Losses weigh on India Inc Q3 results
India Inc’s aggregate performance in Q3FY22 has been disappointing with revenues growing at just 16.7% year-on-year, the slowest pace in the last four quarters. Moreover, net profits for a sample of 1,685 companies (excluding banks and financials) have fallen by 12% y-o-y thanks to a contraction in operating profit margins of 243 basis points y-o-y and a 24% y-o-y jump in interest costs. Also, more companies have reported losses or a year-on-year drop in profits for the quarter than in December 2021.
Except for banks, IT services and automobiles, corporate earnings growth could remain subdued in FY24 as the economy is poised to decelerate sharply. With a few days to go before the end of earnings season, analysts at Jefferies noted that of the 100 companies they analysed for Q3FY23, 40% had reported numbers that were below estimates. Much like in FY23, earnings growth is expected to be dominated by banks and financials in the coming year too
Saudi Arabia becomes the largest outside shareholder of Nintendo
Saudi Arabia’s Public Investment Fund became the largest outside shareholder of Nintendo Co on Friday, in the latest move by the Gulf state to lower its reliance on oil.
The sovereign wealth fund now owns 8.3% of the Kyoto-based games company, according to a filing, building up a position that stood just above 6% at the start of the year. That puts PIF ahead of Japan’s Government Pension Investment Fund and behind only Nintendo’s own holding, according to data compiled by Bloomberg.
Under Crown Prince Mohamed bin Salman, Saudi Arabia is making a concerted push to break into the games and esports industry. Most notably, it set up Savvy Games Group under the PIF umbrella with a $38bn budget and longtime industry veterans in charge. Savvy this week revealed its first foray into China’s games sector with a $260mn investment in a Tencent Holdings Ltd.-backed competitive gaming organiser.
The latest Nintendo stake purchase was made for investment purposes, the filing said. A Nintendo representative said the company doesn’t comment on specific shareholders and PIF didn’t immediately respond to a request for comment.
“It’s tough to bet against PIF due to its size in the market,” UBS analyst Kenji Fukuyama said. “The fund may underpin Nintendo shares if it continues to increase its stake.”
Nintendo marked PIF’s third investment in a Japanese game company that hit the public disclosure threshold of 5%, along with Nexon Co and Street Fighter maker Capcom Co.in 2022. Its growing portfolio in games and entertainment firms now includes Activision Blizzard Inc, Electronic Arts Inc, Take-Two Interactive Software Inc and Koei Tecmo Holdings Co, data compiled by Bloomberg show.
“The Nintendo purchase, as well as investments in game companies around the world, is part of Saudi Arabia’s long-term project to become less reliant on oil,” said Akira Takatoriya, a consultant who works with Japanese companies exporting pop culture content to the Middle East.
The wealth fund’s investments are guided by the Saudi state’s goals for 2030, which include building strategic economic partnerships and bringing home cutting-edge technology. Some of the technologies the PIF has targeted include renewable energy, big data analysis and entertainment content.