RBI keeps Repo Rate unchanged at 5.15%


Monetary Policy: RBI surprises the market; keeps policy rate unchanged at 5.15%


 RBI’s monetary policy committee (MPC) left the repo rate unchanged at 5.15%. All members voted in favour of keeping rates unchanged. This was the first pause after five consecutive rate cuts this year (135 bps reduction from Feb to Oct’19) as it expects the past monetary easing and measures taken by the government to gradually help in the economic revival.

 The MPC also decided to continue with its “accommodative” stance as long as it is necessary to revive economic growth, while ensuring that CPI inflation remains within the target.

 The MPC recognized that there is space for rate cuts in the future, but given the evolving growth-inflation dynamics, it decided to take a pause at this juncture and maintained that it is prudent to carefully monitor incoming data to gain clarity on the inflation outlook.

 Inflation has increased sharply in the last two months and may stay high for some time. However, core inflation is expected to remain below 4% as per RBI estimates.

 The MPC was of the view that the forthcoming union budget will provide better insight into further measures to be undertaken by the government and their impact on growth.

RBI keeps Repo Rate unchanged at 5.15%

The key highlights of the policy:

 CPI inflation projection has been revised upwards to 5.1–4.7% for the second H2FY20 and 4.0–3.8 % for H1FY21, with risks broadly balanced.

 Real GDP growth for FY20 is revised downwards from 6.1% in the October policy to 5%, with a delay in demand revival being the key downside risk to the GDP.

 Real GDP growth in Q2 was weighed down by a sharp slowdown in gross fixed capital formation (GFCF), cushioned by a jump in government final consumption expenditure (GFCE). Excluding GFCE, GDP growth would have been at 3.1% as per RBI’s assessment.

 RBI expects stronger monetary policy rate transmission under its external benchmarking regime, which was introduced from October 1.


 RBI’s decision to not lower interest rate has come as a surprise and hereon the emphasis will be on transmission of earlier rate cuts. In the growth-inflation tradeoff, the RBI has clearly leaned towards keeping inflation in check. Revised
projections of GDP and CPI inflation seem to be realistic.

 Bond markets had already factored in a rate cut and the yield on the 10-year government bond surged by ~12 basis points to hit 6.58% (one month high) after the monetary policy announcement.

 Investors in short & medium duration funds should continue to hold till the cycle of rate reduction is complete. We recommend investment in high-quality AAA oriented short-term and banking & PSU debt funds. Fresh investments in short to medium term is recommended with a 1-to-3 year investment horizon.

Disclaimer: This document is STRICTLY for authorized recipients only and is prepared for information purposes only. The information provided herein, we believe, is from reliable sources. IndiaNivesh is not liable for the accuracy of the source data as well as the results of the calculations based on the same. We do not claim that the data provided herein is accurate and complete in all respects. This is not an offer or solicitation of any offer to buy or sell securities. No action is intended to be taken by the recipients based on this document. The recipients may take their decisions based on their own judgement and independent advice that they may receive before making any investment or disinvestment decisions. The recipients are advised not to take any decision only on the basis of this document. No portion of this document should be printed, reprinted, redistributed, reproduced, duplicated or sold

Previous Story

NIIT Technologies Limited BuyBack Note

Board of Directors of NIIT Technologies Limited at their meeting have approved the buy-back of up to 19,56,290 fully paid equity shares of a face value of Rs. 10/- each at a price of up to INR 1,725 per share aggregating up to INR 337 Crore.Takeaway: As per shareholding data available in FY 2018-19 annual report shareholders holding less than 500 shares are 2.27 Cr. which is 36.5% of the paid up capital. Assuming 1/3 of this is retail shareholding minimum acceptance ratio comes around 3.86% for retail shareholders*. It may go higher depending upon participation of other shareholders in the buyback.Promoters of the company have expressed their intent to participate in the buyback, which makes risk reward ratio unattractive for retail participation in buyback.*Retail shareholders are classified as the one’s who hold shares of market value upto 2 lakhs on the record date.Other Information about the Buyback•The Entire procedure might take approximate 3 months. •Record date for the buyback is yet to be announced by the companyDisclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing.")

read more

Next Story

Prince Pipes and Fittings Ltd IPO 2019

ISSUE HIGHLIGHTS •Initial public offer of up to 2,80,89,887 equity shares comprising a fresh issue of 1,40,44,944 shares and offer for sale of 1,40,44,944 shares•The objects of the offer:(i)Repayment or prepayment of certain outstanding loans of our company(ii)Financing the project cost towards establishment of a new manufacturing facility, either set up directly or indirectly (through a wholly-owned subsidiary that our company may set up in the future)(iii)Upgradation of equipment at manufacturing facilities(iv)General corporate purposes, subject to the applicable lawsCOMPANY HIGHLIGHTS •Prince Pipes and Fittings (PPF) is recognized as one of the leading polymer pipes and fittings manufacturers in India. PPF markets its products under two brand names: Prince Piping Systems and Trubore.•Due to its comprehensive product range, PPF is positioned as an end-to-end polymer piping systems solution provider.•PPF currently manufactures polymer pipes using four different polymers: UPVC, CPVC, PPR, and HDPE, and fittings using three different polymers: UPVC, CPVC, and PPR•As on October 31, 2019, PPF had a product range of 7,167 SKUs. PPF’s products are used for a variety of applications in plumbing, irrigation, and soil, waste and rain water (SWR) management.•PPF sells its Prince Piping Systems products to distributors, who then resell the products to wholesalers, retailers, and plumbers. As on October 31, 2019, PPF sold its Prince Piping Systems products to 1,151 distributors in India.•PPF sells its Trubore products directly to wholesalers and retailers. As on October 31, 2019, PPF sold its Trubore products to 257 wholesalers and retailers.Manufacturing facilitiesPPF has six strategically located manufacturing plants, which gives it a strong presence in north, west and south India. Athal (Union Territory of Dadra and Nagar Haveli)Dadra (Union Territory of Dadra and Nagar Haveli)Haridwar (Uttarakhand)Chennai (Tamil Nadu)Kolhapur (Maharashtra)Jobner (Rajasthan) The total installed capacity of six plants is 241,211 tonnes per annum as on October 31, 2019. PPF plans to expand the installed capacity at Jobner (Rajasthan) from 6,221 tonnes per annum as on October 31, 2019 to 17,021 tonnes per annum by December 31, 2019 and to 20,909 tonnes per annum by the end of FY20. PPF plans to set up a new manufacturing plant in Sangareddy (Telangana), with a total estimated installed capacity of 51,943 tonnes per annum and plan to commence production in FY21.Financial performanceBalance sheetValuationThe company’s revenue has compounded at an annual rate of around 12% and net profit at 6% over the last three years. At the upper price band, the offer is at a P/E of 23.4X FY19 EPS. Though the company boast of a healthy return ratio ROE being 20.80%, and operating margin at 11.83%.; the concern being declining operating margin, low single digit PAT margin & high sensitivity to raw materials prices. The issue looks fairly priced. However, the possibility of a 15-20% listing gain cannot be ruled out. Disclaimer: This document has been prepared by IndiaNivesh Securities Limited (“INSL”), for use by the recipient as information only and is not for circulation or public distribution. INSL includes subsidiaries, group and associate companies, promoters, employees and affiliates. INSL researches, aggregates and faithfully reproduces information available in public domain and other sources, considered to be reliable and makes them available for the recipient, though its accuracy or completeness has not been verified by INSL independently and cannot be guaranteed. The third party research material included in this document does not represent the views of INSL and/or its officers, employees and the recipient must exercise independent judgement with regard to such content. This document has been published in accordance with the provisions of Regulation 18 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is not to be altered, transmitted, reproduced, copied, redistributed, uploaded or published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from INSL. This document is solely for information purpose and should not to be construed as an offer to sell or the solicitation of an offer to buy any security. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. INSL does not take responsibility thereof. The research analysts of INSL have adhered to the code of conduct under Regulation 24 (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is based on technical and derivative analysis center on studying charts of a stock’s price movement, outstanding positions and trading volume, as opposed to focusing on a company’s fundamentals and, as such, may not match with a report on a company’s fundamentals. Nothing in this document constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or appropriate to recipients’ specific circumstances. INSL does not accept any responsibility or whatever nature for the information, assurances, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this document only. The opinions are subject to change without any notice. INSL directors/employees and its clients may have holdings in the stocks mentioned in the document.This report is based / focused on fundamentals of the Company and forward-looking statements as such, may not match with a report on a company’s technical analysis reportEach of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Dharmesh KantFollowing table contains the disclosure of interest in order to adhere to utmost transparency in the matter: INSL, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. This information is subject to change, as per applicable law, without any prior notice. INSL reserves the right to make modifications and alternations to this statement, as may be required, from time to time. Research Analyst has not served as an officer, director or employee of Subject Company One year Price history of the daily closing price of the securities covered in this note is available at www.nseindia.com and www.economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose name of company in the list browse companies and select 1 year in icon YTD in the price chart) IndiaNivesh Securities Limited Research Analyst SEBI Registration No. INH000000511 Corporate Office: Lodha Supremus, 17th Floor, Senapati Bapat Marg, Lower Parel (West), Mumbai - 400 013. Registered Office: 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai - 400 007. Tel (Board): 022 6240 6240 | Fax 022 6240 6241 E-mail: research@indianivesh.in | Website: www.indianivesh.in)

read more