The Supreme Court’s verdict of upholding the emergency arbitration order given by a Singapore Court that halts the sale of Future Retail to Reliance Industries came as a major blow to RIL and its retail ambitions in the country. Amazon had moved the Singapore arbitration court.
Shares of the country’s highest-valued company sank over 2 per cent and dragged the entire market down with its sheer gravity. Such has been the impact of Bezos’ blow that it overshadowed the RBI’s Monetary Policy earlier today (not that it delivered much to be catty about).
RIL can appeal the decision but the sense that investors got that this brawl is going to be a drawn-out affair that will hurt RIL’s opportunity size more than it hurt Amazon’s current state of affairs.
Where to from here, Mr. Biyani?
The biggest blow from the Supreme Court’s verdict is for Kishore Biyani and his Future Group companies who are now back to their miserable square one. For Biyani, selling his family silver to RIL was an act of desperation to avoid bankruptcy.
If the transaction with RIL cannot go through, the Future Group’s retail business will have to look at other options including voluntary bankruptcy given the damage caused by the pandemic to the Group’s balance sheet and its inability to service debt. Following the blow from SC, stocks of Future Retail, Future Consumer, Future Enterprises and others were locked in their lower circuit limit.
EV hopes for Tata Chem
The management of Tata Chemicals sounded so optimistic at their post-earnings conference call that they left no option for investors but to be smitten by it. For a stock that moved nowhere over the past few months, Tata Chemicals’ shares jumped over 7 per cent today.
The company suggested that demand for soda ash is likely to go higher going ahead led by the electric vehicle battery manufacturers. Further, the company indicated that salt prices are likely to inch further and margins are improving due to the increase in volumes seen in the June quarter.
It is easy to see why investors will have a tough time buying into the stock even though its rich valuations leave limited room in the upside.
