In this briefing:
- Vodafone Idea Ltd- Telco’s Debt Bomb Ticking Fast and Louder
- CES 2020. Compare & Contrast What Intel, AMD & NVIDIA Had To Say
- Can Fin Homes – Mortgage Lending Not Totally Safe, In India
Vodafone Idea (IDEA IN) has been under some significant hardships for quite a while. Since the telecom market disruption caused by Reliance Jio, the company has not been able to walk steadily as it continued reporting operational losses. Further, India’s telecom sector has been facing heavy duress ever since the Hon’ble Supreme Court’s verdict which upheld the definition of Adjusted Gross Revenues (AGR). The adjusted AGR meant that the telecom operators were liable to pay more than INR 1 trillion to the government as revenue dues by January 24.
Lastly, Franklin Templeton’s measure to mark down its exposure to the company’s debt securities to zero shall be a final nail in the coffin.
In the report below, we discuss the highlights and see who faces the maximum heat arising out from the saga.
CES 2020 played out very differently for Intel,AMD and Nvidia. With little in the way of new product launches to announce, Intel emphasised its prowess in the fields of Artificial Intelligence and Autonomous Driving. They did have one significant piece of news however, namely that first silicon on their long-promised discrete graphics product is ready, bad news indeed for NVIDIA.
AMD’s pitch on the other hand was all about new products and roadmaps. The launch of their second generation Zen 7nm mobile processors opens up yet another battleground with an increasingly beleaguered Intel while their latest GPU offering had NVIDIA scrambling to cut the price of their competing part within days.
Remarkably, NVIDIA chose to largely ignore the event, relying instead on partner booths to showcase their products. Here’s a look in more detail at what each company had to say and perhaps more importantly, what they absolutely did not want to talk about at all.
The idea that large corporate loans and especially those related to infrastructure projects, are the main credit risk for India’s banks, may be generally true. But it does not mean that NBFCs or even banks, are not seeing stresses appear in their traditionally stronger loan buckets. Where NBFCs are highly leveraged, it puts this risk into a different perspective, and especially where credit metrics are seeing meaningful deterioration. Can Fin Homes (CANF IN) is one of India’s most leveraged NBFCs, at least out of the largest 20 by assets, where its surge in bad loans, is of particular concern. See our latest report on LIC Housing for further thoughts on the risks here and in that note, with even higher gearing than Can Fin. It is worthwhile remembering, that Canara Bank (CBK IN) last year sought to sell its stake in Can Fin, where reportedly it had 12 bidders in September which fell to 1 bidder by November, and where the bank has just announced – this week – its plan to cancel its planned sell. This can not be a positive sign.
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