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Govt to Sell 100% Stake in Air India, IndiGo Reports 168% Rise in Consolidated Net Profit and More

Professor of Financial Economics and Part-time Value Investor, Transfin.
Jan 27, 2020 1:49 PM 5 min read

Government to sell 100% stake in Air India; set March 17th as deadline for submission of EoI. ICICI Bank Q3 net profit surges 158% to ₹4,146cr ($582m). IndiGo reports 168% rise in consolidated net profit to ₹496cr ($69m) in Q3. The coronavirus outbreak is hurting China's economy.



Government makes gains worth ₹10,000cr ($1,406m) from advance pricing agreement (APA) programme.

Money Knocking At Your Door: The Income Tax Department has made a windfall gain of ₹10,000cr ($1,406m) from the advance pricing agreement (APA) programme that allows MNCs to negotiate how profit margins for India operations are to be calculated for tax purposes for five years in return for avoiding rigorous scrutiny of transaction details.


Introduced in 2012, the scheme was tweaked in 2015 to allow such negotiated profit margins applicable for the past four years as well, allowing companies tax certainty for a total of nine years. Extending the agreed profit margin for past years has led to many MNCs revising their past year profit margins upwards, as per government sources. Livemint


India's banking sector is stressed and that the Centre is in no position to bail it out, says Nobel Laureate and economist Abhijit Banerjee.

Extra Crunch: Nobel Laureate and economist Abhijit Banerjee at the 13th Jaipur Literature Festival said that India's banking sector is stressed and that the Centre is in no position to bail it out. He added that this would imply a long process of attrition, that's going to be costly.


Read more of his comments on the Indian economy here.



Government to sell 100% stake in Air India; set March 17th as deadline for submission of EoI.

A Suitable Buyer: The Government of India today has once again kicked off the disinvestment process for Air India, after a failed attempt in 2018 and has set March 17th as the deadline for submitting the expression of interest (EoI).


As part of the strategic disinvestment, Air India would also sell 100% stake in low-cost airline Air India Express and 50% shareholding in AISATS - a joint venture between Air India and Singapore Airlines. Management control of the airline would also be transferred to the successful bidder. Moneycontrol


In 2018, the government had offered to sell 76% stake in the national carrier. Unfortunately, this offer saw no takers then. This time around, the deal is much sweeter. For bidders, having full operational freedom without government interference is a huge positive.


However, even under the new terms, valuations remain rather high. In addition to this, experts opine that "one reason why the deal may not go through is that investors may find it difficult to gulp the entire piece at a go. A sale done in parts is more feasible." Here's a look at why Air India's sale may struggle to fly even with better terms.



ICICI Bank Q3 net profit surges 158% to ₹4,146cr ($582m).

Results Out!: ICICI Bank has reported a 158% YoY jump in net profit on the back of one-time gain from Essar Steel resolution, which led to lower provisions.


The private lender's standalone net profit for Q3 stood at ₹4,146cr ($582m) vs ₹1,605cr ($225m) last year. 


Overall asset quality saw an improvement as gross non-performing assets as a percentage of total assets stood at 5.95% at the end of Q3 vs 7.75% during the same period last year.


Net interest income (NII) for the quarter witnessed a 24% YoY increase to ₹8,545cr ($1201m). ET Markets


IndiGo reports 168% rise in consolidated net profit to ₹496cr ($69m) in Q3. 

By Leaps and Bounds: Private carrier IndiGo has reported 168% rise in consolidated net profit to ₹496cr ($69m) in Q3. 


Revenue for the quarter rose 25.5% to ₹9,931.70cr ($1,396m) on 19.3% increase in capacity. Hindu BusinessLine



How did Apple manage to offset threats of a slump with one of the biggest rallies ever?

Jump the Slump: A year ago, Apple's Chief Executive Tim Cook slashed guidance on the back of sluggish iPhone sales and slowing demand. Apple, it seemed, was headed for a slump.


Fast forward to today and the company's share price has more than doubled and it has added a staggering $725m to its value. Currently, it has a market capitalisation of nearly $1.4trn.


A key factor that helped boost the tech giant despite decreased expectations was its ability to offset decreasing iPhone shipments with a growth in sales of smartwatches, AirPods, wireless earbuds and services like music streaming subscriptions and mobile payments.


And now, as Apple prepares to reveal its latest earnings report and unveil its first handsets with 5G wireless technology, analysts expect iPhone shipments to also see growth for the first time since FY2018.


How did Apple manage to beat the bears and will its bullish run continue or end in the near future? Read this article for details.


Hundreds of Amazon employees criticise firm's climate stance.

Taking a Stand: More than 300 Amazon employees have signed a Medium blog post criticising the company for its environmental record, a move that violates Amazon's communications policy and opens the door for the signatories to be possibly fired.


Amazon has long been criticised for its massive carbon footprint, high energy consumption by its cloud computing facilities, greenhouse gas emissions from its logistics network, and providing artificial intelligence capabilities to companies in the oil sector. ET



China dominates India's mobile market, and it may be eyeing automakers next.

From China to Chandni Chowk: 72%. That's the share commanded by Chinese companies in India's smartphone market as of 2019. Xiaomi and BBK Group (which owns OPPO, Vivo, Realme and OnePlus) comprise the lion's share of this market.


And the mobile Sinopshere is only going to expand as these companies invest increasing sums of money to fund their expansion and local rivals (like Micromax, Intex, Lava and Karbonn) watch helplessly.


As the Chinese takeover of the Indian mobile market nears completion, China's companies may now have their eyes set on another market - that of the auto and electric vehicle industry. Click here for details.


The coronavirus outbreak is hurting China's economy.

ICYMI: China is dealing with a coronavirus outbreak that has seen 80 lives lost, 2,800 cases from every province, and 15 cities with a combined population of over 57m people in full or partial lockdown. CNN


This has also hurt the country's economy. Overall travel on Saturday, the first day of the Lunar New Year, a celebration that usually sees brisk travel, dropped 28.8% from a year ago, with air and rail travel plummeting by more than 40%. At the same time, the Government is asking people and businesses to stay at home, major public events have been cancelled, and travel has been restricted. And state funds worth $1.6bn have been issued to control the epidemic. Officials indicated on Sunday that the disease will remain an issue for the near future. CNBC


For more details on what coronaviruses are and why they are dangerous, read our earlier cover note on the subject here.


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