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It is likely that Jio Cinema and Disney+ Hotstar may merge as a single entity, leading to a new and improved OTT experience unlike any other in India.

In a major move that can change entertainment and OTT viewing in India, Mukesh Ambani’s Reliance has signed a non-binding agreement with Walt Disney Co, taking the companies one step closer to the mega-merger between RIL and Disney Star.

Jio Cinema and Disney+ Hotstar are also included in the deal, likely to be merged together into one entity. Jio Cinema and Hotstar are direct rivals, but their potential merger could be a game-changer in India’s OTT industry.

The Reliance-Disney merger is expected to be finalized in February 2024, with Ambani’s firm set to have more control over the merged entity. The division of stake between Reliance and Disney will be 51-49, as per early details of the deal.

When the deal goes through, it will become the biggest entertainment merger of India. Under the agreement, the two companies will raise $1.5 dollars towards the merger, while Reliance will have more stake in the firm.

What can the Jio Cinema-Disney+ Hotstar OTT offer?

Jio Cinema and Disney+ Hotstar have been the two major players when it comes to bidding for IPL and international cricket tournament rights. With the potential merger on the cards, this bidding war could end forever.

After Reliance gains control over the Star India channels, cricket rights may be retained by Star for television while the OTT rights may be given to the merged Jio-Disney platform.

The merger between Jio Cinema and Disney+ Hotstar will create the biggest OTT platform in India, with the rights to cricket and football streaming, as well as HBO and WB content. It will also pull Hotstar out of the losses it has been incurring over the last year.

Meanwhile, the news about the merger between Reliance and Disney has sparked a mass exodus of users from Hotstar, which has been struggling for the past few years after losing the IPL rights and HBO deal.

The Reliance-Disney deal will not just bring a change to the OTT business, but also television viewing. The companies are currently ironing out the final details of the merger.

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The stock price of fintech giant Paytm has tumbled 42 percent in the last three days as it remained locked at the lower circuit throughout this period following RBI’s diktat mandating Paytm Payments Bank to halt nearly all banking services from March 1, citing supervisory and non-compliance issues. 

The stock is now back at its record low level of Rs 438.35 on BSE, which it last touched on Nov 23, 2022. The three-day selloff has eroded its market value by nearly Rs 20,500 crore.

Overall, a total of 68 equity mutual fund schemes across active and passive categories had exposure to Paytm till December 2023-end worth Rs 1,994 crore. 

Among these, the UTI Innovation Fund from the thematic fund category had the highest allocation to Paytm at 4.8 percent of its total AUM. This amounted to Rs 26.4 crore, as per data from Rupeevest and Value Research. 

It was followed by Quant Teck Fund, also a sectoral fund, with a 3.3 percent holding in Paytm worth Rs 7.6 crore. 

Another scheme from the fund house–Quant Mid Cap Fund–held 3.2 percent in the stock worth Rs 134 crore.

Nippon India Innovation Fund (thematic) was next in line with 3 percent of its AUM in Paytm valued at Rs 35 crore.

Mirae Asset-Focused Fund had the fifth highest holding at 2.9 percent worth Rs 269 crore. This was the second-highest exposure to Paytm in terms of total invested amount. 

Mirae Asset Large Cap Fund led the highest investment in the stock at Rs 430.4 crore, which was 1.13 percent of its total AUM.  

As per BSE data, the total stake held by DIIs in Paytm was 6.06 percent as of December quarter-end. Of this, mutual funds together held 4.99 percent and the rest was held by AIFs, insurance companies, and provident/pension funds. 

Foreign Institutional Investors (FIIs) had a 63.72 percent stake in the company as of December quarter-end. Of this, 45 percent was FDI ownership.

The remaining 18.64 percent was held by FPIs including BNP Paribas Arbitrage and Canada Pension Plan Investment Board, which together held a 3.1 percent stake in the company. 

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Shares of Larsen & Toubro (L&T) plunged 7 percent in Wednesday’s intra-day trade to Rs 3,387.40 on the BSE after the company reported lower-than-expected margins for the December quarter (Q3FY24) despite beating revenue estimates.

The company’s management also indicated the pace of new orders in the domestic market had slowed and there would be weakness for the two quarters between now and June 2024 owing to the Lok Sabha elections.

At 09:52 am, L&T was the top loser among the BSE Sensex and Nifty 50 stocks, down 6.5 percent. In comparison, the benchmark indices were up nearly 0.1 percent.

The stock had hit a record high of Rs 3,738.90 in Tuesday’s intra-day trade. In the past 10 months, it has zoomed 64 percent.

For the reporting quarter (Q3FY24), L&T’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin declined to 10.4 percent from 10.9 percent a year ago. 

The company posted a 15 percent year-on-year (YoY) rise in net profit at Rs 2,947 crore on the back of better operational performance and more orders.

Revenue was up 18.84 percent YoY to Rs 55,128 crore. Despite the slowdown, L&T expects to end FY24 with an order book of Rs 5 trillion and more than 20 percent growth in its full-year order inflow.

L&T reported a 5 percent/10 percent miss at PBT on our/consensus estimates, despite a beat on revenues. While the margin was sub-par, orders were boosted by recent wins in the Middle East, analysts at Kotak Securities said.

The brokerage has downgraded L&T to Sell (from Reduce) on an expensive 33X one-year forward core EPS multiple.

It finds it difficult to be liberal on multiples, given the growing share of fixed price contracts (42 percent versus 33 percent earlier) and related increase in margin volatility.

It flagged the high 30 percent share of Saudi Aramco in backlog and its reassessment of growth plans, weakening domestic orders before the start of the proposed path of fiscal consolidation and margin bottoming out at much lower levels than expected as other concerns. 

L&T reported a 5 percent/10 percent miss at PBT on our/consensus estimates, despite a beat on revenues. While the margin was sub-par, orders were boosted by recent wins in the Middle East, analysts at Kotak Securities said.

The brokerage has downgraded L&T to Sell (from Reduce) on an expensive 33X one-year forward core EPS multiple.

It finds it difficult to be liberal on multiples, given the growing share of fixed price contracts (42 percent versus 33 percent earlier) and related increase in margin volatility.

It flagged the high 30 percent share of Saudi Aramco in backlog and its reassessment of growth plans, weakening domestic orders before the start of the proposed path of fiscal consolidation and margin bottoming out at much lower levels than expected as other concerns. 

It thus expects margins to recover in coming quarters on executing legacy projects from the execution backlog.

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Mark Mobius has joined Hong Kong-based Chartwell Capital in a non-executive, independent advisory capacity. Founded in 2007, Chartwell Capital is an independent, Hong Kong-based investment firm that focuses on China’s Greater Bay Area and the Asia-Pacific region. 

The company favors family-controlled, small-to-mid-capitalization companies and places an emphasis on collaborative engagement with its portfolio companies.

Chartwell Capital serves institutional clients such as endowment and pension funds, charitable foundations, family offices, and high-net-worth individuals.

“Hong Kong is a place of personal and professional significance for me, as it’s where I began my journey in fund management. It remains a vital international finance center and a key access point to China. I’m optimistic about the Hong Kong stock market’s future and see unique opportunities amid the market’s downturn. I believe Chartwell Capital has the right approach and positioning to navigate this landscape successfully,” Mark Mobius said.

Best known for his role at Franklin Templeton Investments where he managed one of the world’s first emerging markets (EM) funds, Mark Mobius helped grow the group’s EM assets under management from $100 million to $50 billion before his departure in 2018.

In the same year, he founded Mobius Capital Partners with two former colleagues. Mobius has also contributed to developing international policies for emerging markets. He served on the World Bank’s Global Corporate Governance Forum as a member of the Private Sector Advisory Group and as co-chairman of its Investor Responsibility Task Force in 1999.

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Shares of Adani group companies were in demand Monday as they rallied up to 7 percent in early deals on the BSE amid heavy volumes.

Adani Energy Solutions (up 7 per cent at Rs 1,135.80), Adani Enterprises (6 per cent at Rs 3,058), Adani Total Gas (5 per cent at Rs 1,051), Adani Power (5 per cent at Rs 569.60), Adani Ports (APSEZ) (4 per cent at Rs 1,195), Adani Green Energy (1,737.75) and Ambuja Cements (3 per cent at Rs 560.50) were up 3 to 7 per cent.

In comparison, the S&P BSE Sensex was up 1.1 percent at 71,493 at 10:38 AM.

The sharp rally comes after brokerage Cantor Fitzgerald initiated coverage on Adani Enterprises, the group flagship company, with an “overweight” rating and a price target of Rs 4,368.

According to a CNBC TV18 report, the brokerage believes that Adani Enterprises is at the core of everything India wants to accomplish.

Adani Enterprises is engaged in mining & services, resource logistics, new energy supply chains including solar module and cell manufacturing, transport & logistics businesses like Airports and Roads, utilities like Water and Data Centres, and edible oil & food businesses in India and internationally.

The company operates as an incubator focusing on establishing new businesses in the transport & logistics and energy & utility sectors, apart from increasing its focus on direct-to-consumer businesses.

Adani Airports Holdings has an integrated airport network comprising seven operational brownfields and one under-construction Greenfield airport.

With a portfolio of eight airports, Adani Airports oversees around 23 percent plus passenger traffic in India. Adani Airports looks to serve 300+ mn consumers through airport infrastructure.

Adani New Industries (ANIL) was founded to create and develop a comprehensive platform to produce the lowest cost renewable energy and products across the value chain through an integrated supply chain mechanism.

The company aims to capitalize on the Indian government’s National Green Hydrogen Mission to lead India towards a greener and self-sufficient energy future.

Meanwhile, last week, APSEZ informed that the rating agency S&P Global Ratings has re-affirmed its investment grade rating ‘BBB-‘. S&P Global ratings have changed the outlook to ‘stable’ from ‘negative’.

APSEZ has maintained its dominant position in the Indian ports industry with operations across 14 ports, handling around 23.5 percent of the country’s total cargo volumes in FY23 (FY22: 23.7 percent). 

Furthermore, most ports in APSEZ’s portfolio have the flexibility to fix their tariffs, which are generally higher than other competing ports, in consultation with the state maritime boards.

Additionally, connectivity with the direct freight corridor would help APSEZ to benefit from the likely structural growth in India’s EXIM trade, according to India Ratings and Research (Ind-Ra).

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