Teji Mandi: Three things investors should know on February 11, 2021
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More clarity awaited on scrappage policy :

The auto sector is coming out from the prolonged downcycle. And, automakers are banking on the recently announced vehicle scrappage policy to boost sales.

The policy proposes to scrap 20 years old cars and commercial vehicles more than 15 years old. As per an estimate, it could generate fresh demand for around 52 lakh PVs and 37 lakh CVs.

However, there is no detail available about how the vehicle owners will be compensated for scrapping their old vehicles. That creates a major doubt over the success of this policy. As per the industry experts, the policy needs to mention the value that the vehicle owner is going to derive. Unless that is not clear, there is a little chance of vehicles coming for scrapping.

Moody's expects asset quality to stabilize at PSBs :

Global investment banker Moody's is expecting to see the positive impact of economic recovery on PSBs. It expects the stressed asset ratio to stabilize in the public sector banks.

Moody's also suggests that the restructured loan pool is not as large as anticipated. It also credits various government initiatives for curbing the ratio of non-performing loans.

Moody's anticipation appears credible as it has come on the back of the government's statement in Rajya Sabha. The government had declared that the Gross non-performing assets (NPAs) of public sector banks (PSBs) have declined from Rs 8.96 lakh crore in 2018 to Rs 6.09 lakh crore in September 2020. The government proposed bad bank is also expected to take significant stress away from the balance sheets of these banks.

RailTel's IPO :

RailTel Corporation of India has set a price band of Rs 93-94 for its Rs 819-crore initial public offer (IPO). The offer comprises an offer for sale of up to 87,153,369 shares. The government will sell a 27.16% stake in the company through this OFS.

According to the DRHP, 4,33,26,683 shares - or 50% of shares are reserved for qualified institutional buyers (QIBs). Total 1,29,98,006 shares are reserved for HNIs, and 3,03,28,680 for retail investors.

RailTel handles modernizing the existing telecom system for railways. It also operates in creating nationwide broadband and multimedia networks by laying optical fiber cable along railway tracks.

RailTel's IPO is one of the many railway entities in recent years that the government has chosen to privatize. And it contributes to the government's mega divestment plan in its small way.

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Free Press Journal