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Good morning. In today’s edition–the financial woes of India's regional airports; record IPOs hitting markets soon; FPIs continuing selling streak; and a fresh petition in the Supreme Court against the Adanis.

DECODE THE NEWS

Why India’s Regional Airports Struggle to Take Off

Even as the government aims to boost regional air connectivity, many new airport destinations struggle with operational inefficiencies and financial losses. Puducherry Airport, for instance, faces limitations due to its short runway and challenging terrain, delaying expansion work and restricting it to smaller aircraft. This, coupled with the lack of night landing capabilities and advanced navigation systems, has led to flight cancellations and ultimately, the withdrawal of commercial airline operations itself.

The situation in Puducherry sadly reflects a broader trend with approximately 90% of India's regional airports facing similar challenges, including outdated infrastructure, poor connectivity, and limited demand. These factors have led to financial turmoil at the emerging airport destinations, with nearly half of India's regional airports operating in the red.

Experts argue that simply building more airports is not the solution. Rigorous feasibility studies, involving airlines in the planning process, are crucial to ensure long-term viability. Furthermore, airports need to be equipped with the necessary infrastructure to support modern aircraft and accommodate room for future expansion projects. Without a more strategic and sustainable approach, India's regional airports risk becoming symbols of misplaced ambition rather than gateways to economic progress.

PODCAST

On Episode 441 of The Core Report, financial journalist Govindraj Ethiraj talks to veteran economic writer and author Shankkar Aiyar as well as Sugandha Sachdeva, Founder of SS Wealthstreet.

• Indian markets rise away on political and global cues

• What does the Maharashtra victory for BJP mean for the state’s economy?

• Oil prices are inching up once again?

• Which way could gold prices go?

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CORE NUMBER

Rs 20,000 crore

This is the combined amount expected from initial public offerings (IPOs) set to hit India's primary public markets in the next few months, with at least ten companies poised to go public.  These include supermarket giant Vishal Mega Mart and Blackstone-owned diamond grading firm International Gemmological Institute (India) Ltd, both expected to launch IPOs next month, education-focused NBFC Avanse Financial Services, and many others. Despite a strong year for IPOs in 2024, some recent offerings have faltered in the secondary market. This highlights the challenge of pricing IPOs during a bull run, when issuers often seek higher valuations.

FROM THE PERIPHERY

—🏗️ The biggest 26 listed real estate companies in India generated nearly Rs 35,000 crore in property sales during the September quarter, primarily from residential sales, according to a PTI report. Godrej Properties led the pack with Rs 5,198 crore in sales bookings, followed by Macrotech Developers and Max Estates. Mumbai-based Macrotech Developers Ltd, known for its Lodha brand, reported sales bookings of Rs 4,290 crore, while Delhi-NCR-based Max Estates achieved Rs 4,100 crore. Despite this strong performance, overall housing sales are estimated to decline by 18% during the July-September quarter across nine major cities, according to PropEquity data.

—💸 Foreign Portfolio Investors (FPIs) have withdrawn Rs 26,533 crore from the Indian equity market in November, a significant drop from October's record outflow of Rs 94,017 crore. The outflows have been attributed to concerns over sluggish corporate earnings, high valuations of domestic stocks, and growing FPI interest in Chinese markets. Reports indicate that future foreign inflows will depend on factors such as US policies, inflation, interest rates, geopolitical developments, and the performance of Indian companies. In contrast, the debt market has seen a mixed trend. FPIs withdrew Rs 1,110 crore from the debt general limit but invested Rs 872 crore in the Voluntary Retention Route (VRR) for debt until November 22.

—🧑‍⚖️ A new petition filed in India's Supreme Court on Saturday urged the court to consider the US indictment against the Adani Group, which alleged bribery and corruption. The petitioner also argued that these charges are relevant to the ongoing case and called for the Securities and Exchange Board of India (SEBI) to release a conclusive report on the Adani probe. The petitioner, Advocate Vishal Tiwari, expressed concern that SEBI's inability to establish a case may be premature and require further investigation. Last week, US prosecutors charged Adani Group chairman Gautam Adani, his nephew Sagar Adani, and other executives with bribery and misleading statements on corporate governance. 

—🚢 Traffic handled at India's 12 major government-owned ports contracted by 3.2% year-on-year in October 2024, a rare occurrence. This decline, primarily attributed to reduced crude oil and coal shipments, resulted in a total of 68.22 million metric tonnes handled, with approximately one-fourth arriving via coastal shipping. While domestic cargo increased by 5.3%, overseas cargo decreased by 5.5%. Crude oil shipments fell by 8.8%, and coal, a major revenue generator, saw a 13% contraction. Container volumes remained relatively flat. This contraction, unusual for October, which typically experiences higher traffic due to the festival season, raises concerns about a potential economic slowdown..

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