Kotak Institutional Equities
Analyst corner: Translation of repo cuts to loans still not visible
Some banks have decreased MCLR rates by 5-15 bps in March-May 2019. With deposit rates stable, a swift rise in MCLR rates is less likely
Stock corner: ‘Buy’ Ashok Leyland, revenue growth was strong in FY19
Expenditure on R&D increased by 45% y-o-y in FY2019 and R&D as a percentage of sales increased to 2.3% in FY2019 from 1.7% in FY2018.
Life insurance: High individual premium drives growth for private insurers
The company has increased focus on ULIPs in the past two years. Its ticket size in individual non-single segment was up moderately by 13% y-o-y/m-o-m.
Stock corner: Maintain ‘buy’ on ICICI Bank, FV revised to Rs 510
As highlighted in our previous notes, the decline in NPL ratios is underway with more scope for further reduction with lower impact on earnings given the bank’s healthy coverage ratio.
Analyst corner: Fuel subsidy unchanged amid steady crude oil price
The government has increased excise duties on auto fuels by `2/litre, which have been passed on to end-consumers by the OMCs.
Banks likely to show stable operating performance, earnings recovery in Q1
Positive outlook on ICICI Bank, SBI. Yes Bank to have the most challenging quarter while there will be focus on asset quality for IndusInd Bank and RBL Bank
Analyst corner: Lower Mutual fund exposure to affect financial flexibity of NBFCs
In light of liquidity challenges and concern in wholesale NBFCs, we remain cautious on the sector even as stable asset quality in most retail segments, detailed in RBI’s FSR, reinforces comfort on retail players.
Moderate growth of non-life insurers
Motor own damage weak Motor insurance premium for the month was up 8% y-o-y, vs 1% in April 2019. This was driven by 11% growth in motor third-party (TP) premium.
Hexaware Rating | Reduce — Mobiquity buy a step in the right direction
Deal will be EPS neutral in CY19; revenue estimates for CY20/21 raised by 9%; ‘Reduce’ retained given that valuations are full.
Strong May for most private insurance players; inflows to equity MFs still muted
Individual APE growth of 27% y-o-y in month; inflows to equity MFs are still muted.
Fall in crude prices augurs well; RM trends mixed for agri-commodities
The fall in crude price augurs well; RM trends were mixed for agri-commodities. We haven’t seen any meaningful pricing action/incremental promotional activity across categories.
Life insurance: Premium collections of private life insurers up 27 pct
Overall inflows to equity mutual funds were better month-on-month (m-o-m) but broadly still muted. Against this backdrop, the sustenance of such high growth is crucial.
Investors Corner: United Spirits rating – maintain reduce with FV unchanged at Rs 550
Though there’s forward movement, valuations are not factoring in moderate pace and regulatory risks; ‘Reduce’ maintained
Avenue Supermarts pins hope on e-commerce model
It is also consciously adding larger stores given good response to new stores. Land costs are certainly higher than Dmart’s historical land costs, which is driving up capex.
Analyst Corner: Retain ‘buy’ on Aditya Birla Fashion and Retail
However, the Jaypore brand is fairly nascent, and will require time and investment to scale up. We await detailed plans of the scale up, but would be wary of hefty investments, similar to the innerwear business.
Coal India Rating | Buy — Strong growth aided by a favourable base
FY19 saw much improved showing by CIL; FY20/21e earnings up 11% to factor in lower production cost; ‘Buy’ rating maintained
Stock corner: Retain ‘sell’ on Timken India at revised fair value of Rs 620
While the company’s growth prospects remain strong due to pickup in industry demand and increase in localisation, we believe that profitability is not sustainable at 4QFY19 levels. Valuations are expensive at 25X FY2021E EP
Stock corner: ‘Reduce’ Interglobe Aviation, earnings were stronger than estimated
FY21e EPS up 2% and TP revised to `1,575; while positives are factored in at present price, risks are not; downgraded to ‘Reduce’
Deposit rates, lending rates expect to remain stable over the near term
As per the latest data by RBI, term deposit rates were flat m-o-m in March 2019 at 6.9%.
Your Money: FY20 Nifty-50 Index net profits to grow at 24%
FY2019 net profits of Nifty-50 Index to grow 13% versus 22% at the beginning of FY2019 due to large earnings misses in 4QFY19 results.
Stock corner: Maintain ‘sell’ rating on Endurance Technologies – Kotak Institutional Equities
Endurance Technologies reported consolidated EBITDA of `320 crore (+26% yoy) in 4QFY19, 18% above our estimatesmainly due to sharp improvement in gross margins and government incentives.
Stock corner: ‘Reduce’ on Pidilite, stock expensive on relative basis
PIDI’s 4Q earnings were 10-12% below our and the Street’s estimates due to sharp deceleration in volume growth (India CBP volume/mix growth down to 4% in 4Q from 15% in 9MFY19), partly offset by better-than-estimated reco
Stock corner: ‘Add’ Vodafone Idea, a couple of hits and misses in last quarter
While synergy benefits are accruing, company is not yet out of woods; reinitiated with ‘Add’ rating and TP of Rs 16
Banks: Trends remain unchanged in MSME lending
While loan growth is healthy and NPLs are stable, private banks have been gaining market share at cost of PSBs
Will liquidity crisis affect Mahindra Finance? Check what Kotak Institutional Equities has to say
Mahindra Finance reported 29% growth in NII on the back of strong (27% yoy and 6% qoq) growth in AUMs and flat NIM (up 5 bps yoy).
Stock corner: Buy Bajaj Consumer Care, decent performance in the quarter
A steady quarter defying some slowdown in consumer staples, healthy trends (market share gains and offtake growth tracking ahead of primary) and new product launches keep us optimistic of earnings growth acceleration.
Analyst corner| IT services – Indian companies still favourite with PE firms
The acquisition reflects continued interest from PE firms in mid-tier companies listed in India and strategic buyers for private or US-listed offshore pureplays.
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