🎳 Double Whammy

PLUS: Paytm stocks are on a rocketship

Author

Ruchirr Sharma
June 14, 2024

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Good morning and Happy Friyay. Hope everyone had a productive week this week.

Our weekend plans involve sleeping, sleeping and more sleeping.

Hope you all get some well-deserved rest too.

- Ruchrngd Sharma & Shatakshi Sharma  

🧵 In today’s issue:

  • 📊 Markets recap

  • 🎳 Double Whammy

  • 📈 Paytm stocks are on a rocketship

  • 🗞️ Bite-sized summaries

    • Next steps for Byju’s?

    • The G7 Summit is happening soon - here’s a TL;DR

    • First 100 days

  • 🧑‍🍳 What else is cookin’? (quick links)

  • 🍿 Entertainment, Entertainment, Entertainment

📊 Markets

🇮🇳 India

Data as of market close on 13/6/2024

  • Indian benchmark indices modestly rose to record highs on Thursday. BSE Sensex closed at 76,811, a 0.27% increase, and Nifty50 ended at 23,399, a 0.33% gain. Stocks like M&M, Titan Company, L&T, and others supported these indices. Broader markets rose by 0.89%, with Nifty Realty leading the sectors with a 2% gain.

🌍️ International

Data as of market close on 13/6/2024

  • S&P 500 and Nasdaq reached record highs due to a tech rally led by Broadcom. Dow Jones fell slightly due to market caution. Economic data hints at a potential interest rate cut. Tesla and Adobe saw stock increases after positive news.

India's real money gaming (RMG) companies like Dream11, Games24X7, and Mobile Premier League (MPL) are facing a double whammy of cost pressures.

Here’s what’s going on: 

  • Google has announced that it will start levying service fees for listing these apps on the Play Store from July 1st. 

  • This comes as RMG firms are already grappling with the recent GST hike to 28% on their services.

  • While Google's move to onboard pay-to-play gaming apps could potentially give them access to over 600 million Android users in India, the impending service fee of 15-30% has raised concerns. 

  • The All India Gaming Federation (AIGF) lauded Google's decision but highlighted two critical aspects - the existing high tax burden and the unique revenue model of RMG games.

Unlike regular apps, RMG platforms don't earn from one-time purchases or subscriptions. 

  • Their revenue comes from platform fees charged on the total prize pool contributed by players. 

  • For instance, in a ₹400 Ludo game, Google's 15-30% cut would apply to the entire ₹400 pool, instead of just the ₹30 platform fee earned by the gaming company.

AIGF emphasizes that Google must consider this "revenue recognition" aspect while structuring its fees. Otherwise, a flat high percentage on entire deposits could severely impact RMG operators already struggling with unit economics.

Overall: While the Play Store listing brings immense scale, some speculate that high service fees may prompt large platforms to explore distribution through .apk versions outside Google's ecosystem.

As Google finalizes its policy, RMG companies anxiously await clarity on the new service fee model, hoping it accounts for the unique dynamics of their pay-to-play business.

Read more: Economic Times

Shares of Paytm have been on a stellar run lately, rallying over 25% in just the last week. The fintech giant's stock jumped another 5.4% to ₹424.40 on Thursday, propelling its market cap close to ₹27,000 Cr.

Here’s the tea: 

  • The recent surge has been fueled by Paytm's partnership with Samsung to offer flight, bus, movie and event ticketing services through the Samsung Wallet app. 

  • This integration aims to provide a seamless booking experience for Galaxy smartphone users by giving them direct access to Paytm's suite of services within Samsung's wallet.

  • The rally also comes on the back of an increase in Paytm's stock circuit filter from 5% to 10% by the NSE last week, allowing more trading flexibility after months of high volatility.

  • However, Paytm has had a tumultuous year so far, with its stock plunging over 50% following the RBI's ban on Paytm Payments Bank in January 2024. 

  • Even after the recent recovery, the stock is still down 57% from its 52-week high of ₹998.30 hit in October 2023.

Overall: While the Samsung deal has boosted investor sentiment, brokerages remain divided on Paytm's prospects. 

Macquarie has an 'underperform' rating with a target of ₹275, citing tough quarters ahead. In contrast, Motilal Oswal values Paytm at ₹400 based on 15x FY28 EBITDA and projects an EBITDA breakeven by FY26, maintaining a 'neutral' stance.

Read more: Business Today

🗞️ Bite-sized summaries

 🧑‍🏫 Next steps for Byju’s? - The National Company Law Tribunal (NCLT) has directed edtech major Byju's to maintain status quo on its shareholding, effectively halting its controversial $200M rights issue conducted at a steep 99% discount to the company's last $22B valuation peak. The tribunal's order comes after a petition was filed by a group of investors including Peak XV Partners and Prosus against the rights issue. The NCLT has asked Byju's to pause the 'second rights issue' tranche and keep funds raised from the 'first rights issue' in an escrow account until the next hearing on July 4.

👥 The G7 Summit is happening soon - here’s a TL;DR - The annual G7 Summit brings together the leaders of Britain, Canada, France, Germany, Italy, Japan, the United States, and representatives of the European Union to discuss major economic issues and international policies. Despite disagreements, the G7 nations share broadly similar views on trade, security, and human rights, giving them significant influence when acting in concert, as seen in their united support for Ukraine against Russia's invasion. Originally formed in 1973 during the oil crisis, the summits have addressed pressing global matters like climate change, financial crises, and currently the wars in Ukraine and Gaza Strip as well as the challenges posed by China's rise.

🇮🇳 First 100 days - The Modi government's 100-day agenda for education aims to assess the true state of India's schooling system through its nationwide Vidya Samiksha Kendra (VSK) network. The goal is to have a VSK centre in every state linked to the national VSK within 100 days, with real-time digital availability of parameters such as student and teacher attendance across all states on a GIS dashboard. The initiative is making significant progress, with 29 states and UTs having already launched or in the final stages of launching their VSK centres. The VSK network will integrate various layers of information, including enrolment, dropout rates, school accreditation, teacher training, student performance assessments, and mid-day meal scheme data.

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

🍿 Entertainment, Entertainment, Entertainment

And that’s all for today folks - have a lovely day and we’ll see you tomorrow.