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JSPL board okays divestment in Jindal Power to World one for Rs 3,015 cr

Jindal Power and Steel (JSPL) on Tuesday said its board has approved divesting its entire equity interest in Jindal Power to Worldone, a promoter group company, for Rs 3,015 crore. The board of directors of JSPL has approved the divestment of its entire equity interest (representing 96.42 per cent of the issued and paid up capital) in Jindal Power by way of sale of shares, to Worldone Pvt Ltd, a promoter group company and a related party to the company, JSPL said in a regulatory filing.

The equity value is an all-cash offer of Rs 3,015 crore, the company added. JSPL said Worldone was selected by way of an elaborate bidding process run by an independent third-party merchant banker, Grant Thornton Advisory, wherein the acquirer submitted the highest binding bid on acceptable terms and conditions.

The proposed sale is subject to necessary approvals of shareholders of the company, regulatory clearances, go-ahead from lenders of the company and Jindal Power, contractual approvals and such other consents, permissions and sanctions as may be necessary in line with extant relevant guidelines.

JSPL said the long stop date for completion of the proposed sale is 12 months which maybe mutually extended by the parties thereto, failing which the proposed sale shall terminate. The company’s board also approved the execution of a binding share purchase agreement, a loan agreement and other ancillary agreements, in relation to the proposed sale and accordingly, the company has executed a share purchase agreement.

The share purchase agreement with the Worldone and Jindal Power captures the entire understanding between the parties in relation to the sale of shares held by the company.

The company’s board also approved entering into a loan agreement with Jindal Power to convert the existing capital advances and inter corporate deposits availed by JSPL from Jindal Power aggregating to Rs 4,386.28 crore into an unsecured loan.

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Blackstone commits up to $2.8 billion to acquire a controlling stake in Mphasis

Blackstone on Monday announced that private equity funds managed by Blackstone have entered into definitive agreements to acquire a majority stake in Bengaluru-headquartered IT services company Mphasis Limited. A wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA), UC Investments and other long-term investors will co-invest along with Blackstone, a joint statement said.

This transaction will trigger a mandatory open offer for the purchase of up to 26 per cent additional shares of the company from the public shareholders and the acquiring entity has released a public announcement to the stock exchanges, it said. Based on the open offer subscription, the blended purchase price will vary between Rs 1,452 to Rs 1,497 per share (12-16 per cent premium to 12-month average price and 3 -6 per cent discount to six-month average price) and the purchase consideration will vary between Rs 152 billion to Rs 210 billion (or, approximately USD 2.0 billion to USD 2.8 billion).

A different fund managed by Blackstone had acquired a controlling stake in Mphasis from Hewlett Packard Enterprise in September 2016. The sale is expected to complete in the coming months, subject to customary closing conditions and regulatory approvals, the statement added.

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Wipro beats HCL Tech in m-cap; becomes 3rd most valued IT company in India

Wipro share price hit Rs 486.70 apiece on BSE today, taking the company’s total market capitalisation to Rs 2.65 lakh crore. IT major Wipro has pipped HCL Technologies in terms of market capitalisation and has become the third most valued Indian IT firm. Wipro stood at 12th position in the overall ranking with a market capitalisation of Rs 2.66 lakh crore, as on April 22, according to BSE data. HCL Technologies was at the 13th position with a market capitalisation of Rs 2.60 lakh crore. Improving deal wins, strong fourth-quarter results, weakening rupee, and strong buying in defensive sectors like IT and consumer have led to Wipro outperforming its other IT peers, according to an analyst. “Technically, Rs 465-470 remains a strong support and target of Rs 515 looks highly likely in the coming weeks,” AR Ramachandran, Co-founder & Trainer, Tips2Trades, told Financial Express Online.

On the back of healthy quarter earnings for the January-March quarter of FY21, Wipro share price rose to hit a fresh 52-week of Rs 494.50 apiece on Thursday. Wipro stock was trading muted on Friday at Rs 484.85 apiece. HCL Technologies share price was up 1.14 per cent at Rs 972.10 apiece. In comparison, S&P BSE Sensex was trading 172 points or 0.36 per cent up at 48,253. According to an analyst, Wipro underperformed on revenue growth against HCL Technologies and other large IT names over the last decade.

“Recent restructuring efforts, which include simplified operating structure, step-up in capability upgrade and talent management under new leadership bode well for Wipro in the medium term,” Suyog Kulkarni, Senior Research Analyst at Reliance Securities, told Financial Express Online. Wipro has witnessed a strong acceleration in large deal wins which Kulkarni believes provides higher visibility of low double-digit revenue growth over FY22. “Additionally, Capco acquisition is likely to enhance Wipro’s BFSI vertical capabilities which will aid in large transformation deal wins. We have a buy recommendation on the stock with a 2-year target price of Rs 565 apiece,” he added.

Wipro announced its commitment to achieving Net-Zero Greenhouse Gas (GHG) emissions by 2040 in line with the objective of the Paris Agreement to cap temperature rise to 1.5°C. “Wipro, while unveiling its pledge on Earth Day, also set an intermediate target of a 55 per cent reduction in GHG emissions by 2030 in absolute emission levels compared to its base year of 2016-17 (April-March),” the press release said

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Share market in for ‘sharp correction’ soon; Credit Suisse favours cyclicals over defensive stocks

Indian share markets are expected to see a ‘sharp correction’ soon, as profit booking continues in the coming weeks, Credit Suisse said. “We believe the equity market could see some further profit booking in coming weeks, but we expect this correction to be very sharp and to not last long,” Jitendra Gohil, Head of India Equity Research, and Premal Kamdar, Equity Research Analyst, Credit Suisse, said in a note. Sensex has turned negative year to date, falling 9% from mid-February highs.

The global investment manager is, however, not advising investors to turn away from domestic markets. Instead, Credit Suisse said that it recommends investors to use this correction as a buying opportunity from a 6-to-9-month perspective. “While our global Investment Committee (IC) acknowledges near-term challenges in equities, it maintains a positive outlook on equities from a medium-term perspective, given the overall favourable growth prospects and ultra-loose monetary policies,” they added.

Banking on growth to rebound sharply in the second half of the fiscal year, analysts at Credit Suisse prefer cyclicals over defensives and mid-caps over large-caps. “We continue to prefer large banks, industrials and export-sensitive sectors like metals and chemicals. We also continue to prefer mid-caps given our expectation of a broad-based recovery in the second half of this fiscal year,” the note said.

In the bond market, Credit Suisse said that the Reserve Bank of India’s quantitative easing is likely to keep government bond yields range-bound despite higher-than-expected supply and elevated inflation. This has led them to prefer corporate bonds over treasuries, with a preference for 1 to 3-year duration bonds.

India is grappling with the second wave of the coronavirus pandemic and the continuous spike in daily case count has led some states to announce restrictions on economic activity. While the restrictions could impact growth, Credit Suisse believes India Inc is better positioned to tackle the challenges this time.

Currently, the consensus growth projections for India forecast for India stands between 10.5% to 12.5% for the fiscal year. However, the spike in cases, going from 10,00 in February to 3 lakh in April has led to lockdowns that may impact projections. However, there is still hope for India. “Even if we assume a cut of about 100–150 bp to India’s GDP, India can still deliver low double-digit real-GDP growth in FY 2022, the fastest growth in the world,” the note added.

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