Paytm's buyback, Wedding season boost, IRCTC in demand | Oh! What a Week

 Paytm's buyback, Wedding season boost, IRCTC in demand | Oh! What a Week

 Hello Learner! 👋

Oh! What a Week it was… It’s going to be a long Sunday as we all gear for the world cup finals. Tell us which team you’re rooting for and what snacks are going to be on your plate and I might send you a gift hamper to either celebrate the victory or just ease your sorrows.

⚽Okay, with the finale in mind, let’s kick off this week’s newsletter.

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Market Mood This Week

🔻Markets this week were super volatile with bears dominating the session. The negative sentiment was driven by Fed's aggressive stance on inflation and weakness in the global markets. The rupee dropped for the second week straight,

IT, healthcare, auto, banking, capital goods, and consumer durables stocks were the worst hit.

Things to watch out for next week are US GDP data, RBIs meeting, and the IPO market.

Now, here are the 3 most interesting news of the week:

1. 🤫What’s hidden beneath Paytm's share buyback?
2. 🍾Weddings are boosting the economy
3. 🛒IRCTC's offer for sale sees a good response

🤫Beneath Paytm's Share Buyback

Did you hear about Paytm's share buyback? Basically, they are using their own cash to buy back some of their own shares from the market, which can make it seem like the company is doing well and boost the share price. But the thing is, Paytm has been having a tough time recently.

Some investors are worried that instead of using their cash to try and turn things around, Paytm is just trying to put on a good show for shareholders. India's stock market watchdog, SEBI, even told Paytm not to use money from its IPO for the buyback and Paytm promised to use its own cash instead.

But unless the buyback price is higher than the IPO price of ₹2,150 per share — which it isn’t as it’s buying back the shares at a top price of ₹810 per share — it won’t benefit the retail investors. So, it seems like Paytm is trying to make it look like everything is fine when it might not be.

Bottom line

It's been a rough ride for some of these flashy new startups lately. First, Nykaa offered a bonus share deal that seemed a little sketchy, and now Paytm is trying to distract everyone from its recent string of losses with a share buyback.

Some investors may have been drawn to Paytm because of Warren Buffet's involvement, but it's important to watch out for common mistakes when investing in hyped IPO openings like these. Don't get caught up in the hype and end up regretting it later-

🍾Wedding Season Boost

Ugh, it feels like everyone on social media cares these days are showing off their fancy wedding attire and posing with the happy couple. And don't even get me started on all the people who look like they could easily pass for the bride or groom themselves. (Sorry, I'm just feeling a little left out because I didn't get an invitation to any of these weddings!)

On the bright side, at least all these weddings are good for the economy... Right?

The wedding season has led to a 30% increase in sales of things like clothes, jewelry, and food, as well as consumer goods like TVs and refrigerators. Even luxury shopping is on the rise, according to Titan's quarterly numbers, which showed a 2.5X increase in sales in the first quarter compared to pre-pandemic levels.

The wedding industry took a hit during the past two years of Covid, but now it's making a strong comeback with even higher sales than before the pandemic. And the good news is, the wedding season isn't over yet – it's expected to continue until February, with plenty of lucky holidays coming up.

So if you're feeling left out of all the wedding fun, at least you can take comfort in the fact that it's boosting the economy.

🛒IRCTC on Sale

Govt. Is selling its stake in IRCTC through an Offer For Sale (OFS) Route. This is exactly opposite to Paytm’s scenario where the company is buying back its shares. In this case, the govt is taking the OFS route that allows promoters to reduce their holdings in listed companies transparently. These shares sold by the promoters are offered for sale directly to the public through a bidding process.

The government will sell a 5% stake in IRCTC at a floor price of ₹680 per share and is planning to raise around Rs.2720 crores through this offer. Retail investors can apply for IRCTC OFS through their Demat account. Brokers offer options in their apps and websites to place bids.

Why is govt Selling its shares?

The Indian govt. Had set a very ambitious disinvestment target of Rs. 65,000 crores for the current financial year. This move is a part of that target. Disinvestment is done in order to reduce the financial burden on the government, encourage a wider share of ownership, and make operations more efficient. Apart from this, the govt. Has planned to sell its stake in other railway stocks too.

However, this does not mean that the govt. Has lost control over these companies. Even after the OFS offer, they will have a controlling stake of more than 50%.

In essence, disinvestment, unlike privatization, does not take away the control from the govt.

How is IRCTC faring these days?

As for IRCTC, things seem to be going pretty well these days. After a rough patch during the pandemic, they've bounced back with a 42% increase in net profit and a 99% surge in revenue for the quarter ending September 2022 as compared to the same quarter last fiscal. Looks like all those train snacks are paying off! 

🤏One Liners

• Infosys@40: From humble beginnings with just $250 in 1981, Infosys has grown into a multi-billion dollar company with a market cap of $83-$84 billion and over 3.35 lakh employees. Here's a heartwarming interview of NR Narayana Murthy and his wife Sudha Murty.
• Biggest gainer of the year: There's a mining stock in Indonesia that goes by the name of PT Adaro Minerals and is proving to be the world’s best performer with a whopping 1,595% rally.
• US helps Ukraine: The US is planning to send smart-bomb kits to Ukraine that converts unguided aerial munitions into smart bombs, allowing a high degree of precision in attacking Russian ground forces.
• I’m lovin’ it Live: McDonald’s India North and East is setting up a global music platform with music channel MTV to create an international music franchise.
• Qatargate scandal: A corruption scandal involving Eva Kaili, a vice president of the European Parliament, has emerged with allegations that she accepted bribes from Qatar to influence policies in its favor and suppress criticism against it.
• Spot the faker: Here is an interesting list of things that people who pretend to be rich can be seen doing. I'm sure you'll find it relatable.

💎Hidden Gem

Have you seen those vans that transport cash and are always protected? Well, these vans also serve a company that is responsible for cash management operations between banks and ATMs.

The company with the biggest market share in this segment is also a listed company and that company is CMS Info Systems Ltd. — India’s Largest Cash Management Company. They have a 24.7% market share out of the total number of ATMs in India, and a 41.1% market share out of the total number of outsourced ATMs in India. For FY21, the total currency value passing through all their ATMs and retail cash management businesses amounted to ₹9,158.86 billion.

CMP - ₹ 313.6

Market Cap - ₹ 4,831 Cr

5- year Sales growth - 12%

5-year Profit growth - 23%

That’s all for this week, Learner

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Happy Learning!

Manish Thole

Team Alpha2Sigma