ICICI Bank announced the sale of a 6% stake in its life insurance arm at a valuation of Rs 32,500 crore. This comes on the back of a 9% stake sale in its general insurance arm valued at Rs 17,500 crore. Both sales combined will provide ICICI bank with a one-time gain of Rs 3,000 crore. While the valuation of the life insurance business at 2x F15 EV was in line with expectations, the general insurance valuation was higher.

These gains will help offset some of the higher provisioning we expect on the company’s stressed loan portfolio in metals/Infra. While we expect asset-quality pressure to only ease by middle of CY16, we believe the valuation adjusted for stress for ICICI at 1.65x FY17E book is reasonable. Also, such gains from subsidiaries, especially at higher valuations than expected, should aid in early recognition/provisioning of its stressed portfolio.

We estimate ICICI Bank to have a loss given default of Rs 15,000 crore on its total stressed book. These sales provide one-off gains of Rs 3,000 crore and in our view should be used to recognise and provide for some of these stressed loans, especially overseas coal assets. While near-term asset-quality pain will likely remain, our stress test (Rs 150bn of write-off) adjusted valuations 1.65x FY17 book is reasonable and hence we maintain our ‘buy’ rating.

Shares of sugar companies touched their 52-week high level on Tuesday on expectations that shortage in sugar supplies globally will aid domestic sugar prices and increase realisation. Scrips of 11 sugar companies ended at their upper price limit on Tuesday and stocks like Dharani Sugars, Balrampur Chini, Sakthi Sugars and Dwarikesh Sugar touched their one-year high.

Narendra Murkumbi, vice-chairman and MD of Shree Renuka Sugars, reiterated that 2016 seems to be a deficit year for sugar in the world market. “The futures market is already signalling that kind of change in the fundamentals. We have an overhang of about 3 million tonne of stocks…” he said.

Shares of EID-Parry climbed 9.33% during the session. Scrips of the company have gained more than 20% during the last four sessions. Balrampur Chini — another major sugar company — rallied 18% during the same period.

ICRA expects domestic sugar production to decline to 7.6 million tonne in 2015-16, down from 10.1 million tonne in 2014-15. Further, due to increase in fair and remunerative price of cane and the absence of linkage of cane rates to sugar and by-product realisation in the state advisory price adhering states, the profitability and debt coverage of sugar mills would continue to be under stress in near term resulting in continued dependence on government support to clear cane arrears to farmers.

Global private investment firm KKR on Tuesday announced acquisition of a majority stake in Indian financial services firm Avendus Capital for an undisclosed amount.

Sources in the know pegged KKR’s investment at $100-110 million through a combination of new shares and purchase from existing investors — Eastgate Capital and Americorp Ventures. KKR’s investment is routed through its Asian Fund II.

The acquisition will help KKR foray into the credit solutions business and to grow its wealth and alternative asset management solutions offerings to its customers. KKR India has a non-banking financial company (NBFC) and a real estate NBFC through which it offers structured loans.

Sanjay Nayar, member – KKR and CEO – KKR India, said the acquisition will help meet the demand of rising entrepreneurship in India by offering diverse alternative investment products and wealth advisory services.

“Avendus is a world-class firm built and run by three visionary founders which delivers solutions to meet this demand by offering diverse alternative investment products and wealth advisory services. The Avendus team continues to build on this banking franchise by seeking opportunities to elevate the company to the next level. KKR’s investment will aid this effort by accelerating the build-out of the company’s highly sought-after investment banking platform,” Nayar said in a press release.

According to reports, KKR has purchased 60% stake in Avendus and its ownership will increase to 70% after the said acquisition that is awaiting regulatory clearance. Avendus’ existing management team, led by co-founders Ranu Vohra, Gaurav Deepak and Kaushal Aggarwal, will continue to manage day-to-day operations and its growth into the new businesses. KKR will have a nominee on the board of directors of Avendus.

Ranu Vohra, MD and CEO of Avendus, said the company’s new motto is to ‘scale up’ its businesses. “We have excellent potential to expand our businesses…KKR’s capital commitment and support will enable us to provide a broader set of synergistic services and products to these clients, which can catalyze their growth,” Vohra said.

Eastgate Capital had invested R100 crore in Avendus in 2008 for a 26% stake. It’s the PE  unit of NCB Capital, investment banking arm of National Commercial Bank of Saudi Arabia. Americorp Ventures is an angel investor associated with Avendus since inception with 13% ownership.

On BSE, Dishman Pharma stocks closed 14.08% down at Rs 325 and 14.04 per cent down on NSE at Rs 324.45 Dishman Pharma, thereby marking its biggest single-day percentage fall since August 24. (Reuters)

Shares of drugmaker Dishman Pharmaceuticals and Chemicals fell as much as 16.14 per cent on the BSE after the US Food and Drug Administration (USFDA) on Monday asked the company for more data on US firm Clovis Oncology Inc’s lung cancer drug, Rociletinib. Traders thought Dishman was supplying active ingredient for Rociletinib.

On BSE, Dishman Pharma stocks closed 14.08 per cent down at Rs 325 and on NSE, the scrip plunged 15.22 per cent to Rs 320. Shares of the the pharma major posted their biggest single-day fall since August 24. The share price of Dishman Pharma declined 18.32 per cent on the August 24.

According to Harshil Dalal, vice president of finance at Dishman, the company supplied active ingredient for Rociletinib to Clovis only for clinical testing.

Stating that the market overreacted to USFDA’s awaited approval, he said, “Dishman does not expect any revenue from Rociletinib in fiscal 2016 or 2017”.

“Dishman expects fiscal 2016 total sales to grow about 10 pct from fiscal 2015”, he added.

HCL Tech shares gained as much as 2.5 per cent on Tuesday after the company announced that it has signed an Application Development and Maintenance contract with Deutsche Bank. (Express Photo by Heena Khandelwal)

Shares of HCL Technologies gained as much as 2.5 per cent on Tuesday after the IT major announced that it has signed an Application Development and Maintenance contract with Deutsche Bank.

Under the terms of agreement, HCL will provide digital solutions, systems integration, product implementation and design, build and test new applications in addition to the ongoing application maintenance and support services.

At 2.26 pm, HCL Technologies shares were trading 1.87 per cent up at Rs 854.25 apiece. The scrip opened at Rs 843 and had touched a high and low of Rs 859.50 and Rs 837, respectively, in trade so far. Sensex was up 0.59 per cent at 25,910.

In a BSE filing, the company said, “HCL will manage and enhance some of the existing application suites, including corporate banking and securities, global transaction banking, asset and wealth management, and risk, finance and back-office operations across Deutsche Bank group.”

The program is part of a broader strategic initiative by Deutsche Bank. HCL is an innovation partner for the company’s digital strategy which aims to enhance customer experience by bringing innovation to its products, services and operations.