However, gross impaired loans are coming off (1% lower q-o-q) & recovery/resolution will be trigger for further re-rating. Loan growth, capital & profitability are key focus areas from here. Retain Buy, with PT of Rs 365.
Although volatile & wider vs expectation, trends broadly reflect a strengthening core profitability, peak stress but elevated provision needs.
While growth is expected to be strong, risks in US and valuations limit upside; FY18-20e EPS cut 2-3%.
Hero’s Q3 revenue and earnings were in line with our (and consensus) estimate. The company also announced an interim dividend of Rs 55/share similar to last year.
ICICI has to make good on provisions in the RBI list #2 accounts referred under IBC in Q4, but a few resolutions from list #1 may provide a cushion and keep credit costs under check.
Energy costs continue to remain a headwind, leading to 5-quarter low Ebitda per ton of Rs 286, in spite of a 10% y-o-y volume growth. We have tweaked estimates for lower realisation and higher costs, which is expected to normalise only in FY19. Maintain Hold with revised target price of Rs 161.
Q3 PAT grew 58% y-o-y to Rs 2.2 bn, in line with our estimates. NII surprised positively due to stronger loan growth, but this was offset by higher costs. Asset quality was stable.
Bajaj Auto, Ashok Leyland likely to post robust earnings; Eicher’s consensus FY18 estimates could see downgrades
Elevated Brent and busy political calendar in 2018-19 makes this uncertain, though, and could peg back a re-rating for India’s downstream SOEs with softer refining likely to weigh on earnings too.
Post steep hike in non coking coal FSA prices by CIL, we lift our FY18-19E EPS 6-40%.
We assume Ashok Leyland at Hold with price target of Rs 130. We expect 10-15% growth in M&HCV industry over FY18-20e, but this is priced, in our view.
We are enthused by JFL’s margin story helped by improving store vintage, cost saving initiatives and dip in Dunkin’s losses. Possible double-digit SSSG could be an additional earnings driver given high operating leverage.
PNB raised Rs 50 bn of capital and sold its stake in PNB Housing (Rs 13 bn) aggregating to 1.4% CET 1. Together with ~60 bps of unrealised gains from the bond book provides reasonable elbow room under IndAS.
Maintain ‘Buy’ with revised TPs of Rs 830 for GRIL and Rs 2,600 for HEG
EPS expected to grow at 17% CAGR over FY18-20e; initiated at ‘Buy’ with TP of Rs 1,300
PLNG has renegotiated the Exxon Gorgon contract that may cut LNG import price by ~USS$1 mitigating potential offtake risks even if direct benefits are limited. Indeed, the start of the new 1.2mt contract is also some time away precluding immediate upside there either.
Potential Rs 128-bn equity issuance for KPO phase II could be EPS-dilutive in near term and weigh on the stock price
The government also revised up petcoke demand for Apr-Sep by 15% by incorporating actual import data taking 11M 2017 demand growth past 90kbpd – similar to IEA/EIA assumptions (100kbpd) but higher than what OPEC currently assumes (80kbpd).
Reliance’s EBITDA may double to $20 bn by FY22/23e but at $123 bn in EV, much of that appears baked in.
SBI raising its bulk rates signals a normalising macro. Interest rates can only head higher from here, even though policy rates don’t immediately.
We believe LICHF’s NIMs have bottomed out, but meaningful improvement on them appears unlikely in the near term. While LICHF would be a beneficiary of government’s thrust on affordable housing, it could face higher competition from banks given its focus on the salaried segment. We trim our estimates and forecast EPS CAGR of 14.7% over […]
Refining margins may firm up in the remaining winter months but we are more alarmed by the sharp fall in auto fuel marketing margins in India since early November.
We like BRIT for its strong execution in biscuits viz, distribution expansion, cost efficiencies and steady premiumisation that bode well for revenues and margins, allowing EPS to rise at a 16% CAGR in FY17-20E.
BOB trades at 1.3x book (Sep’17) & 11.6x earnings (12m to Sep’18) vs. 10-year averages of 1.5x & 7.0x, respectively. Price target of Rs 180 is based on 1.2x P/B and 7.1x P/E. Downside risks: Asset quality deterioration, NIM compression, growth slowdown.
Eicher recently announced twin launches of Interceptor INT 650 and Continental GT 650, which use the same engine.
FY18-19 estimates remain same due to Yadadri order; business model flawed as overcapacity will hit RoE.
Blue Star has been through a difficult phase of low margin orders in this segment. We believe the capex cycle should see a recovery post announcements in the next 12-18 months.