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<ul><li>The Board of Directors at one of India's top state-owned banks has decided to raise over $1.7 billion from the market.</li><li>The fund raising will include qualified institutional placement to shore up tier-I capital. </li><li>The decision is subject to regulatory approvals.</li></ul>Bank of Baroda's Board of Directors have approved a plan to raise ₹13,500 crore, over $1.7 bilion, from the market to shore up its coffers as the coronavirus pandemic has brought the economy to a standstill. This will be the breakup of the fund raising: <table style="width: 284pt;"> </colgroup> <tbody><tr> <td class="xl63" style="height:15.75pt;width:210pt">Common equity capital including QIP</td> <td class="xl64" style="border-left-width: initial; border-left-style: none; width: 74pt;">₹9,000 crore</td> </tr> <tr> <td class="xl63" style="height: 15.75pt; border-top-width: initial; border-top-style: none;">Fund raising with interchangeability option</td> <td class="xl64" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">₹4,500 crore</td> </tr></tbody></table> This will be subject to applicable statutory 1 regulatory approvals, the company statement added. The decision has come in on a day that the financial stocks were battered in trade. The <keyword id="722345" type="COMPANY" weightage="20" keywordseo="Nifty-bank">Nifty Bank</keyword> index slumped over 3% on Friday (April 24). These were the top ten losers among banking stocks in trade today. <table style="width: 179pt;"> </colgroup> <tbody><tr> <td class="xl65" style="height:15.0pt;width:131pt">IDFC First Bank</td> <td class="xl66" style="border-left-width: initial; border-left-style: none; width: 48pt;">-6.33%</td> </tr> <tr> <td class="xl65" style="height: 15pt; border-top-width: initial; border-top-style: none;">IndusInd Bank</td> <td class="xl66" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-5.60%</td> </tr> <tr> <td class="xl65" style="height: 15pt; border-top-width: initial; border-top-style: none;">Axis Bank</td> <td class="xl66" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-5.59%</td> </tr> <tr> <td class="xl65" style="height: 15pt; border-top-width: initial; border-top-style: none;">ICICI Bank</td> <td class="xl66" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-4.50%</td> </tr> <tr> <td class="xl65" style="height: 15pt; border-top-width: initial; border-top-style: none;">Federal Bank</td> <td class="xl66" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-4.40%</td> </tr> <tr> <td class="xl65" style="height: 15pt; border-top-width: initial; border-top-style: none;">Bank of Baroda</td> <td class="xl66" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-4.23%</td> </tr> <tr> <td class="xl65" style="height: 15pt; border-top-width: initial; border-top-style: none;">SBI</td> <td class="xl66" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-3.50%</td> </tr> <tr> <td class="xl65" style="height: 15pt; border-top-width: initial; border-top-style: none;">PNB</td> <td class="xl66" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">3.04%</td> </tr> <tr> <td class="xl65" style="height: 15pt; border-top-width: initial; border-top-style: none;">HDFC Bank</td> <td class="xl66" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-1.88%</td> </tr> <tr> <td class="xl65" style="height: 15pt; border-top-width: initial; border-top-style: none;">Bandhan Bank</td> <td class="xl66" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">-1.02%</td> </tr></tbody></table> The prospects for India's financial firms is going from bad to worse even as the economy is getting reopened slowly. "Lower credit offtake and significantly higher credit cost for FY21/FY22 have led to FY21E earnings cuts of 9-70% for financials we cover, with diversified financiers impacted the most. Subsequently, we lower our target price (for bank stocks) by 32% on average," BNP Paribas said in a report last week titled 'Down but not out". SEE ALSO: <a href="https://www.businessinsider.in/business/news/icici-bank-shares-extend-losses-fall-nearly-3-pc-on-exposure-to-singapore-oil-trading-firm/articleshow/75286422.cms" data-type="tilCustomLink" target="_blank">ICICI Bank shares fall 3% after its admits to a $100 million exposure to Singapore trading firm</a> <a href="https://www.businessinsider.in/stock-market/markets/news/goldman-sach-bought-indusind-shares-after-the-stock-price-nearly-doubled-in-13-trading-sessions/articleshow/75176481.cms" data-type="tilCustomLink" target="_blank">Goldman Sachs bought IndusInd shares after the stock price nearly doubled in 13 trading sessions</a> <a class="in-cell-link" href="https://www.businessinsider.in/finance/news/how-to-check-account-balance-in-bank-of-baroda/articleshow/74119351.cms" target="_blank">How to check account balance of bank of baroda</a>

Bank of Baroda decides to raise ₹13,500 crore from the market on a day that financial stocks get battered

<ul><li>At 7:45 am, the SGX Nifty was trading flat, indicating a subdued start for Nifty50.</li><li>Here’s a list of stocks to watch for in trade today. </li><li><a href="https://www.businessinsider.in/">Check out the latest news and updates on Business Insider.</a> </li></ul>Indian stock-market indices are likely to open on a tepid note on Friday, led by mixed cues from the global markets. At 7:45 am, the SGX Nifty was trading flat, indicating a subdued start for Nifty50. The US stocks closed mixed on Thursday amid falling jobless claims and new hopes for a stimulus deal. The Dow Jones Industrial Average closed 0.29% higher, and the S&amp;P 500 was down 2.29 points. These are the stocks to watch out for during the trading session today: IndiGo and SpiceJet The shares of IndiGo and SpiceJet will be in focus during the trade after the Aviation Ministry increased the cap on domestic flight capacity of airlines from 70% to <a href="https://www.businessinsider.in/india/news/india-allows-domestic-airlines-to-operate-at-80-of-pre-covid-capacity/articleshow/79546855.cms">80% of pre-Covid levels</a>. The shares of IndiGo ended 4% higher on Thursday, whereas SpiceJet gained 8%. SBI SBI’s mobile application<a href="https://www.businessinsider.in/tech/news/sbis-mobile-banking-app-is-down-for-the-third-time-in-last-30-days/articleshow/79548953.cms"> YONO was impacted due to a system outage</a> last evening. This was the third time in 30 days. The shares of State Bank of India ended 4% higher on Thursday. Bank of Baroda, Bank of India, State Bank of India and Punjab National Bank Bank of Baroda, Bank of India, State Bank of India and Punjab National Bank will be in focus during the trade after Fitch affirmed IDR rating at ‘BBB-’, with a Negative outlook. The shares of Bank of Baroda, Bank of India, and Punjab National Bank ended 8%, 2%, and 5% higher on Thursday, respectively. Granules India Drug firm Granules India said its wholly-owned foreign subsidiary, Granules Pharmaceuticals Inc, has received approval from the US health regulator for its abbreviated new drug application (ANDA) for Penicillamine capsules USP, 250 mg. The drug is used for the treatment of Wilson’s disease and cystinuria. The shares of Granules India ended 0.73% lower on Thursday. NMDC The Karnataka government has issued orders allowing iron ore mining to be resumed in Donimalai mines by NMDC. The shares of NMDC ended 2% higher on Thursday. Bharti Airtel, Vodafone-Idea, RIL Bharti Airtel added 3.77 million new customers in September while Reliance Jio added 1.46 million. Vodafone Idea lost nearly 4.65 million subscribers. The shares of Vodafone-Idea and RIL ended flat on Thursday, whereas Bharti Airtel was down 2%. HDFC Life Insurance The<a href="https://economictimes.indiatimes.com/markets/stocks/news/standard-life-aberdeen-sells-1-37-stake-in-hdfc-life-for-rs-1703-cr/articleshow/79550122.cms"> reports indicate</a> that the UK-based Standard Life Aberdeen has sold 1.37% stake in HDFC Life Insurance Company for ₹1,703.2 crore. The shares of HDFC Life Insurance ended 2% higher on Thursday. Mindspace Business Parks REIT The board of Mindspace Business Parks REIT will meet on December 8 to consider fundraising up to ₹200 crore via debentures on a private placement basis. The shares of Mindspace Business Parks REIT ended 1% higher on Thursday. Orient Cement Orient Cement entered into a share purchase agreement to acquire 26% stake in AMPSolar Systems to put up a solar power plant with a capacity of 13.5 MW, under the captive scheme. The shares of Orient Cement ended 0.45% lower on Thursday. SEE ALSO: <a href="https://www.businessinsider.in/tech/news/a-coordinated-global-network-of-hackers-tried-to-break-into-the-covid-19-cold-chain-which-transports-vaccines-at-94-degrees-fahrenheit/articleshow/79549902.cms" data-type="tilCustomLink">A coordinated, global network of hackers tried to break into the COVID-19 'cold chain,' which transports vaccines at -94 degrees Fahrenheit</a> <a href="https://www.businessinsider.in/tech/news/sbis-mobile-banking-app-is-down-for-the-third-time-in-last-30-days/articleshow/79548953.cms" data-type="tilCustomLink">SBI’s mobile banking app is down for the third time in 30 days — digital services take a hit for the 25th time this year</a>

Top stocks to watch — RIL, Airtel, IndiGo, SpiceJet, SBI, Bank of Baroda, Vodafone-Idea, Granules India, and others

<ul><li><keyword id="36838" type="COMPANY" weightage="20" keywordseo="indian-banks">Indian banks</keyword> on the hunt for capital having raised $7 billion so far with plans to bring in another $7 billion in the coming days. </li><li>Analysts estimate that in the worst-case scenario, Indian banks will needs nearly three-time that amount. </li><li>The level of <keyword id="142154" type="PERSON" weightage="20" keywordseo="bad-loans">bad loans</keyword> in the Indian banking industry is expected to increase once the <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword>'s (RBI) moratorium comes to an end on August 31.</li></ul>Banks in India have raised around ₹52 crore ($7 billion) in funds so far and have plans to raise another ₹52 crore in the coming days. Public and private banks alike are shoring up capital as the economy fears a fresh cycle of bad loans resulting from the coronavirus pandemic. However, analysts have earlier estimated that the true requirement for banks if things go south may actually be <a href="https://economictimes.indiatimes.com/news/economy/policy/indian-banks-may-need-20-50-bn-capital-over-next-1-2-years-as-bad-loans-set-to-rise/articleshow/76043255.cms#:~:text=Fitch%20Ratings%20has%20pegged%20the,banking%20sector%20at%20%2450%20billion.&amp;text=Indian%20banks%20may%20need%20to,brokerages%20and%20rating%20agencies%20believe.">up to $50 billion</a> — more than three times what’s currently on the docket. <div type="Article" hostid="261" msid="76054599" title="Indian lenders like SBI, Axis Bank and others need $20 billion⁠ in capital— most of it will go into filling up NPA holes" mstype="2" mssubtype="0"></div> “All Indian banks, including private-sector ones, will face capital erosion in the high-stress scenario envisaged by the rating agency, but PSBs are the most vulnerable,” said a report by Fitch Ratings dated July 28. Funds raised by Indian banks so far: <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Funds </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fundraising method </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ICICI Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 15,000 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">QIP </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Yes Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 15,000 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FPO </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Axis Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 10,000 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">QIP’ </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Kotak Mahindra Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 7,422 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">QIP </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">IndusInd Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 3,288 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Preferential issue </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">IDFC First Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 2,000 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Preferential issue </td></tr></tbody></table> Funds to be raised in the future by Indian banks: <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Funds </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fundraising method </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">State Bank of India </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 20,000 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Equity </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bank of Baroda </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 13,500 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Equity and debt </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Canara Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 8,000 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Equity and debt </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">PNB </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 7,000 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Equity </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Federal Bank </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹ 4,000 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Equity </td></tr></tbody></table> Why do Indian banks need capital? The Reserve Bank of India (RBI) may have delayed the onslaught of bad loans by putting a six-month moratorium on loan repayments in place, but that is set to end on August 31. The more bad loans the bank has, the more capital it will need to cover the risk. “The levels of NPA will be unprecedented six months from now,” said former RBI governor Raghuram Rajan in July. Every bank takes in deposits but only makes money by giving out loans through interest. Loans come with a certain amount of risk, which is why banks have to keep some amount of money in the kitty to cover the risk. The level of capital that is required depends on the classification of the loan. When it comes to non-performing assets (<keyword id="127693" type="ORGANIZATION" weightage="20" keywordseo="NPAs">NPAs</keyword>), the provisioning requirement balloons to 15% as per RBI’s guidelines. So, the more bad loans there are, the more money the bank needs to have in liquid form. While that may sound simple enough, the problem lies in the fact that provisions put aside to maintain the capital adequacy ratio of the bank can’t be given out at loans. This restricts the bank’s ability to make more money. Furthermore, if bad loans cross a certain threshold, banks may not have enough capital to cover the minimum risk requirement. The RBI’s own stress tests found that the gross ratio of bad loans may jump from 8.5% as of March 2020 to anywhere between 12.5% to 14.7% in the next nine months. On the flip side, if all goes well, Indian banks will have enough in their coffers to put new growth plans into play. Last week, during the Monetary Policy Meeting, governor Shaktikanta Das also addressed the industry’s call for a one-time restructuring of all loans under an Expert Committee that will be led by KV Kamath that may help keep bad loans at bay. It’s not just Indian banks but banks around the world that are hungry for capital right now. In the US, the <a href="https://www.nasdaq.com/articles/7-u.s.-banks-that-will-need-to-hold-more-regulatory-capital-2020-08-12">Federal Reserve</a> has increased capital requirements for large banks on August 12 so that they have enough of a buffer to absorb any significant losses. Federal Reserve Bank of Minneapolis President <a href="https://twitter.com/neelkashkari/status/1283425495086968832">Neel Kashkari</a> believes that US banks will need at least $200 billion in capital to survive the economic downturn. SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/news/bad-loans-in-india-to-get-1-5-times-bigger-this-year/articleshow/77147120.cms">India's pile of bad loans could be at least 1.5 times bigger in the next 9 months</a> <a href="https://www.businessinsider.in/finance/news/indian-banks-earn-3-1-billion-with-rbi-instead-of-giving-loans-to-businesses-despite-repo-rate-cut/articleshow/76000355.cms">Indian banks have made $3.1 billion just by parking funds with the RBI — instead of giving them out as loans</a>

SBI, ICICI Bank, Axis, Kotak and others have plans to raise $14 billion — but if things go haywire, they could need three times more

<ul><li>India’s upcoming <keyword id="6358021" type="ORGANIZATION" weightage="20" keywordseo="budget">budget</keyword> may set out a framework for setting up a <keyword id="6605010" type="UNKNOWN" weightage="20" keywordseo="bad-bank">bad bank</keyword> to handle the expected influx of bad loans post-pandemic.</li><li>According to the <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (<keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword>), gross non-performing assets (NPAs) could balloon to 14.8% by September under the worst-case scenario.</li><li>A bad bank would allow regular banks to sell their bad loans and focus on bringing in new business.</li></ul>India’s government owned banks like State Bank of India, Punjab National Bank and Bank of Baroda have a huge amount of bad loans. Anywhere from 16.2% to 17.6% of all the money that these public sector banks have lent are unlikely to return or are under stress. This may only get worse and which is why the proposal for a bad bank⁠, which will absorb all these sour loans, is back on the table ahead of the Union <keyword id="8420431" type="UNKNOWN" weightage="20" keywordseo="budget-2021">Budget 2021</keyword> scheduled on February 1. Even the RBI Governor Shaktikanta Das recently <a href="https://indianexpress.com/article/business/economy/shaktikanta-das-rbi-bad-loan-npas-banking-sector-7149385/">indicated </a>that the central bank is open to the idea of creating a bad bank. “If there’s a proposal to set up a bad bank, the RBI will look at it. We have regulatory guidelines for asset reconstruction companies,” Das said speaking at an event on January 16. <cmsannotation type="cmsannotation" annotationid="What is a bad bank?" comment="subhead" text="What is a bad bank?">What is a bad bank? </cmsannotation> If a bad bank is set up in the upcoming budget, it will have the power to purchase bad loans from banks at the market price. It acts as an aggregator of all the stressed assets in the banking system. This will allow the banks to clear their balance sheets and improve their fundraising capabilities. While the bad bank focuses on the resolution of bad loans, regular banks will be able to focus on bringing in new business. The Finance Ministry has <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/bad-banks-plan-back-on-table-to-tackle-npas/articleshow/80143468.cms?from=mdr">reportedly</a> reached out to stakeholders for inputs on the likely framework. <div type="image" title="Indian banks" msid="80343116" hostid="261"></div> <cmsannotation type="cmsannotation" annotationid="RBI itself is fearing that the amount of loans that may go bad is likely to rise" comment="subhead" text="RBI itself is fearing that the amount of loans that may go bad is likely to rise">RBI itself is fearing that the amount of loans that may go bad is likely to rise</cmsannotation> Indian banks are on the cusp of a fresh cycle of bad loans, and a setting up of a bad bank may be on the docket for Nirmala Sitharma’s ‘never-seen-before’ 2021 Budget. The Reserve Bank of India (RBI) has <a href="https://www.businessinsider.in/finance/banks/news/rbi-estimates-bad-loans-could-be-as-high-as-14-8-september-2021-in-the-worst-case-scenario/articleshow/80225314.cms">projected </a>that bad loans may hit 14.8% by September under the worst-case scenario — nearly double from the current 8.5%. <div type="image" title="RBI projected GNPA" msid="80343148" hostid="261"></div> The government is mulling the proposal of creating a bad bank to avoid excessive dependence on capital infusion. Thanks to the series of <a href="https://www.businessinsider.in/policy/economy/news/rbi-is-using-lessons-from-2008-financial-crisis-to-handle-the-covid-19-lockdown-effect-on-the-economy/articleshow/75039749.cms">measures</a> announced by the government as part of its ₹20 lakh crore stimulus package, and liquidity measures from the RBI through the pandemic, the banking system is flooded with excess liquidity right now. However, that may no longer be the case as the business environment gets tougher, while the demand for credit continues to stagnate, and bad loans continue to increase. <div type="image" title="RBI growth projections for key economies" msid="80343215" hostid="261"></div> This has implications for the banking sector as its balance sheet is linked with corporate and household sector vulnerabilities "We are looking at various options, including the option you mentioned [of a bad bank], and it is still in the works... The RBI has been asking us, and we ourselves also feel that we need to recapitalise. We have recapitalised to a large extent and this year too, we have kept some money for recapitalisation so that commitment is there," the Department of Economic Affairs (DEA) Secretary Tarun Bajaj <a href="https://www.business-standard.com/article/economy-policy/govt-exploring-setting-up-bad-bank-all-other-options-dea-secretary-120121801397_1.html">told</a> the Confederation of Indian Industries (CII) in December. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bank group </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Liquidity coverage ratio as of 30 September 2020 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Public sector banks </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">181.83% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Private sector banks </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">148.35% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Foreign banks </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">201.32% </td></tr></tbody></table>Source: RBI Financial Stability Report <cmsannotation type="cmsannotation" annotationid="One bad bank or many" comment="subhead" text="One bad bank or many">One bad bank or many </cmsannotation> While the privatisation of banks — or at least the reduction of government stake in public banks — is currently on the cards as well, <a href="https://www.financialexpress.com/opinion/bad-bank-should-india-have-one/1980470/">experts believe</a> that an Indian bad bank should be spearheaded by the government until there’s a change in the status quo. Meanwhile, the industry body CII, has recommended that the government create multiple bad banks by allowing Alternate Investment Funds (AIFs) to buy bad loans. "Hitherto the NPAs have largely been sold to asset Reconstruction Companies (ARCs) only and mostly not for cash consideration which means that the sale price was not a ‘true sale’ since ARCs could pay through 'security receipts',” explained the Pre-Budget Memorandum 2021-22. Security receipts are an instrument where the payment is made only upon recovery of some money — a sort of participatory note. According to the RBI, outstanding security receipts currently stand at around ₹1.46 lakh crore and recovery is a mere 10-12%. Without recovery, there isn’t any cash going back to the banks. "The need of the hour is to increase avenues for ‘cash realisation’ against sale of loans and to increase avenues for capital to compete for such loans to maximize realisation for banks,” said the apex industry body. It proposes allowing AIFs and foreign portfolio investors (FPIs) to purchase bad loans and make the market more competitive with the asset reconstruction companies (ARCs). <cmsannotation type="cmsannotation" annotationid="Bad loans during COVID-19 and its aftermath" comment="subhead" text="Bad loans during COVID-19 and its aftermath">Bad loans during COVID-19 and its aftermath</cmsannotation> The stock market may have recovered but the true impact of COVID-19 on businesses is yet to emerge. For now, the onslaught of non-performing assets (NPAs) has been kept at bay due to the RBI’s <a href="https://www.businessinsider.in/personal-finance/news/interest-payments-on-home-loans-car-loans-and-others-extended-by-another-three-months-by-rbi/articleshow/75884387.cms">loan moratorium</a>, which was in place till 31 August 2020. The Supreme Court further put a stay in place to hear petitions requesting the extension of moratorium, compound interest accrued, possible restructuring and other matters with respect to issue. The apex court is <a href="https://www.businessinsider.in/finance/banks/news/supreme-court-reserves-judgement-on-loan-moratorium-case/articleshow/79777686.cms">yet to announce its verdict</a>. <div type="image" title="Quarterly slippage ratio" msid="80343230" hostid="261"></div> The timing seems right for the Finance Ministry to consider the creation of a ‘bad bank’ with the Indian banking system gearing up to deal with a spike in bad loans and assess the true extent of stressed assets post the pandemic. Sitharaman has a tall order to fill when it comes to banking reforms during this year’s budget with privatisation of banks and creating demand for credit also on the docket. SEE ALSO: <a href="https://www.businessinsider.in/budget/news/indian-government-budget-dilemma-curb-the-sale-of-cigarettes-or-let-the-over-12-billion-tobacco-industry-provide-the-much-needed-cash/articleshow/80340422.cms">Indian government’s budget dilemma – curb the sale of cigarettes or let the over $12 billion tobacco industry provide the much needed cash</a>

What is a bad bank and why are some people pushing for it ahead of Budget 2021?

Gautam Adani in striking distance of entering the top 20 richest club once again

<ul><li>The IPO bonanza continues with more companies lining up in the coming week — Mazagon Dock Shipbuilders, UTI Asset Management and Likhitha Infrastructure. </li><li>The grey market premium of all these upcoming IPOs may have taken a hit due to the recent market weakness, but that isn’t stopping these companies from launching their IPOs</li><li>Here’s everything you need to know about Mazagon Dock Shipbuilders, UTI Asset Management, and Likhitha Infrastructure IPOs.</li></ul>After five successful fundraisings in the past one month, the IPO bonanza continues with more companies in line — Mazagon Dock Shipbuilders, UTI Asset Management, and Likhitha Infrastructure Limited. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">IPO Pipeline </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Opens On </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Closes On </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Mazagon Dock Shipbuilders </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">September 29 </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">October 1 </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">UTI Asset Management </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">September 29 </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">October 1 </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Likhitha Infrastructure Limited </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">September 29 </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">October 1 </td></tr></tbody></table> These IPOs are coming at a time when the markets are flush with liquidity, and the preceding issues like Happiest Minds Tech, Route Mobile, CAMS have been oversubscribed at record levels. Although the grey market premium of all these upcoming IPOs may have taken a hit due to the recent market weakness. <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Upcoming IPO </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Grey Market Premium (per share) </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">UTI Asset Management </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹140-150 </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Likhitha Infrastructure Limited </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> ₹15-20 </td></tr><tr><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Mazagon Dock Shipbuilders </td><td style="border-left:solid #000000 0.9907650000000001pt;border-right:solid #000000 0.9907650000000001pt;border-bottom:solid #000000 0.9907650000000001pt;border-top:solid #000000 0.9907650000000001pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹80-90 </td></tr></tbody></table>*As of Sept 25. Here’s everything you need to know about these IPOs: UTI Asset Management ₹2,160 crore IPO Mutual fund manager UTI Asset Management Company (AMC) ₹2,160 crore IPO will open for public subscription on September 29. The company has fixed a price band of ₹552-554 per share for its IPO that will close on October 1. The company said the bidding for anchor investors would open on September 28. The UTI Asset Management Company will compete against its likes — Nippon Life India Asset Management and HDFC AMC on the stock exchanges. The shares of the UTI AMC will list on both the stock exchanges, BSE and NSE. The 17-year old company has some marquee names in its shareholder’s list, such as— SBI, LIC, Punjab National Bank, Bank of Baroda, and the US-based T Rowe Price. Mazagon Dock Shipbuilders ₹444 crore IPO The state-owned defence firm Mazagon Dock Shipbuilders ₹444 crore initial public offering will open for bidding on September 29. The company has set the price band for the at ₹135-145 per share. The issue will close for subscription on October 1, the company said in a virtual press conference. The shares of the Mazagon Dock Shipbuilders are proposed to be listed on both the stock exchanges, BSE and NSE. Mazagon Dock Shipbuilders is engaged in the construction and repair of warships and submarines for use by the Indian Navy and other vessels for commercial clients. Likhitha Infrastructure Limited ₹61.2 crore IPO A Hyderabad-headquartered oil and gas pipeline infrastructure service provider Likhitha Infrastructure ₹61.2 crore IPO will hit the primary market on September 29. The company has set the price band for IPO at ₹117-120, and the public offer will remain open until October 1. The company has a strong client base such as ONGC, HCG, Indian Oil, GAIL, among others, to name a few. The minimum bid for the IPO has been set at a lot of 125 shares or in multiples thereof. The company has a strong financial record with its revenue growing at a compound annual growth rate of 22% and the profit at 41% during FY18-FY20. Likhitha Infrastructure Limited order book as of July was approximately ₹950 crore. SEE ALSO: <a href="https://www.businessinsider.in/careers/news/interview-cams-ceo-says-they-are-actively-hiring-through-the-pandemic/articleshow/78269110.cms" data-type="tilCustomLink">INTERVIEW: CAMS CEO says they are actively hiring through the pandemic</a> <a href="https://www.businessinsider.in/stock-market/news/angel-broking-600-crore-ipo-opens-today-heres-what-works-for-it-and-what-doesnt/articleshow/78248335.cms" data-type="tilCustomLink">Angel Broking ₹600 crore IPO: Here’s what works for it and what doesn’t</a>

Three more IPOs to hit the Indian market next week —  Mazagon Dock Shipbuilders, UTI AMC and Likhitha Infrastructure

<ul><li>Chairman <keyword id="3820" type="PERSON" weightage="20" keywordseo="Mukesh-Ambani">Mukesh Ambani</keyword>, with a net worth of $72.4 billion, is leaving no stone unturned ⁠— whether it is in adding physical stores or technological might for <keyword id="8506093" type="UNKNOWN" weightage="20" keywordseo="Jiomart">JioMart</keyword>.</li><li>The RIL stock has gained 25.8% this year so far , analysts expect a lot more from RIL in the next few months.</li><li>While the big-ticket fundraising by Reliance <keyword id="2003276" type="PERSON" weightage="20" keywordseo="Jio">Jio</keyword> has caught the market’s fancy, the next round of unlocking potential value is likely to come from the retail vertical set for an IPO.</li><li>While a deal to buy out Kishore Biyani’s Future Retail is being worked out, here’s a look at the size and scope of Ambani’s existing retail unit, which is a giant in its own right. </li><li>Check out the latest news and updates on <a href="https://www.businessinsider.in/">Business Insider.</a></li></ul>According to Reliance Industries’ annual report, the retail vertical sold 20 million electronic units, 160 million garments, 2.6 billion units of grocery among other things last financial year. Reliance is already the country’s largest retail chain but Chairman Mukesh Ambani ⁠— with a net worth of $72.4 billion ⁠— wants more and he is leaving no stone unturned, whether it is in adding physical stores or technological might (including the reach and scale of WhatsApp) for its e-commerce platform JioMart. While the big-ticket fundraising by Reliance Jio has caught the market’s fancy, the next round of unlocking potential value is likely to come from the retail vertical, which is also headed for an initial public offering (IPO) soon. While a deal to buy out Kishore Biyani’s struggling Future Retail is being worked out, here’s a look at the size and scope of Ambani’s existing retail unit, which is a giant in its own right. To start with <keyword id="58448" type="COMPANY" weightage="20" keywordseo="Reliance-Retail">Reliance Retail</keyword> employs nearly 1.4 lakh people, and has almost 11,800 stores all across India selling everything from food and grocery, consumer electronics, to fashion and lifestyle. Adding Future Retail’s stores would straight away add 1,500 outlets to its network. Profit is a habit for Ambani Reliance Retail revenue and profit is twice as much as it was three years ago. In the last quarter, even with March being a tepid month, Reliance Retail posted an operating profit of ₹2,062 crore, up by 19.8% from the same quarter the previous year. <div type="image" title="retail charts." msid="76954033" hostid="261"></div> In the full year ending March 2020, it has added 1,500 stores and 30% to its total retail space. Reliance Retail saw 640 million footfalls during the year, and has a 125 million registered customer base, up 40% year-on-year. According to the report, the retail venture on an average adds three stores per day. <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Segment </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Brands </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Margin (Source: BOB Capital Markets) </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Food and Grocery </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Reliance Fresh, Reliance Smart and Reliance Market </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.5% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Consumer electronics </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Reliance Digital Jio stores </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.2% 2.2% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fashion and lifestyle </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Reliance Trends, Project Eve, Reliance Footwear, Reliance Jewels and AJIO.com. </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">24% </td></tr></tbody></table> Consumer electronics has been the big win for retail so far <div type="image" title="reliance revenue chart." msid="76954052" hostid="261"></div> 61% of the retail revenue comes from consumer electronics. “Reliance Retail, being the master distributor for Jio’s telecom services, is a strategically important entity. With 8,100+ Jio stores, the retail business is cleverly capitalising on Jio’s technology platform and moving between brick-and-mortar stores and the e-commerce business,” said a Bank of Baroda Capital Markets report. Essentially, Reliance Retail is not just selling technology, it is also using tech to boost its business Reliance is betting on e-commerce with its much talked about venture JioMart, which currently works on the offline-to-online model with kirana stores and is present across 200 cities. “The roadmap to this journey requires Reliance Retail to establish a complex yet robust physical and digital pan-India infrastructure and neatly weave this network to a smooth, sound and responsive operating system, which will enable Reliance Retail to serve consumers in partnership with traditional retailers,” Reliance’s annual report said. Facebook’s $5.7 billion investment in the company has meant that Reliance Retail and WhatsApp are now in a commercial partnership to accelerate JioMart’s growth. Reliance's various startup investments have been boosting its technological prowess like Haptik in the conversational AI (Artificial Intelligence) space, Fynd in the e-commerce sector, among various other bets in education, cloud, robotics, SaaS (Sofware as a service) and more. All this will take Reliance deep inside India’s heartland Reliance Retail already has extended beyond the big cities of India. “Under the Trends umbrella, retail operates Trends Small Town (a concept addressed to tier-3 and 4 towns). The concept has been well received by customers and has scaled up to 240 stores across 200+ towns in a short time,” said the report. And the tech investments may help it go far deeper and grow much larger. “We expect revenues to surge to ₹3.4 trillion by FY23 (33% of which will come from connectivity),” said the Bank of Baroda Capital Markets report from July. Post-covid retail All eyes will be on retail on the April-June 2020 earnings, as the coronavirus lockdown would have impacted the sales. But Reliance Retail with Mukesh Ambani’s deep pockets is likely to fare better than peers. “Business is re-imagining the store in a post COVID-19 world and reworking its interactions with customers when they come back, how they come back, their shopping journey, checkout and so on. Taking a 360 degree view of the customers, business is strengthening digital commerce and omni-channel capabilities, bolstering its supply chain / fulfillment capacity to handle 10x home delivery,” said Reliance in its annual report. The investments into the company and the planning for a future with new rules of the game have helped the stock <div type="image" title="RIL share (1)." msid="76954116" hostid="261"></div> While the stock has gained 25.8% this year so far ⁠— at a time when the Sensex has fallen 12.5% ⁠— analysts expect a lot more from RIL in the next few months <table style="border-width: initial; border-style: none; width: 468pt; table-layout: fixed;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Broking firm </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Target price </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Morgan Stanley </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1801 </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Angel Broking </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹1937 </td></tr></tbody></table> SEE ALSO: <a href="https://www.businessinsider.in/business/news/mukesh-ambani-jio-fiber-and-reliance-invit-set-to-raise-over-1-billion-from-abu-dhabi-and-saudi-sovereign-funds-for/articleshow/76888352.cms">Mukesh Ambani is not done – Jio Fiber to get over $1 billion as Abu Dhabi and Saudi sovereign funds are set to invest in Reliance InvIT</a> <a href="https://www.businessinsider.in/tech/news/google-ceo-sundar-pichai-announces-10-billion-investment-in-india/articleshow/76937372.cms">Google will invest $10 billion in India, as CEO Sundar Pichai says India will lead the next wave of innovation</a>

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