Reports came out this week that Flipkart is looking to list in the US through a SPAC (special purpose acquisition vehicle). For its owner Walmart, a merger with a SPAC would list the company a lot quicker than trying to list it through an IPO in India or elsewhere. Walmart spent about $16 Bn to buy 77% ownership in Flipkart in the year 2017. Word on the street is that this listing could fetch about $50 Bn in valuation for Flipkart - that would mean a 240% return on investment within 3 years for Walmart. Neat, eh?
IN TODAY'S NEWSLETTER
News in brief
Cover story - Your refund from Makemytrip.com
Quiz, thought for the day
Crypto news, price is right
In case you missed it - Why did the markets crash this week?
MARKET UPDATE (WEEK ON WEEK CHANGE)
Gold (per gram)
NEWS IN BRIEF
IT and ITES companies were in cover pages this week. Cognizant said that it was offering bonuses to employees that are ‘substantially higher than 2019’. Mindtree was upgraded to ‘overweight’ by Financial services provider Morgan Stanley which said that the firm will surprise the street on revenue growth. Wipro, meanwhile, announced that it is about to complete its largest ever acquisition worth Rs.10,500 crore of a London HQ company Capco.
The IPO of Hyderabad based defence, aerospace and nuclear sector equipment manufacturer MTAR technologies received overwhelming response this week – and that is even by current standards. It was oversubscribed 21X on the final day of subscription. Retail investors seemed to be the extremely enthusiastic about it. Their portion was oversubscribed by 10X. At the upper end of the IPO price, its 12-month trailing PE was around 45 while its clients like HAL and BEL are trading at PE ratios of 13 and 20 respectively. Ummm….
Interest rates on home loans went down even more this week to their lowest levels in over 10 years. Loans upto Rs.75 Lakhs could now be availed from SBI & ICICI at 6.70% while Kotak Mahindra which claims to be offering the lowest interest rate in the market is charging 6.65%. Oh, and 100% fee waiver on processing fees too. Home loans, anyone?
Oil prices are trending up and the OPEC countries are thrilled. Why wouldn’t they? They have had a terrible 2020 when prices briefly went down below 0. This week the cartel decided to keep supply in check as the Saudis delivered extra oil cutbacks last month. Brent crude was trading at about $68 dollars on Thursday, well above the $60 level at which point shale oil production in the US becomes profitable. That inevitably means that more supply will kick in from the US.
Two state owned borrowers IRFC corp. and NCD corp. withdrew their bond sales this week as yields surged. The RBI similarly cancelled a government bond sale last month due to pressure on yields. We wrote about this trend of increasing bond yields last week.
GAME : PRICE IS RIGHT
This is the Coasta Victoria, a cruise ship which could take you on a 7 day journey from Mumbai to Maldives. It has 5 restaurants and 10 bars onboard. The featival theatre on the cruise can accommodate 625 people and hosts a number of shows. There is a disco if you feel like dancing, a casino if you feel like gambling, a library if you feel like reading and a shopping centre if you feel like, well, shopping. All the cabins are Italian designed and some even have balconies. Your job now is to guess the price per person for a week long cruise from Mumbai to Mangalore, then to Cochin and finally to Maldives !
In which country is theworld's largest hotel located?
Your refund from Makemytrip.com
When the pandemic started causing ruckus worldwide around March/April of last year, one of the very first industries that felt the pain was travel and tourism. Most others struggled too, but none like tourism. A year later, while much of the rest of the world has learnt to live and cope with the virus, the tourism industry has not.
Few companies had it worse than Airbnb which was almost on the brink of a collapse. Brian Chesky, its CEO, orchestrated a phenomenal turnaround. This article on the Wall Street Journal has the full story.
Airbnb reimbursed almost all of the bookings that had to be cancelled, set up a fund to help struggling hosts and rolled out generous termination support to all employees who were fired. And where did they find the money to do it? Well, they went to the bond market and raised funds at rather high-interest rates. With that money, Airbnb looked after its customers, its suppliers and its employees – extremely tactfully. Chesky turned a nightmare into an extraordinary PR opportunity (Read this letterif you haven’t already) which eventually led to Airbnb’s stock listing at a 113% premium to its IPO price on day 1 of trading. A story almost straight from an unwritten Harvard Business School case study.
Closer to home though, Makemytrip decided that they’d go in exactly the opposite direction. Hit the link to find out more.
The SENSEX and NIFTY dropped as much as 4.2% on Friday’s intra-day trade posting one of their worst single-day losses since March 2020. It wasn’t just an India problem – the decline was global. CSI 300, the Shenzen stock exchange in China, dropped 2.4%, KOSPI (Korean) index was down 2.8% and TAIEX (Taiwan) dropped 3%.
And why? This is why.
10-year government bond yields have been consistently increasing since the beginning of this year. The above chart shoes the trend for Indian government bonds 10Y and US government bonds 10Y.
What does that even mean? Hit the link to read more.
Bitcoin prices dropped by over 20% from its peak levels this week on the back of rising bond yields. Popular media speculated this week that if the slide in equity and other risk trade continues, Bitcoin will continue to drop.
A JP Morgan survey of institutional investors revealed that 58% of investors think that cryptocurrencies are here to stay. But over 78% said that they are not planning on investing in them.
The largest cryptocurrency platform in India WazirX announced this week that trading volume quadrupled in February compared to December. $2.3 Billion in crypto assets were traded in Feb compared to a measly $500 Million in Dec.
ANSWER TO PRICE IS RIGHT
is what it would cost per person to go on a week long cruise on the Coasta Victoria from Mumbai to Maldives. Someday, may be?
THOUGHT FOR THE DAY
We are trying, Steve. We are trying!
ANSWER TO QUIZ
is the country which has the world's largest hotel. Called the First World Hotel, it has 7,351 rooms and is situated in Genting Highlands which also happens to be the place with the casinos and theme parks. I can assure you, they have rooms available if you want to go now 🙂
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