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XX 30, 12 PAGES, `10.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 62,787.47 ▲ 240.36 NIFTY: 18,593.85 ▲ 59.75 NIKKEI 225: 32,217.43 ▲ 693.21 HANG SENG: 19,108.50 ▲ 158.56 `/$: 82.68 ▼ 0.38 `/€: 88.40 ▲ 0.22 BRENT: $77.91 ▲ $1.78 GOLD: `59,427 ▼ `672 IIT MADRAS RETAINED the top spot among institutes in the country for the fifth consecutive year, while Indian Institute of Science was adjudged the best university and research institution, according to the National Institutional Ranking Framework rankings, 2023, reports Vidheesha Kuntamalla. NCLT directs Go IRP to reply in one week THE NATIONAL COMPANY Law Tribunal (NCLT) on Monday directed the interim resolution professional of Go First to file a reply within one week over petitions filed by three lessors seeking possession of their aircraft and engines from the carrier, reports fe Bureau. ■ PAGE 4 India, EU approach WTO over dispute INDIAAND THE EU have jointly approached the dispute settlement body of WTO seeking deferment of the adoption of its ruling on tariffs imposed by India on some information technology products, reports Mukesh Jagota. ■ PAGE 2 RBI panel moots customer initiatives THE RESERVE BANK of India’s (RBI) committee to strengthen customer service standards at banks and nonbanking finance companies (NBFCs) has submitted its final report to the central bank listing a host of new initiatives, according to a notification issued by RBI, reports Piyush Shukla. The committee, formed under the chairmanship of former RBI deputy governor B P Kanungo submitted their report after conducting on-ground visits to bank branches and detailed communication with lenders, the RBI said. ■ PAGE 8 FE S P E C I A L S Indiamart to invest in new capabilities REDUCE rating driven by rich valuations and competitive risks ■ INVESTOR, P7 AWE Funds: Helping women gain agency The `350-crore fund aims to empower 30 million women by 2030, says its founder ■ EFE, P7 Not correct reflection of DOMESTIC SALES ▲ 64,528 1,365,924 10% demand trend, says 44,482 71,964 Total Maruti on FADA data 286,523 Continued on Page 2 Punjab Rajasthan SWARAJ BAGGONKAR Mumbai, June 5 26,545 THE EXPENDITURE BY states on subsidies rose at a faster pace even as their capital spending slowed down in FY23. As a result, some states reported more spending on subsidiesthanoncapexintheyear,areviewofthe spendingpatternsof20statesbyFErevealed. The spend on subsidies by these states, contributing 90% of the country's gross domestic product (GDP), showed that their expenditureonsubsidies,includingtheitems that can be called ‘freebies’ rose by 19% to `2.8 trillion in FY23. This was against 16% growth witnessed in the previous year. However, their capex growth was flat in FY23 at about `4.82 trillion (excluding central capex support) compared with 29% growth in FY22. In case of three states – Punjab,Rajasthan and Haryana – thespending on subsidieswas even higher than the capex in FY21-FY23. Despite its precarious finances, Punjab’s expenditure on subsidies was `44,871 crore in the three years to FY23,more than double of its capex of `19,112 crore.In FY23,Punjab was an outlier with a subsidy expenditure of `20,607 crore, three times its capex of `6,720crore.Thelargessewasmainlyforgiving free power to households and farmers. The state's debt-to-GSDP ratio was the highest in the country at about 48% in FY23. Haryana Growth in states’ capex vs subsidies* (%, y-o-y) 29 19 15.6 FY22 FY23 0.6 79,433 *Data of 20 states; Capex excluding central support 1,833,421 WITH FACTORYDESPATCHES remaining higher than actual retail sales for two consecutive months (April and May), dealers have asked passengervehicle manufacturers to moderate supplies of models which don't have a high consumer demand. Forinstance,according to sales data for Mayreleased byFederation ofAutomobile DealersAssociation(FADA)onMonday,the PV segment saw retail sales (based on actual registrations) of almost 299,000 units during the month, recording a growthof4.3%year-on-year(y-o-y),which is farlowerthan the 13-15%y-o-ygrowth in wholesales as per the data shared by the manufacturers last week. The dealers have told the manufacturers that if despatches of less-selling models are not moderated, they would be saddled with higher inventories. Since the Total May 2022 Two-wheelers Three-wheelers PV CV Tractors Source: FADA ▲9 ▲ 79 ▲4 ▲7 ▲ 10 37-39 April 12-15 May 15-20 40-45 months of June, July, and August are relatively weaker months from the point of view of sales, the dealers fear that they would have to offer higher discounts on lesser selling models to liquidate their inventories. “We are not addressing the rightvehicle demandofthecustomer.Thevariantwhich is required is not getting produced, simply because it needs higher number of semiconductors. But the variant that is not in demandisbeingsuppliedtodealers.Forthe past two months we have been requesting OEMstorecalibratetheirsupplies,”Manish Raj Singhania,president,FADA,told FE. FADA, which represents 15,000 dealers, said on Monday that passenger vehicle (PV) inventorydays increased to 40-45 byMay-end from 39-41 days at the end of April and 37-39 at the end of March. Continued on Page 10 ● SERVICES RESUME AFTER ACCIDENT INDIA'S SERVICES ACTIVITY in May expanded at the second-fastest pace in closeto13yearsat61.2,marginallylower than 62 inApril,reports fe Bureau. ■ Page 2 completed a pre-payment programme ahead ofMarch 31 deadline, including a $700 million taken for the acquisition of Ambuja Cement 15-20 39-41 AVande Bharat Express passes the site of the triple train accident near Bahanaga Bazar in Balasore district on Monday. Government sources stated that there was a "deliberate interference" in the system and that information unearthed during the initial investigation necessitated a probe by a professional agency GAINING LOST GROUND GAUTAMADANI-HELMEDADANI Group has repaid loans totalling $2.65 billion,completing a pre-payment programme ahead of March 31 deadline,including a $700 million taken for the acquisition ofAmbuja Cement. The repayment was mainly for pledged shares, which were hit following a report in January by Hindenburg Research, eroding half the group’s market cap. The prepayments were done along with a $203 million interest payment. Further, the promoters also completed a secondarytransaction of $1.87 billion from US investment firm GQG Partners forits fourkeylisted entities, according to a credit update released by the group on its portfolio companies. Adani Group had embarked on a deleveraging programme following the January 24 report by short-seller Hindenburg Research which raised significant governance issues in the Adani Group companies. “The deleveraging programme testifies the strong liquiditymanagement and capital access at sponsorlevel eveninvolatilemarket condition, supplementing the solid capital prudencyadoptedatallportfoliocompanies,” Adani Group said in the credit update. According to the update,the keyfinancial metrics of group’s portfolio companies also improved. The portfolio companies combined net debt to Ebitda ratio fell to 3.27 in FY23from3.81inFY22.TheirrunrateEbitda March Total May 2023 % change Services PMI at 61.2 ■ The group Two-wheelers PV 2,019,414 Adani Group completes $2.65 bn deleveraging RAJESH KURUP Mumbai, June 5 Inventory days 70,739 77,135 298,873 1,493,243 26,482 PRASANTA SAHU New Delhi, June 5 64,358 FY23 subsidies up 19% to SEASON OF FREEBIES Capex Subsidies `2.8 trn; poll freebies to States’ spending on subsidies see a spike going ahead and capex (FY21-FY23, ` crore) 63,493 IIT Madras at top for 5th consecutive year outpaces capex 44,871 THE INDIA METEOROLOGICAL DEPARTMENT on Monday predicted that a low-pressure area over the Arabian sea by Tuesday would likely develop into a depression, helping advancement of the monsoon towards Kerala coast over the next couple of days, reports Sandip Das. ■ PAGE 3 Slow retail sales: Dealers want States’ subsidy bill car makers to apply brakes FOR 3 STATES, TREND SEEN FROM FY21-23 19,112 IN THE NEWS Monsoon may arrive at Kerala coast in a couple of days: IMD PTI ■ Adani Group had embarked on a deleveraging programme after the Hindenburg report ■ The update says key financial metrics of group’s portfolio companies also improved rose to `66,566 crore in FY23 from `50,706 crore recorded in FY22,it added. The debt service cover ratio (DSCR) has improved to 2.02 times in FY23 from 1.47 timesinFY22,whilegrossassetsroseby`1.06 trillion to `4.23 trillion.The gross asset/net debtcoverhasimprovedto2.26timesinFY23 from 1.98x in FY22, while the cash balance was higher by41.5% at `40,351 crore. The group’s continued investments in core infrastructurewith gross assets of `3.77 trillion (89% of the portfolio) has provided a long-term multi-decadal visibility of cash flow,it added. Continued on Page 10 Byju’s board approves Aakash IPO SALMAN SH Bengaluru, June 5 MARKET ROUTE ■ The appointment ofthe ■ The announcement comes at a timewhen Byju's is under pressure to make a quarterly interest payment of$40 million EDTECH MAJOR BYJU'S on Monday said merchant bankerswill be that it will launch the initial public offer- announced soon to ensure a ing(IPO)ofitstestpreparatoryarmAakash planned and successful Education Services bymiddle of nextyear. listing next year The board of directors of Byju's has given its official sanction for the IPO and the ■ In March, FE reported appointmentofthemerchantbankerswill thatAakash is also in be announced soon to ensure a planned talks to raise $250 and successful listing next year, the com- million in a pre-IPO round pany said in a statement. through convertible notes “The upcoming IPO will provide a significant capital infusion to bolINSIDE ster Aakash's infrastructure, November 2021. The interest broaden its reach, and extend Lava IPO repayment is due as the lenders high-quality test-prep educa- put on hold have called off negotiations on tion to a larger number of sturestructuring the covenants of ■ PAGE 4 dents across the nation,” the the term loan. statement added. Lastweek,thecreditorsended The announcement comes at a time the negotiations after taking Byju's US when Byju's is under pressure from its entityto court in Delaware,alleging that it creditors to meet the deadline to make had hidden about $500 million from quarterlyinterest payment of $40 million them. Byju's has denied these allegations. on a $1.2 billion term loan it raised in The company is also facing a probe by the ■ Byju’s had originally acquiredAakash in 2021 in a cash and stock deal worth $950 million,which also gave a large cash exit toAakash’s key investor Blackstone Enforcement Directorate. In March, FE reported that Aakash is also in talks to raise $250 million in a preIPO round through convertible notes. Theconvertiblenoteswillincludeadiscount of 20% on the listing price for incoming investors.Sources told FE at that timethatsomeofByju’sinvestorsmayalso participate in the pre-IPO round. Continued on Page 2 54% STOCKS IN NSE 500 DELIVERED 10X RETURNS IN A 5-YEAR PERIOD India churns out most multibaggers among top markets ASHLEY COUTINHO Mumbai, June 5 INDIAHASTHE highest proportion of multibagger stocks among the 10 major global markets including the US,China,Brazil and Japan over the last two decades. About 54% or 269 stocks within the NSE 500 universe generated over 10x returns, within a 5-year rolling period since 2000. Nearly 40% of the BSE 200 stocks gave greater than 20% annualized returns over the past two decades, 2x the ratio for EMs, suggesting ample alpha opportunities. The findings are part of a study bybrokerageGoldmanSachs,which analysed 6,700 stocks across six emerging markets and four devel- TOPPING THE CHARTS Companies with total returns >10x in local currency within a 5-year rolling period since 2000s Region & index % of multibaggers Korea (Kospi) Brazil (IBOV) S Africa (Jalsh) China (MSCI China) Taiwan (TWSE) Europe (STOXX 600) US (S&P 500) Japan (Topix) oped markets since 2000.Of these, 1,500 stocks grew 10x. The 1,500 stocks took 52 months on an average to reach the 10x threshold, achieving a total 54 India (NSE 500) Australia (ASX 200) return of 16x when they hit the peak price levels during their respective 5-year (or shorter) outperformance window. In India’s case, it took 54 months on average 18 18 17 16 16 35 34 32 29 Source: Bloomberg, Local Indices, FactSet, Goldman Sachs Global Investment Research and the stocks delivered 24x median returns, 1.5x the median across the 10 markets and second highest afterAustralia,which delivered slightly higher 25x median Moreover, 80% of the multibagreturns. Size,promoter holding,growth, gers have seen a margin increase and valuations were the key factors during their outperformance that played a role in identifying periods,likely reflecting high efficiency of the businesses and high Indian multibaggers. Multibagger stocks have exhib- pricing power," the Goldman ited high revenue and earnings Sachs study said. growth. About 60% of the multiMultibagger stocks are efficient capital allocators and baggers in India managed INSIDE to generate at least 20% exhibit high return ratios. revenue growth and at Apple A majority of the multileast 30% profit growth shares hit baggers generated ROE during their outperfor- all-time high (return on equity) and cash return on invested mance periods. The ■ PAGE 9 capital in excess of 15% median sales CAGR was 25%, while the median during their outperforprofit CAGR was 37%. manceperiods.Aboutthree-fourths "This reinforces the core of the multibagger stocks had investing principle that earnings increasing ROEs. growth is the fundamental driver of long-term equity returns. Continued on Page 2 HYDERABAD