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JSPL, JSW Steel share prices rally up to 12%; metal stocks gain as more countries ease lockdown

Jindal Steel and Power (JSPL) share price rallied over 12 per cent to Rs 108.70 apiece on BSE in Tuesday’s volatile session after the company reported a consolidated net profit of Rs 305.62 crore in the quarter ended March 31. The company had posted a net loss of Rs 2,713.34 crore in the corresponding quarter of last year. The stock hit the day’s low of Rs 99.20 per share. Jindal Steel and Power share price has risen 75 per cent from its low of Rs 62.10 touched in April. While the stock is still 46 per cent down from its 52-week high of Rs 202.40 hit in the second month of the calendar year 2020. S&P BSE Metal index was ruling with upticks with all the constituents in green except Vedanta, as more economies are easing lockdown restrictions.

At 2.15 PM, Jindal Steel and Power was leading the pack of gainers with a growth of 11.51 per cent to Rs 107.50, followed by JSW Steel and NMDC, up 5.83 per cent and 3.52 per cent, respectively. Hindalco Industries share price was up 3.52 per cent, SAIL gained 2.20 per cent, Tata Steel advanced 2 per cent. While Coal India and National Aluminium were up 1.92 per cent and 1.67 per cent. On the flip side, Vedanta share price was down 0.73 per cent to Rs 88.45, the only stock trading in red in BSE metal index. In comparison, the S&P BSE Sensex was trading 0.49 per cent down at 30,521.

The total income of Jindal Steel and Power during the fourth quarter of FY20 was down at Rs 8,835.23 crore as against Rs 10,158.95 crore in the same period a year ago. Total expenses, however, stood at Rs 8,355.48 crore during the quarter under review as compared to Rs 11,850.61 crore in the corresponding period of last year.

Research and brokerage firm Motilal Oswal in results flash, recommended the stock with ‘buy’ rating to it. From yesterday’s close of Rs 96.40, the stock will have to jump 38% to touch the target price of Rs 150 predicted by the brokerage firm. “JSPL’s 4QFY20 consolidated EBITDA of Rs 2,220 crore was up 22% QoQ due to higher steel prices in Indian and Oman operations,” Motilal Oswal said in a research report. “The beat on estimates was led primarily by higher-than-expected margins in Oman operations and lower raw material costs in standalone operations due to usage of Sarda mines’ inventory,” it added.

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RBI’s rate cut fails to lift Sensex, Nifty; check key factors behind today’s market fall

Halting the three-day rally, BSE Sensex and Nifty 50 ended in the red as the extension of the moratorium on loans by the Reserve Bank of India led to a sell-off in financial stocks. The 30-share Sensex fell 260 points or 0.84 per cent to end at 30,672, while the broader Nifty 50 index dropped 67 points or 0.74 per cent to close the session at 9,039. Axis Bank share price closed 5.65 per cent lower, while HDFC settled with 5 per cent loss. Similarly, Bajaj Finance was down 4.67 per cent and ICICI Bank dropped 4.32 per cent. “Before the extended weekend, Nifty successfully hold 9000 levels. On a weekly basis, it formed a bearish candle. Rising tensions between US and China will determine the trend for next week. There is a clear divergence between Nifty and Bank Nifty, it will be interesting to see how long remaining stocks in Nifty will continue to hold it above 9000,” said Vishal Wagh, Head of Research, Bonanza Portfolio Ltd.

RBI slashes repo rate by 4%: Reserve Bank of India decided to cut the repo rate by 40 bps from 4.4 per cent to 4 per cent to trim the impact of coronavirus on the economy. RBI MPC also said that it expects the GDP growth for this fiscal to remain in negative territory.

HDFC twins top drags: HDFC, HDFC Bank, ICICI Bank, Axis Bank and Reliance Industries were among top index contributors towards today’s fall. On the contrary, M&M gained 4.30 per cent and was the top Sensex gainer. Infosys, Asian paints, UltraTech Cement, Tech Mahindra and Maruti Suzuki were among other gainers on the index.

Nifty Financial Services decline 3%: Most of the sectoral indices ended lower with up to 3.06 per cent decline. Nifty Financial Services dropped 272 points dragged by M&M Financial Services, Shriram Transport Finance and PFC.

Expectations for next week: Domestic equity markets will remain closed on Monday, May 25 on account of Eid ul-Fitr. “Market is encircled with negative news and the only thing that can really bring back confidence in these dark days is discovery of an anti-drug to fight COVID-19 and a vaccine to keep it away. The commentary from US CEOs, even the Fed Governor are all pointing towards the worst which may still be ahead of us. Therefore, Indian bourses going ahead will mirror their economic trajectory,” Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote, said.

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RIL-Rights Entitlement soars over RIL share price. Check live how much you may gain from rights issue

Reliance Industries-Rights Entitlement (RIL-RE) soared over 40% on day 1, taking the total with rights issue price over the actual RIL share price. Today, as of 10 AM, RIL-RE shares were trading 0.77 per cent lower to Rs 200.60 on NSE. At Wednesday’s closing, RIL-RE shares soared to Rs 214 on NSE, which was Rs 34 higher than the spread between Reliance Industries share price of Rs 1,437.40 and rights issue of Rs 1,257. Analysts are upbeat on this rights issue recommending it to ‘buy’. “We are recommending investors to subscribe to the rights issue of Reliance Industries Ltd as we are positive on the future prospects of the company on the back of strong traction in digital and retail business,” said Jyoti Roy, DVP Equity Strategist, Angel Broking Ltd.

What does Sebi’s ‘rights entitlement’ platform mean for traders and investors?

It is for the first time that Rights Entitlement (RE) shares were allowed to trade in India after market regulator Sebi introduced this platform earlier this year. “India’s largest rights issue will test the RE platform to see how resilient it is at technical and settlement factors as this also partially paid issue,” Ravi Singh, Head of Research, Karvy Stock Broking told to Financial Express Online. “The success/shortcomings of this platform would dictate future norms and response to the subscription percentage to the rights issues in the future,” Singh added.

How does Sebi’s ‘rights entitlement’ platform used by RIL-RE help shareholders?

So far in previous rights issues, some of the shareholders who had entitlement to the rights shares either subscribed, or transferred it to the other buyers at a little or no cost, or left it to renunciate, says Ravi Singh. Suggesting Sebi’s Rights Entitlement (RE) platform a good move for the investors or shareholders, Ravi Singh said: “The platform will help the rights entitled shareholders, who opt to renunciate to get a fair value for their rights entitlements by trading across this RE platform.” Describing it as a win-win situation for both the buyers and sellers, he added that the rights sellers may get anywhere between Rs 130 to Rs 190 for each entitlement, the buyers may get a yield of around 13.50% to 18% on an average. “Since intraday trading is not possible that may affect the liquidity to an extent, it is still a good platform for speculators for the remaining 9 trading days,” Singh said.

As of 5 PM yesterday, investors subscribed 0.27 per cent of the shares on sale, according to data from stock exchanges. India’s biggest-ever rights issue will remain open for the eligible investors for 14 days and the rights entitlements can be traded till May 29. The company is offering shares to existing investors in the ratio of 1:15 at a price of Rs 1,257 per share. The investors who wish to subscribe need not pay the entire amount in one go. The company has asked investors to pay only 25 per cent at the time of subscription. While out of the rest 75 per cent, investors will have to pay 25 per cent in May 2021 and the remaining 50 per cent in November next year.

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Reliance Industries rights issue opens: RIL shares at discount, get at only one-fourth the price

Reliance Industries Limited (RIL) share price zoomed 2% on the initial hour of trade as the Rs 53,124 crore rights issue of the Mukesh Ambani-led company opened on Wednesday morning. The rights issue, biggest ever to enter the Indian equity markets, will remain open for eligible investors for 14 days and is expected to see positive response despite the troubled times that stock markets have seen in the past couple of months. RIL, India’s most valuable company, is looking to cut its net-debt to zero by the end of this fiscal year and is looking to aid that with the rights issue and the consecutive deals that it has signed with global investors for its telecommunications arm, Jio Platforms. Here’s all you need to know about the rights issue.

Eligibility and Price: To be able to subscribe to the rights issue, you must have had at least 15 shares on the record date which was set as May 14. According to RIL’s Board, the shares will be offered at 1:15 ratio, so having at least 15 shares is what makes you eligible for subscribing to the rights issue. The shares are being offered at Rs 1,257 per share, translating to a 12% discount from the current market price.

Payment structure: Interestingly, investors looking to subscribe to the issue will not be asked to pay the entire amount in one go, which would have been a difficult task at this juncture. RIL has asked investors to pay only 25% at the time of subscription. Of the remaining 75%, investors have been asked to pay 25% in May 2021 and the other 50% in November next year. As a promoter and 50 percent shareholder, Mukesh Ambani will have to pump in 26,600 crores for his portion of the rights issue, according to brokerage firm Angel Broking.

How to apply: Investors need to consult their bank if they have the option, you can apply through them. Otherwise, investors can apply through an ASBA (Applications Supported by Blocked Amount). Other options include applying through a courier of the Composite Application Form (CAF) from RTA (Registrar and Transfer Agent) of the company.

What the experts have said so far:

In my opinion, this is the perfect opportunity for investors to participate in the medium-term growth story for the company. As indicated by the Chairman (Mukesh Ambani) in the last AGM, the firm is well on its way to become a zero-net-debt firm by March 2021, even the consumer-focused businesses I think will very soon start contributing up to 50% in the profits of the company. ~ Ajay Bodke, CEO (PMS) Prabhudas Lilladher.

Investors should subscribe, they (Reliance Industries) have a great idea, have great partners and good investors so there’s a huge opportunity for them to execute so I think with all these cash infusions they are very well capitalized to invest in the opportunity they see, so the outlook is very positive. ~ Nilesh Shah Envision MD & CEO Envision Capital.

Clearly the point is the slew of deals they have done. Rerating of the stock that is happening and has happened over the time as well. People though core business will suffer and eventually the company will suffer but post the deals they have enough cash flows. They also have other deals on the table so they will have cash during the current times. How the situation is right now, the companies with surplus liquidity will be preferred. ~ Abhimanyu Sofat Head of Research, IIFL Securities

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