China's benchmark up 0.43%
Asian stocks ended mixed on Tuesday despite the White House flagging imminent trade talks with China and calling for best-offer proposals from trade partners to fast-track trade negotiations.
The dollar recovered slightly, and gold slipped from a nearly four-week high hit the previous day while oil prices continued their sharp rise due to escalating geopolitical tensions, stalled Iran nuclear talks and wildfire-related supply disruptions.
China's Shanghai Composite index rose 0.43 percent to 3,361.98 as weak PMI data as well as looming trade risks spurred stimulus hopes.
China's manufacturing activity in May shrank at its fastest pace since September 2022, a private survey showed earlier today.
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Mint
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KEC is making amends to repair margin, allay debt concerns
KEC International Ltd's problems of weak margin profile in select segments, elevated debt, and an elongated working capital cycle are set to ease. The capital goods company is prioritising improving its cash flows and profitability. This is backed by better traction in transmission and distribution (T&D) business and KEC's strategic moves to reduce the earnings drag from non-T&D segments. At its annual investor conference recently, KEC said its current order book, including L1 positions, stood at around ₹40,000 crore. The order book was ₹33,398 crore in FY25. Plus, KEC has a strong bid pipeline of around ₹1.8 trillion, of which 50% is T&D, which typically has a higher margin and a favourable working capital cycle. A robust order book provides near-term revenue visibility. But execution remains crucial to meet its revenue growth guidance of 15% in FY26 from around 10% in FY25. Also Read: PMI: India's services exports bump may lose steam amid global economic gloom The Middle East, Australia and the Americas are boosting T&D demand in the international market, the management said. Domestic T&D demand is robust, led by rising power demand and the shift from fossil fuels to renewable energy. Plus, competitive intensity in the T&D segment has cooled off with the average number of bidders per project dropping to three to five from around 10 earlier. Margin pressure Reducing competitive intensity in T&D could act as a margin lever for KEC, which is eyeing an operating margin of 8-8.5% in FY26 from 6.9% in FY25. On the flip side, the non-T&D business, particularly civil and railways, is facing pressure on margin and net working capital (NWC) days. Also Read: Ola Electric's new breakeven targets appear more like wishful thinking For these segments, KEC is trying to improve return ratios with higher collections, targeting better margins in projects, and timely project completion. However, Motilal Oswal Financial Services cautions, while NWC improvement can happen faster, margin improvement will still take some time to reflect for non-T&D segments. KEC expects NWC days to drop from 122 in FY25 to 100 in FY26. KEC reduced its net debt by ₹500 crore in FY25 to ₹4,558 crore, and a similar drop is likely in FY26. It is also making efforts to lower interest costs from 3% to 2.5%. 'Whilst historically lower margins and NWC elevated segmental mix led to debt bloat up, KEC's course correction may see debt stabilizing with growth driven by surplus cash flow from operations," said an HDFC Securities report on 4 June. If this strategy yields desired results, it may help reverse the performance of the stock, which is down about 27% in 2025 so far. Also Read: Lemon Tree ends FY25 on a good note, but investors must watch debt levels
Mint
an hour ago
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Oil slips on US stockpile build, Saudi Arabia price cuts
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Business Standard
an hour ago
- Business Standard
India coal-fired power output falls at fastest pace in five years in May
India's coal-fired electricity generation in May fell at the fastest pace in five years, as overall power demand declined for the first time since August and renewable energy generation rose to a record high, a Reuters analysis of government data showed. Increased generation from less polluting power sources including hydro and nuclear also led to a decline in natural gas-fired power output, which fell at the steepest rate in nearly three years, a review of data from the federal power grid regulator Grid India showed. The decline in demand for fossil fuels for electricity generation in India - the second largest importer of coal and the fourth biggest buyer of liquefied natural gas (LNG) - comes at a time when benchmark prices of the fuels are under pressure. "Demand from the power sector - typically strong during peak season - remained limited. Additionally, economic headwinds have weighed on non-power industries," Indian coal trader I-Energy said in a note this week. Asian spot LNG prices have declined more than 15 per cent this year, while benchmark prices of thermal coal have plunged to more than 4-year lows due to weak demand from China and India - the top coal importing countries. India's coal-fired power generation fell 9.5 per cent in May on an annual basis to 113.3 billion kilowatt-hours (kWh), a review of data from the federal power grid regulator Grid India showed, marking the sharpest year-on-year decline since June 2020, when the COVID-19 pandemic led to a nationwide lockdown. A sustained slowdown in demand for fossil fuels for power generation could help the world's third largest emitter of greenhouse gases slash emissions after it previously boosted its reliance on coal to power a post-pandemic economic recovery. India has repeatedly cited lower per capita emissions compared with richer nations to defend its high coal use. Utilities in China and India have cut dependence on coal and LNG imports this year also due to record coal stocks and slower growth in power demand. India had forced gas-based power plants to operate last year to meet high power demand as temperatures soared. As power demand is lower and prices are high for gas-fired power to be competitive with other sources such as solar this year, utilities will buy fewer volumes, said Prashant Vashisth, vice president at Moody's affiliate ICRA. Total electricity generation in May fell 5.3 per cent year-on-year to 160.4 billion kWh, the data showed, with the highest peak demand about 8 per cent lower on-year at 231 GW, mainly due to milder temperatures, government officials said. Peak demand - a measure of the maximum electricity requirement over any given time - reached 250 GW during a heatwave in May 2024. Meanwhile, renewable energy output surged to a record high of 24.7 billion kWh in May, up 17.2 per cent from a year earlier, with its share in the overall power mix rising to 15.4 per cent - the highest since records began in 2018. The share of coal in India's power mix dropped to 70.7 per cent in May, down from 74.0 per cent a year earlier and the lowest level since June 2022, according to the Grid India data. Hydropower generation jumped 8.3 per cent to 14.5 billion kWh, accounting for 9.0 per cent of total generation compared to 7.9 per cent in May 2024, the data showed. Natural gas-fired power generation fell 46.5 per cent annually to 2.78 billion kWh in May, the steepest decline since October 2022.
