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CARE Ratings places NDTV’s bank facilities on ‘credit watch’, shares gallop

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The shares of Adani group’s takeover target satellite channel company New Delhi Television Ltd (NDTV) continued to hit the upward circuit on Monday with the price touching Rs 540.85.

The 52-week low price for the scrip was Rs 72.

Meanwhile, credit rating agency CARE Ratings has placed ratings assigned to NDTV’s bank facilities on credit watch with developing implications following takeover decision by the Adani group.

NDTV, which had postponed its 34th annual general meeting (AGM)to September 27 from the earlier fixed date of September 20, said it has completed the dispatch of notice for the shareholders meeting on September 3, 2022.

Due to change in the date of the AGM, the Register of Members and the Share Transfer Book of the Company will now remain closed September 20-27 (both days inclusive), NDTV had said.

The scrip has been on the upswing since August 23, the day on which the Adani group’s AMG Media Networks announced its subsidiary Vishvapradhan Commercial Private Ltd’s (VCPL) decision to exercise its rights to acquire 99.5 per cent of equity shares of RRPR Holding Private Ltd, the investment company of NDTV promoters – Prannoy Roy and Radhika Roy.

The VCPL holds 1,990,000 warrants of RRPR Holding entitling it to convert them into 99.99 per cent stake in the latter.

The VCPL has exercised its option in part, resulting in acquisition control of RRPR Holding — 1,990,000 equity shares or 99.50 per cent.

RRPR Holding holds 29.18 per cent stake in NDTV that has three national television channels.

This triggered the issue of open offer to acquire shares of NDTV from the public as per SEBI’s (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

Placing the credit ratings of NDTV’s bank facilities on credit watch with developing implication, CARE Ratings said it will continue to monitor the developments in this regard and will take a view on the ratings once the exact implications of the acquisition on the credit risk profile of the company are clear.

According to CARE Ratings, the ratings continue to remain constrained by high exposure towards group companies and revenue concentration risk as the company majorly generates revenue from advertisement which in turn exposes the company’s revenue profile to the business cycle of the advertisers.

“The ratings are also constrained on account of uncertainty over ongoing litigations against the company and its promoters especially pertaining to tax demand, hence the impact of the same on operational and financial risk profile of the company is not clear,” CARE Rating said.

According to CARE Ratings, NDTV had a total investment of Rs 335.13 crore in its subsidiaries/joint ventures/associates as on March 31, 2022 (Rs 325.03 crore as on March 31, 2021) as against its tangible net worth of Rs 345.09 crore as on March 31, 2022, majority of which are in NDTV Networks Limited, having an investment of Rs 315.70 crore as on March 31, 2022 (NDTV Networks Limited have a negative net worth of Rs 28.48 crore as on March 31, 2022).

“There are a number of ongoing litigations against the company especially pertaining to tax demand, the outcome of which will be crucial, particularly in the matter pertaining to transaction with Universal Studios International BV (a General Electric company) wherein a tax demand of

Rs 450 crore had been raised against the company for AY 2009-10,” CARE Ratings said.

“Further, the company had also received demand notice from SEBI for alleged non-disclosure of tax demand dated November 22, 2019, against which the company filed an appeal and matter is likely to be listed on September 12, 2022. Company also received show cause notice from the Directorate of Enforcement (ED) for the alleged contraventions under Foreign Exchange Management Act, 1999 (“FEMA”),” the credit rating agency said.

The CARE Ratings said the company also received notice dated August 20, 2018, from SEBI in regard to alleged violation of Clause 36 of erstwhile Listing Agreement for non-disclosure of loan agreements entered into by Prannoy Roy, Radhika Roy and RPRR Holding with VCPL in 2009-10.

“Further, the investigation by CBI is also pending with respect to the FIR registered against the company, promoters and other officials on August 19, 2019, in a case of alleged violation of foreign direct investment rules in one of their companies under section of Indian Penal Code, 1980 and Prevention of Corruption Act, 1988. In addition to this, there are few other investigations also pending w.r.t. income tax demand. Any adverse developments in relation to these ongoing legal cases having a material impact on the operational or financial risk profile of the company shall remain negative from the credit perspective,” CARE Ratings said.

Business

Nifty, Sensex open flat as investors wait for fresh cues, US Fed meet outcome

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Mumbai, Sep 15: The Indian benchmark indices opened on the flat note with a positive bias on Monday, on the back of positive domestic inflation data and growing expectations of a US Federal Reserve rate cut.

As of 9.30 am, the Sensex was up 4.5 points or 0.005 per cent at 81,909, and the Nifty was up 4.15 points or 0.017 per cent at 25,118.

The broadcap indices outperformed benchmark indices, as Nifty Midcap 100 inched up by 0.26 per cent, and the Nifty Small cap 100 moved up 0.53 per cent.

Bajaj Finance, Tata Motors, Hero Motocorp and Bajaj Finserv were the top gainers on NSE Nifty 50 index. Infosys Ltd., Tata Consultancy Services, Sun Pharmaceutical Industries, Dr. Reddy’s Laboratories Ltd., and Shriram Finance Ltd. weighed on the Nifty 50 index.

Among sectoral indices, Nifty Realty, the top gainer, jumped 1.19 per cent. Nifty PSU bank (up 0.39 per cent) and Nifty Auto (up 0.38 per cent) were the other major gainers. Nifty Pharma was the top loser down 0.78 per cent.

Inflation had cooled to 2.07 per cent well below the RBI’s projection of 3.1 per cent in August, latest government data said.

Analysts said that Indian equities, which have recently underperformed compared to global peers, now appear attractively valued. Positive factors such as ongoing GST reforms, anticipation of a Fed rate cut, and improving US–India trade ties are expected to further support the market.

Last week, Nifty 50 notched its eighth consecutive advance, closing above the symbolic 25,100 mark for the first time since July—its longest winning streak in a year and the biggest weekly gain in nearly three months.

“Nifty has been gradually taking out the crucial resistances and on the weekly chart, the Nifty has confirmed a pattern of higher tops and higher bottoms, which is an encouraging sign for a sustained positional bullish trend,” said Devarsh Vakil, Head of Prime Research at HDFC Securities.

Nifty seems to be heading towards the next resistance of 25,250, while the 24,900 level could offer support, he added.

Major US indices posted strong weekly gains and closed near all time highs. The Nasdaq rose 2.0 per cent, the S&P 500 gained 1.6 per cent, and the Dow advanced 1.0 per cent, marking the best week since early August.

Most of the Asian markets made strong gains during the morning session. While China’s Shanghai index advanced 0.22 per cent, and Shenzhen added 1.07 per cent, Japan’s Nikkei rose 0.89 per cent, while Hong Kong’s Hang Seng Index jumped 0.32 per cent. South Korea’s Kospi inched up 0.52 per cent.

The US markets are pricing in a 96.4 per cent probability of a 25-basis-point rate cut on September 17, with additional cuts expected through year-end. Softer labour data and persistent inflation support the dovish shift, boosting demand for equities and cryptocurrencies, said analysts.

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Business

Adani Power signs pact to supply 2,400 MW power to Bihar

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New Delhi, Sep 13: In a significant development, Adani Power Ltd (APL) has signed a 25-year power supply agreement with Bihar State Power Generation Company Ltd (BSPGCL) to supply 2,400 megawatt (MW) of power to the state, the Adani Group’s firm said on Saturday.

Under the agreement, the India’s largest private sector thermal power generator would supply the proposed power from a greenfield ultra super critical plant to be set up at Pirpainti in Bhagalpur district of Bihar.

The development came after a Letter of Award (LoA) by BSPGCL to APL, on behalf of North Bihar Power Distribution Company Ltd (NBPDCL) and South Bihar Power Distribution Company Ltd (SBPDCL) in August.

Adani Power won the project by offering the lowest supply rate at Rs 6.075 per kWh.

“The company is planning to invest approximately $3 billion to build the new plant (800 MW X 3) and its supporting infrastructure under the Design, Build, Finance, Own, and Operate (DBFOO) model,” the APL informed.

The coal linkage for the power plant has been allocated under the SHAKTI Policy of the government of India.

During the construction phase, the project will generate around 10,000 to 12,000 direct and indirect employment. Once it becomes operational, it will employ 3,000 people.

APL aims to commission the plant in 60 months.

Earlier, in a first-of-its-kind adoption of the greenshoe option in a thermal power tender in India, APL was awarded a total of 1,600 MW capacity by MP Power Management Company Limited (MPPMCL).

The company received a LoA from MPPMCL, awarding 800 MW additional capacity under the ‘Greenshoe Option’.

Both units (800MW x 2) in Anuppur district, Madhya Pradesh, will be commissioned within 60 months of the appointed date.

APL said that it will invest around Rs 21,000 crore towards setting up the plant and related infrastructure.

The project is expected to generate direct and indirect employment of 9,000-10,000 during the construction phase, and 2,000 once in operation.

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Business

Stock market ends week on positive note, clock 8 consecutive session gains despite uncertainties

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Mumbai, Sep 12: The Indian equity indices ended the week on a positive note on Friday, maintaining the winning streak for the eight consecutive trading sessions despite geo-political uncertainties.

Optimism over a potential rate cut by the US Fed, positive developments in India-US trade talks and buying in defence stocks fueled the market sentiment.

Sensex settled the session at 81,904.70, up 355.97 points or 0.44 per cent. The 30-share index started trading with a decent gap-up at 81,758.95 against last day’s closing of 81,548.73. The index extended the momentum further amid positive global cues to hit an intraday high at 81,992.85.

Nifty closed at 25,114.0, up 108.50 points or 0.43 per cent.

The national market closed at a three-week high, supported by renewed global optimism over a potential Fed rate cut. Sentiments improved further on reports that the EU may reject U.S. tariff proposals on India for buying Russian oil, analysts said.

Progress in the US-India trade talks is also expected to keep the positive momentum intact in the near term. The defence sector outperformed, aided by the Indian procurement authorities beginning negotiations for six next-generation conventional submarines, analysts added.

BEL, Bajaj Finance, Bajaj FinServ, Axis Bank, Maruti, Tata Motors, ICICI Bank, L&T, Infosys, and PowerGrid were the top gainers from the Sensex basket. Eternal, Hindustan Unilever, Trent, Asian Paint, Bharati Airtel and ITC settled lower.

The majority of sectoral indices settled higher. Nifty Fin Services jumped 184 points or 0.70 per cent, Nifty Bank escalated 139 points or 0.26 per cent, Nifty Auto increased 122 points or 0.46 per cent, and Nifty IT settled the session 107 points or 0.3 per cent. Nifty FMCG fell.

Broader indices followed suit as well. Nifty Smallcap 100 moved 114 points or 0.64 per cent, Nifty Midcap 100 jumped 183 points or 0.32 per cent, and Nifty 100 closed 106 points or 0.41 per cent.

Rupee traded positively with gains of 0.18 per cent at 88.27 as mixed FII inflows supported sentiment.

“The dollar index remained weak below 98, providing additional strength to the rupee, while ongoing trade deal talks with the US also added optimism. Weakness in crude prices offered further minor support,” said Jateen Trivedi f LKP Securities.

Overall, the rupee looks set to gain some lost ground with scope to test 87.75 in the coming days, while 88.50 is seen as a reversal resistance zone, he added.

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