Transfin.
HomeNewsGuidesReadsPodcastsVideosTech
  1. News
  2. Explained

10% Quota for Economically Weaker Section, Turnaround Plan For Jet Airways, Infosys Misses Estimates et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Jan 13, 2019 8:24 AM 4 min read
Editorial

Govt announces 10% quota for economically weaker sections within the General category. $900m turnaround plan for debt-laden Jet Airways. Ola rumored to be raising $2bn at a valuation of $6bn. 

 

Now to the week's Top Business Stories through our End Of Week Wrap Up:

10% Quota for Economically Weaker Section, Turnaround Plan For Jet Airways, Infosys Misses Estimates et al.

 

POLICY

Govt announces 10% quota for economically weaker sections within the General category.

Up Close: The proposed 10% reservation in jobs and higher education will be over the existing 50% reservation for the Scheduled Castes, Scheduled Tribes and the Other Backward Classes, and will take the total reservation to 60%.

Who’s on the list?: According to an Economic Times report, the beneficiaries will include those in the General category who:

  • Have family income below INR8L per annum, own less than 5 acres of land
  • Have a residential house smaller than 1000 sq ft, and residential plot smaller than 100 yards in a notified municipality area and smaller than 200 yards in a non-notified municipality area

 

AVIATION

Lenders propose $900m turnaround plan for debt-laden Jet Airways.
 

The What: As per the plan proposed by lead creditor SBI:

 

  • Promoter Naresh Goyal and shareholder Etihad Airways are likely to infuse $450m together in the airline
  • Indian lenders to restructure $450m of the debt 

 

Zoom Out: The plan is expected to be finalized by the end of January - before the 180-day period under the RBI’s 12 February circular which pushed for a timely resolution of stressed assets in the economy.
 

Perspective: If approved by all stakeholders, the implementation of the plan will result in a reduction of Chairman Naresh Goyal’s stake below the current 51%.

 

PAYMENTS

Amazon injects INR300cr in its online payments processing service Amazon Pay. Amazon begins testing for its payments platform in India.

 

Amazon Pay: As per an Economic Times report, digital payments company Amazon Pay has received INR300cr in fresh funding from its e-commerce parent entity Amazon.

 

The Big Picture: The injection comes in light of increased competition from the likes of Google Pay, Paytm and PhonePe and as the tech giant has begun testing its native Unified Payments Interface in India with a closed user group.

In other news: Amazon is the only American tech giant to have a PPI (prepaid payment instrument) license from the RBI and according to the Central Bank’s guidelines all PPI issuers should complete the full KYC of their user base within February 28. To this effect, Amazon Pay has now started rolling out doorstep know-your-customer (KYC) services for its mobile wallet users.

Moreover, the retail giant is also looking to extend Amazon Pay from online sales to brick-and-mortar transactions as per this Business News Daily report.

10% Quota for Economically Weaker Section, Turnaround Plan For Jet Airways, Infosys Misses Estimates et al. 

STARTUPS

Ola rumored to be raising $2bn at a valuation of $6bn. Softbank slashes proposed investment in WeWork. 

 

The What: As per a YourStory exclusive report, Ola is set to raise $2bn in funding at a valuation of $6bn from existing and new investors.
 

Zoom Out: The development comes a day after Ola raised $74m from existing investor Steadview Capital, making it the second-highest-valued startup in India, after Paytm.
 

The Plan: The proceeds will be deployed towards pushing its presence in the Electric Vehicle segment, expanding Foodpanda, and growing focus on international markets.

 

The What: As per a Business Insider report, Softbank has slashed its proposed investment of $16bn in America-based shared workspace provider WeWork to $2bn.
 

Softbank: Softbank allegedly faced criticism from its biggest investors Saudi Arabia’s Public Investment Fund (PIF) and Abu Dhabi’s Mubadala Investments over the proposed amount. 
 

Deep Dive: The original deal of $16bn valued WeWork at $45bn. As per a Seeking Alpha report, this would have been c. 20x its estimated revenue for 2018. Moreover, SoftBank has already invested $8bn in the startup.

 

Last Word: Dubbed a political ploy before the General Elections 2019 by the seasoned journalist Shekhar Gupta, the proposed amendment leaves some fundamental questions unanswered which raises doubts on its feasibility. Click here to read a quick explainer on this issue.

 

MARKETS

Infosys misses estimates, announces returning meaningful cash back to shareholders; Q3 Earnings influenced by several macro themes.

The What:  Infosys announced results for the quarter ending December 31, 2018 after market close on Friday. While, the numbers were generally behind estimates, a meaningful share buyback worth INR 8,260 crore and a INR 2,107 special dividend are perhaps key positives in otherwise a somewhat choppy quarter. An upward revision to revenue guidance (constant currency) to 8.5%-9% was also a positive but a sharp decline in profitability perhaps overshadows some of the positives and ends up painting an overall disappointing picture. Earnings Press Release here.

Perspective: TCS reported relatively more robust quarterly numbers. Here's a nice summary which captures the results and succinct views from several brokers. As such TCS and Infosys results are closely watched by investors for readthrough's to the overall Indian IT Services industry notwithstanding impact from fx swings.

Also this: With Q3 earnings season at play, in addition to typical business operational efficiencies, there are several macro-level moving pieces at play which could possibly sway the earnings print (and the stock). Here’s a nice piece touching on some of those moving pieces.

 

(Don't want to miss out on these End Of Week Wrap Ups? Subscribe Now to our No Nonsense Email Digest and get the day's Top 6 Business stories straight to your mailbox.)