Business Today 20 August 2023

If there is one quality about Gautam Adani that those who know him agree on, it is that he is a fighter. The 61-year-old Adani’s ability to take adversity head-on has been in ample evidence over the past few months. Ever since a report in January by US-based short-seller Hindenburg Research alleged stock manipulation and other wrongdoings, knocking $100 billion off the group’s market capitalisation, Adani has been busy staving off multiple problems. When Business Today did a cover, ‘Adani Under Attack’, in its March 5, 2023 issue, it seemed the ₹2.6-lakh crore Adani Group would find it near impossible to get itself out of the rut as its stocks continued to get hammered and foreign banks and rating agencies came up with negative views on it. Our March cover…

DATA AS OF JULY 27, 2023; SOURCE CMIE ECONOMIC OUTLOOK 4.49 PER CENT Food inflation in June 2023, compared with less than 3 per cent in May, thanks to the uneven march of the monsoon 375 PER CENT The surge in the retail price of tomatoes to ₹122 per kg in 2023. The increase was 250 per cent from a year ago 193 PER CENT Increase in garlic prices on a year-to-date (YTD) basis to ₹8,499 per quintal; ginger prices also jumped 188 per cent YTD…

Good Going THE BSE CAPITAL GOODS INDEX CLIMBED 48 PER CENT IN THE PAST YEAR COMPARED TO THE BSE SENSEX’S 23 PER CENT GAIN Data has been indexed to 100; Source ACE Equity Doubling Down THE SHARE OF CAPITAL EXPENDITURE IN THE UNION BUDGET HAS ALMOST DOUBLED IN THE PAST 10 YEARS *Revised Estimate; #Budget Estimate (BE) Source: CMIE Economic Outlook Top Heavy FOR THE SECOND YEAR IN A ROW, THE TOP LINE OF LISTED CAPITAL GOODS PLAYERS IN FY23 REMAINED ABOVE PRE-COVID-19 LEVELS Consolidated figures; companies that are currently a part of the BSE Capital Goods index have been considered for historical calculations; Source: ACE Equity Growing Strength PROFITS OF CAPITAL GOODS COMPANIES HAVE IMPROVED COMPARED TO THE INTEREST OUTGO Note: Rising profit-to-interest ratio indicates increasing capability of these…

▶ INDIA REPORTED higher-than-expected GDP growth of 7.2 per cent in FY23. The International Monetary Fund too has upgraded India’s GDP growth forecast for FY24 to 6.1 per cent from 5.9 per cent earlier. But if you thought that the economy could look forward to sunny weather, curb your enthusiasm. Economic growth may remain subdued this fiscal thanks to global storm clouds. The domestic economy, however, may still do better than anticipated if the capital expenditure of the centre and states remain on track and inflationary pressures ease to allow domestic demand to stay robust. Easing retail inflation—despite the recent spurt in vegetable prices—at 4.81 per cent in June, has raised expectations of improved consumption demand as real wages rise. Besides, the Reserve Bank of India (RBI), too, may opt…

▶ SALT-TO-CIGARETTES MAJOR ITC Ltd is spinning off its hotels division—after nurturing it for over two decades—into a separate company in an effort to accelerate its growth and improve resource allocation. The company’s board has given its in-principle approval to the demerger, long-awaited by the company’s shareholders and market experts. The board will still need to ratify the specifics of the demerger on August 14. According to the proposed structure, ITC’s management would hold a 40 per cent stake in the newly established entity that will house its hotels assets and business, while the remaining 60 per cent will be owned directly by ITC shareholders proportionate to their shareholding in the company. Experts say the board’s decision is pragmatic, based on the realities of the market. ITC had brought the hotels…

▸ As part of the proposed demerger, ITC will hold 40 per cent in ITC Hotels Ltd while other shareholders will own the rest 60 per cent ▸ Upon its listing on the exchange(s), the demerged ITC Hotels will become the country’s second-largest hotel chain, with a market cap of ₹25,000 crore ▸ The ITC management expects a sizeable increase in the company’s profitability: an 18-20 per cent rise in ROCE and a 10 per cent growth in ROIC ▸ The spin-off will free up capital and improve efficiency in capital allocation for ITC Ltd, as the hotels business consumes 20 per cent of its capex ▸ ITC Hotels will be a debt-free well-capitalised entity; to follow an ‘asset-right’ strategy, leveraging the goodwill, brand equity and synergies of ITC…