BT’s shares climb. In fact, Bharti has not even asked for a board seat. “We are not in this for making a buck or looking at stock markets up or down. We are long-term telecom investors,” he said.
The Curvv and the Roxx
While Bharti is taking long strides overseas, Indian automakers are stepping up focus on the home market. Even as they look to clear piled-up inventory by offering deep discounts, the automakers are coming up with a slew of fresh launches across all segments with the festive season just around the corner.
Mahindra & Mahindra (M&M) has unveiled the much-anticipated Thar Roxx, a five-door version of its popular off-roader Thar. Earlier this month, Tata Motors made headlines with the launch of its electric sport-utility vehicle Curvv in the mid-SUV segment while French automaker Citroen rolled out its Basalt coupe SUV and MG Motor India has announced its Windsor EV for India.
Korean automaker Hyundai, which is preparing to launch its IPO in India, and its sister company Kia are also expected to introduce updated versions of their popular cars Alcazar and Carnival, respectively.
Action is heating up also in the motorcycle segment. M&M will reintroduce the iconic BSA GoldStar retro roadster bike to take on market leader Royal Enfield, the maker of the iconic Enfield bikes. Royal Enfield is preparing to launch the new Classic 350 motorcycle and introduced the Guerrilla 450 earlier this month for adventure enthusiasts. And newly listed Ola Electric launched its suite of new e-bikes this week, pushing its shares higher.
Cooldown Starts
Moving on to some macroeconomic news, latest data showed inflation cooled off in July.
The wholesale price index (WPI) inflation fell to a three-month low of 2.04% in July from a 16-month high of 3.36% in June, as food prices fell sharply. The food price inflation stood at 3.45% from 10.87%, government data showed. Within food articles, prices of vegetables slipped 8.93% though onion and potato got costlier.
Will the cooling inflation numbers prompt the RBI to start cutting interest rates?
Well, economists in general feel the RBI might keep rates on hold again when it meets next in October but that it would start cutting rates thereafter, possibly from early next year.
So, if you are a saver, now is the time to lock-in higher rates on fixed deposits. And if you are repaying any loans, you just need to wait a little longer to see a reduction in your EMI burden.
On Back Foot
A year and a half after its January 2023 report on the Adani Group, the New York-based short seller Hindenburg Research has now levelled allegations against the head of the Securities and Exchange Board of India (SEBI).
Hindenburg alleged that SEBI chief Madhabi Puri Buch and her husband, Dhaval Buch, had stakes in offshore funds used in the alleged Adani money siphoning scandal. The Buchs have denied the allegation and SEBI has said that it has adequate internal mechanisms to address issues relating to conflict of interest, including a disclosure framework and provisions for recusal.
Hindenburg’s attack came after SEBI told the Supreme Court in May last year that it had hit a blank in its investigation into alleged violations in money flows from offshore entities into Adani companies. Then, in July this year, Hindenburg said it had received a show-cause notice from SEBI for short selling of Adani Enterprises Ltd stock before and after the release of its January 2023 report.
Buch and her husband have said that their investment in the offshore funds mentioned by Hindenburg were made in 2015 when they were “private citizens” living in Singapore. The investment was made almost two years before Madhabi joined SEBI as a member, they have said.
The market itself though appears to have shrugged it off as a minor irritant. Although shares of the Adani Group did fall on Monday, they too recovered most of their ground in the following trading sessions.
Market Wrap
After the news on the allegations against the SEBI chief broke last weekend, most people were expecting the markets would tank. But instead, this turned out to be a good week for the markets, which were in business for four of the five days. Markets remained closed on August 15 on the occasion of Independence Day.
While the Sensex retraced its path above the 80,000-mark, the Nifty ended the week above 24,400. A spike on Friday ensured that both indices ended the week in the green with the Sensex gaining 0.7% and the Nifty 0.6%.
Nifty stocks that gained the most this week were led by the IT pack that included Tech Mahindra, Infosys, TCS, HCL Technologies, Wipro and LTIMindtree. Other Nifty counters that rose included auto majors Mahindra & Mahindra, Tata Motors and Eicher Motors, as well as Titan and Hindalco.
Top Nifty losers in the week were HDFC Life Insurance, Divi’s Laboratories, Adani Enterprises, Coal India, Adani Ports, NTPC, Tata Steel, Ultratech Cement and Dr. Reddy’s Laboratories, to name a few.
Q1 Earnings Snapshot
- Hindustan Aeronautics consolidated net profit jumps 77% to Rs 1,437 crore
- Hero MotoCorp misses estimate as standalone profit rises 36% to Rs 1,123 crore
- Apollo Hospitals beats estimates as consolidated net profit jumps 83% to Rs 305 crore
- Ola Electric loss widens to Rs 347 crore from Rs 267 crore a year ago
- SpiceJet standalone profit falls 26.7% from a year earlier to Rs 150 crore
- Nykaa‘s consolidated net profit nearly triples to Rs 9.64 crore but misses estimate
- Hindalco consolidated net profit climbs 25% to Rs 3,074 crore
- Vodafone Idea loss lower than expected at Rs 6,432 crore vs Rs 7,840 crore year ago
Other Headlines
- Supreme Court revives insolvency proceedings against Byju’s on a plea by US lenders
- India’s merchandise trade deficit expands to $23.5 billion in July from June’s $20.98 billion
- India’s wholesale prices rise 2.04% on year in July, slower than June’s 3.36% gain
- India’s retail inflation slows to 3.54% in July from 5.08% in June
- Vedanta to sell 3.3% stake worth $950 million in Hindustan Zinc
- JSW Steel to buy 67% stake in Australian company M Res NSW for $120 million to expand coal reserves
- Logistics company Ecom Express files DRHP for Rs 2,600 crore IPO
- Firstcry shares gain 52% on stock market debut
- Govt allows Adani Power to sell Bangladesh-bound electricity in India
- Ola Electric rolls out Roadster X series of electric motorcycles
- Turkish state-run firm BOTAS to buy Swan Energy‘s stake in LNG terminal for $399 million
- SBI plans to divest Yes Bank stake worth Rs 18,400 crore by the end of March 2025
That’s all for this week. Until next week, happy investing!
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