Top Business News: US-China Trade Talks End Without A Deal, Trumps Orders Raising Tariffs On All Remaining Imports From China, Etihad airways Submits Bid for Jet Airways, Uber's Shares Fall c. 9% in Debut et al.

US-China trade talks end without a deal. Trump orders raising tariffs on all remaining imports from China. Etihad Airways submits bid to acquire additional minority stake in Jet Airways. NSSO finds GDP new series data faulty; 36% companies under Ministry of Corporate Affairs database wrongly classified. Uber's shares fall nearly 9% in their debut. TCS set to become world’s third-largest IT services company. Apple inches closer to finalizing the location for its first retail store in India. RIL loses ‘most valuable’ tag as it loses INR1L cr in mcap in under 5 days. Thyssenkrupp-Tata Steel deal collapses as European Commission blocks the proposed JV.

 

Moving on to the top Business news of the week.

 

 COMPANIES  


TCS set to become world’s third-largest IT services company. Apple inches closer to finalizing the location for its first retail store in India. RIL loses ‘most valuable’ tag as it loses INR1L cr in mcap in under 5 days. Thyssenkrupp-Tata Steel deal collapses as European Commission blocks the proposed JV. Etihad Airways submits bid to acquire additional minority stake in Jet Airways.


Heavy Weight Champion: Tata Consultancy Services (TCS) is set to become the third-largest software services provider in the world in FY18-19, surpassing DXC Technology, only behind International Business Machines (IBM) and Accenture.


DXC Technology, which was formed by the merger of Computer Sciences Corp. with a division of Hewlett Packard in 2017, needs to clock a 5.06% sequential growth in Q4 to end with $20.91bn in revenue. Most analysts however, believe that it is unlikely that DXC will manage this growth as it declares its fourth-quarter earnings on 23 May.

 

 
To Put Things Into Perspective: TCS grew 9.6%, adding $1.82bn in new business, to end with $20.91bn in revenue in the year ended 31 March.


In the first nine months of FY18-19, TCS generated $15.52bn in revenue, more than the $15.47bn in business done by DXC.

 
We Might Have a Winner Soon: Apple has reportedly shortlisted locations for its first retail store in India, as it seeks to redouble its efforts in the world’s fastest-growing smartphone market.

 
The giant has zeroed in on several upscale sites in Mumbai, and plans to make a final decision in the next few weeks. 


Preferred Choice of Investors: Flexible working space saw a 277% jump in leasing to nearly 3 million sq ft in the first quarter of this calendar year. The first quarter also saw some of the big names in the industry including Ascendas Singbridge, Brigade, and OYO entering the co-working office space market.

 
With a sharp increase in leasing in the shared working space over the last few quarters, co-working is catching up as a preferred asset class for several leading developers and investors. More on this here.

 

New King: Reliance Industries Ltd lost its top position as the country’s most valuable company by market capitalisation on Thursday with Tata Consultancy Services (TCS) regaining the spot for the first time since January 10.
 

The development comes as RIL lost nearly INR1L cr in market value in the past five sessions, as the stock was pulled down c. 11% on back of nervous mood in the market and bearish commentary from some brokerages.
 

Worst Hit: Analysts noted that foreign portfolio selling in the past three days has weighed down the market. Reliance, which has the highest weightage on the Sensex and Nifty50 indices, subsequently, has been one of the worst hit.

 

You Have Hit A Block: Thyssenkrupp-Tata Steel deal collapses as European Commission blocks the proposed joint venture. Tata Steel will now explore new options after the fallout. 
 

Big Plans: Tata Steel and ThyssenKrupp had signed definitive agreements in June 2018 to combine their steel businesses in Europe to create a 50-50 pan European joint venture company which would be the continent's second-largest steel company after Lakshmi Mittal's ArcelorMittal.
 

The Commission opened an "in-depth" investigation into the proposed merger in October last year amid concerns that a deal between the two steel majors may reduce competition in the supply of various high-end steels.
 

Eleventh Hour Bid: Etihad Airways, which holds 24% stake in Jet Airways on Friday submitted a binding bid to acquire additional minority stake in Jet Airways in the bank-led resolution plan. Lenders had put 75% stake of Jet Airways on sale.
 

Conditions Apply: Etihad, which has put several conditions before the lenders including a waiver from making a mandatory open offer, is the only candidate which submitted the binding bid among the four short-listed bidders selected earlier through the Expression of Interest (EoI) process. The others were TPG Capital, Indigo Partners and National Investment & Infrastructure Fund (NIIF).

 
 
 ECONOMY 

NSSO finds GDP new series data faulty; 36% companies under Ministry of Corporate Affairs database wrongly classified. 
 
 
A key database introduced in India’s new GDP series has been found to be riddled with gaps.

 
As per a report published by the National Sample Survey Office, 21% of companies included in a database underlying India’s GDP numbers were “out of coverage”, implying they were no longer operating. Another 12% could not be traced. 
 
 
Recalibrating data of past years using 2011-12 as the base year instead of 2004-05, the Central Statistics Office (CSO) estimated that India's GDP grew by 8.5% in FY2010-11 and not at 10.3% as previously estimated.
 
 
A deep dive into the matter here.
 
 
Bonus: The inside story?of?the decline of a?globally ?renowned statistical system and its effect on Asia’s third largest economy here.
 
 
 EARNINGS 
 

Airtel reports 29% jump in net profit in Q4. SBI reports net profit of INR838cr in Q4. HCL overtakes Wipro to become third-largest IT services firm in India. Disney’s revenue rose to $14.9bn in Q2. Fox 1reports 2% increase in the profits in Q1.


Making Money is an Art: Bharti Airtel posted a 29% jump in net profit to INR107cr, primarily on back of gains from exceptional items.

 


The consolidated revenue also rose by 6% YoY to INR20,602cr vs INR19,394cr last year.


For the entire fiscal, however, Airtel's net profit tanked 62.7% to INR409.5cr compared to INR1,099cr in the previous fiscal.


A Continuing Struggle: Airtel is struggling to add subscribers in a saturated market after Jio managed to lure more than 300 million users over the past three years. The aggressive expansion of Jio with free calls and cheaper data, backed by the deep pockets of Asia’s richest man, was bad news for highly indebted incumbents engaged in a tariff war that had pushed call rates to less than a cent. A deep dive into how Airtel is battling Reliance Jio's onslaught here.

 

  
Missing Expectations: State Bank of India reported net profit of INR838cr in Q4, missing expectations of INR4,840cr, on back of higher provisioning for its bad debt.
 
 
SBI has last year, in the same quarter, posted a loss of INR7,718.17cr.
 
 
Because We Love Data: Gross NPAs declined to 7.53% against 8.7l% in the previous quarter and 10.91% cent in the corresponding quarter of the previous fiscal. Net NPAs during the period came in at 3.01% against 3.95% in the previous quarter and 5.73% in the year-ago quarter.
 
 
All is Well: Disney reported a 3% increase in revenue in Q2 to $14.9bn vs last year. The latest figures have major contribution from the returns of “Captain Marvel,"
 
 
The company also completed its $71bn purchase of most of 21st Century Fox's assets in March.
 
 
More Good News: Fox Corp.’s revenue rose 12% to $2.75bn vs last year, on back of stronger performances in its cable network and broadcast TV segments.
 
 
The company, whose businesses include Fox News; the Fox broadcast network and television stations; and Fox Sports, was spun off from 21st Century Fox and began trading as a separate public company in March. Walt Disney had closed its $71.3bn acquisition of the major entertainment assets of the former 21st Century Fox earlier this year.
 
 
 UBER 
 
Uber's shares fall nearly 9% in their debut.
 
 
A Weird Start: Uber Technologies Inc's shares fell nearly 9% in their debut on May 10.
 
 
The stock's opening at $42 undermined Uber's strategy to price its oversubscribed IPO conservatively at $45 per share to avoid a repeat of rival Lyft Inc's stock market struggles following a strong debut in March.
 
 
The lackluster market response comes perhaps against the backdrop of a spike in trade tensions between the US and China and increased investor skepticism about the company's ability to turn profitable soon enough.
 
 
3 reasons why Uber had such a 'weird' and terrible IPO, according to a portfolio manager would wouldn’t buy the stock here.
 
 
 
 TRADEWARS 

US-China trade talks end without a deal. Trump orders raising tariffs on all remaining imports from China.
 
 
Dead End: US and Chinese trade negotiators come to an end without a deal.
 
 
President Trump said that the newly imposed 25% US tariffs on $200bn in Chinese imports would remain in place pending future negotiations. But he called the talks “candid and constructive” and said his relationship with Chinese President Xi Jinping “remains a very strong one and conversations into the future will continue.”
 
 
Spare No One: As per US Trade Representative Robert Lighthizer, President Donald Trump has ordered his top officials to begin the process to raise tariffs on almost all the imports from China, amounting to about $300bn. This is in addition to the Chinese imports worth $200bn on which Trump increased the import duty from 10% to 25%, beginning Friday.
 

 

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