Jefferies
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Punjab National Bank Rating: Govt bailout the need of the hour
Fall in asset quality biggest disappointment of quarter; loss forecast in FY19 and FY20e EPS slashed by 40%; TP down to Rs 80 from Rs 110.
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Avenue Supermarts Rating: Q4 results in keeping with estimates
D-Mart’s Q4FY18 revenue, Ebitda and PAT growth of 22.5% y-o-y, 41.8% and 72.9%, respectively, came in line with our estimates. FY18 same-store sales growth (SSSG) at 14.2% was decent in absolute value but lower than expectations of 18-20% SSSG built in the numbers.
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ICICI Bank: Jefferies rates ‘buy’; Says core profitability weak even as growth improved
The implied value of the core banking business at CMP is 1x fwd. adj. book based on current market price of ICICI Bank, ICICI Lombard, ICICI Prudential Life and ICICI Securities.
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LIC Housing Finance Rating: Quarter was in line with expectations
LICHF reported Q4 PAT of Rs 5.4 bn, flat y-o-y, in line with our estimates. AUM was in line, but NII was 2.5% ahead due to slightly better NIMs. This was offset by higher costs.
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Bharat Infra: Jefferies rates it ‘hold’; subdues Q4, though ahead of estimates
Near-term earnings are expected to remain muted; concerns over long-term margins; stock is fully valued.
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Telecom Services: A subdued Q4 likely
ARPU decline expected to continue; both Bharti and Idea likely to report a loss; cautious stance on sector
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Infosys rating ‘Buy’, Jeferies says cut in margin guidance key disappointment
Q4 results in line with expectations; estimates revised to factor in 7.5-9% CC growth over FY19-21; risk-reward favourable; TP up to Rs 1,340 from 1,100
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Organised retail enjoys good outlook
Re-rating in recent months reason to be selective; FLFL, ABFRL and SHOP top picks
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ICICI Bank: Jefferies rates ‘buy’, says limited downside to stock from present levels
ICICI Bank faces allegations of malpractice & conflict of interest involving the CEO. Media reports suggest a preliminary inquiry has been filed; overhang to continue until a speedy investigation & closure is reached.
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Auto and auto parts: March was strong across segments
Auto sales remained strong with double-digit y-o-y growth across all segments in March. Within two-wheelers, TVS, Eicher and Hero all delivered strong growth with Bajaj being the only exception.
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Consumer Finance: There’s strong opportunity for growth
Consumer finance offers a large growth opportunity and while competition is intensifying in this segment, we believe only a few focused firms will be able to scale up given strong entry barriers, high opex intensity and long gestation period required to achieve critical mass and break even.
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Consumer Diary: Respite from input costs
The overall RM basket has seen some cool-off with 2% MoM dip in February led by non food-RMs that dipped 3% MoM while food RMs dipped 1% MoM.
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We expect gas prices to rise 9% from April
India’s LNG imports fell 12.5% m/m after a strong Jan but we expect operating rates at PLNG to be more resilient like we do when India’s LNG macro turns even softer.
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User addition up in February for incumbents
Competitive intensity likely to remain high; grounds for caution on Bharti and Idea
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Maintain ‘hold’ on IEX with target price of Rs 2,050
We recently interacted with the management of Indian Energy Exchange (IEX). 4QFY18 has started along expected lines with exchange traded volumes up 9% YoY in January-February 2018.
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Pfc/REC Rating: No ground to back the power financiers
Both POWF & RECL have corrected by 32% and 20% in last 12m, but we still don’t see any reason to own these stocks.
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Jefferies says Q4 likely to be strong quarter for steel
Strong domestic steel prices should sustain near term, driving higher margins in Q4, but we see this as an opportunity to take profits as domestic prices should soften post Q4.
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Private banks laughing all way to bank
It can’t get better for private banks—every day as a new scam or fraud gets unearthed, SOE Banks are put on greater scrutiny, slowing down decision-making and losing business to their private sector peers.
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‘Buy’ on ONGC, Oil India; prefer IOCL to BPCL/HPCL
ONGC, Oil India and BPCL’s Area-1 project moved a step forward this week although FID may still be months away. Nonetheless, with valuations inexpensive we keep our ‘Buy’ on ONGC, Oil India preferring IOCL to BPCL/HPCL in downstream SOEs.
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Jefferies says Retain ‘buy’ on Federal Bank with TP of Rs 145
Primary synergies lie in broadening product offerings to corporate & SME clients and additional fee income.
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Jefferies rates Repco Home Finance as ‘hold’, says Q3 a disappointment on most counts
Home loan disbursal (+32% y-o-y off low base, -15% q-o-q) was affected by sand mining ban in Tamil Nadu by Madras High Court
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Quarter was in line with expectations
Growth challenges for APHS are likely to continue; TP revised to 1,140 from 1,080
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State Bank of India shares get Buy rating from Jefferies despite bottomline slippage
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.
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Volatile quarter but the trend is improving
Although volatile & wider vs expectation, trends broadly reflect a strengthening core profitability, peak stress but elevated provision needs.
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Results met estimates
While growth is expected to be strong, risks in US and valuations limit upside; FY18-20e EPS cut 2-3%.
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Hero MotoCorp stock rated ‘Hold’ by Jefferies, cuts TP to Rs 3874 from Rs 4158
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.
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ICICI Bank rated buy by Jefferies
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.
