Grasim to enter paint business, RR Kabel IPO fully subscribed & more

NIFTY50: 20,103 ▲ 33 (+0.1%)
SENSEX: 67,519 ▲ 52 (+0.08%)

• Benchmark indices edged higher, with NIFTY50 crossing 20,100
• In all, 28 of the NIFTY50 stocks closed in the green
• India’s wholesale price inflation fell further by 0.52% YoY in August after a 1.36% drop in July.

Among the NIFTY sectoral indices, PSU Bank (+1.6%) and Metal (+1.4%) were the top gainers, while Media (-0.4%) and FMCG (-0.1%) were the top losers.

What’s trending

⭐ Grasim to enter paint business in Q4 

Grasim Industries announced that it plans to launch its paint brand under the ‘Birla Opus’ brand name by Q4FY24. The company had earlier committed an investment of ₹10,000 crore towards the paint business to set up manufacturing plants with a total capacity of 1,332 million litres per annum (MLPA). Meanwhile, the company's shares closed flat. 

⭐ Wadia Group companies rise 

Shares of Wadia Group companies including Bombay Dyeing, Bombay Burmah and National Peroxide rose between 4% to 9% today. This comes after the Bombay Dyeing board approved the sale of a 22-acre land parcel in Mumbai for a total consideration of ₹5,200 crore. The deal value is more than the market cap of Bombay Dyeing and National Peroxide combined. The company is looking to reduce its debt and pay a dividend using the sale proceeds.

⭐ Rice companies gain on weak production outlook 

Shares of rice producers like LT Foods and Kohinoor Foods rose between 1% and 3% today. This came after the US Department of Agriculture (USDA) estimated India’s rice production to drop by 2 million tonnes (mt) to 132 mt in the 2023-24 season due to below-average rainfall in August. This may increase domestic rice prices, which is a positive for rice companies.  

⭐ IPO receive strong response 

The ongoing IPOs are receiving a healthy response from investors. The ₹1,964 crore IPO of wire and cable maker RR Kabel witnessed strong interest with a total subscription of 1.4 times on Day 2. Meanwhile, SAMHI Hotels and Zaggle Prepaid Ocean Services IPO were subscribed 19% and 7%, respectively, at the end of the first day. To know more and apply for these IPOs, click here

In Focus

Gas distribution companies in the spotlight 

City gas distribution (CGD) companies seem to be on fire. Shares of Mahanagar Gas and Indraprastha Gas rose in the range of 2% to 13% so far this month. Several positive factors are driving the CGD business. What are these factors? Let’s explore.

Revised gas prices to benefit companies

CGD companies are in the spotlight after Indian government raised natural gas prices to $8.60 per metric million British thermal unit (mmBtu) for September from $7.85 mmBtu in the previous month. This price increase comes amid a rise in global crude oil prices.

Meanwhile, the administered price mechanism (APM) under which gas prices are regulated by the government, has also been revised upward. APM floor price is set at $4 per mmBtu, with a ceiling of $6.50 per mmBtu. Experts believe the revised pricing is beneficial for CGD players as it reduces volatility and will lead to stable revenue for companies. 

Other than this, the companies are receiving active support from regulators as the government looks to push up the share of natural gas in the country's primary energy mix to 15% by 2030 from the current 6%. The industry regulator Petroleum and Natural Gas Regulatory Board (PNGRB) is actively issuing new CGD licences, and facilities like new import terminals are also being developed.

Demand set to rise  

In most households, gas is the only mode of cooking. Considering this, CGD companies are expanding their pipeline networks as well as investing to digitise customer services and improve their tech infra. In addition, some state governments are giving incentives for gas-based vehicles, especially light commercial vehicles (LCV), in a push to make gas an attractive alternative to petrol and diesel for transport.

These factors could result in higher volumes for CGD companies. Furthermore, the companies are looking to acquire smaller players and also eyeing renewables like green hydrogen for the next phase of growth.

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