Brokerage: Equirus | Rating: Add | Target: Rs 1,652
The brokerage house highlighted that the bank had a stable quarter with results in-line with the estimates. It retained its add call on limited upside. Among key risks, it believes that increase in slippages and slowdown in retail loan demand would be the risks.
Brokerage: CLSA | Rating: Buy | Target: Rs 1,870
CLSA termed IndusInd Bank’s Q1 profit to be a tad ahead of estimates with better net interest income and lower operating expenditure. Having said that, 21 percent quarter on quarter (QoQ) rise in NPLs was a tad disappointing, CLSA mentioned in its report.
Going forward, it sees a 25 percent CAGR over FY17-20, while it will watch out for underwriting in unsecured retail loans as well as market risk from higher bond holdings. It also raised the earnings estimates by 1-2 percent.
Brokerage: Kotak Equities | Rating: Add | Target: Rs 1,620
The brokerage house highlighted that the first quarter was not as stable as previous quarters, but was still going well. Further, it said that valuations are unlikely to change as underlying growth momentum is strong. Further, it expects the bank to deliver 20 percent earnings CAGR over FY17-20 on the back of 25 percent loan growth.
Brokerage: Goldman Sachs | Rating: Neutral | Target: Rs 1,499
The global research firm called the bank’s Q1 to be in line with expectations, but said that the operating trends were not trending. It reduced the FY18-19 earnings per share (EPS) estimates by up to 3 percent on Q1 trends. The neutral stock is given the balanced risk-reward at current valuations.
Brokerage: Nomura | Rating: Buy | Target: Rs 1,850
Nomura highlighted that improving net interest margins along with lower capital consumption was a key positive. IndusInd Bank delivering profitability with lower capital consumption was also a positive. Meanwhile, it said that the asset quality miss was due to a migration of 50 percent of restructured book into NPAs.
Brokerage: Deutsche Bank | Rating: Buy | Target: Rs 1,700
The global financial services firm saw strong trends in CASA, while cost ratios improved. Even though the bank reported rise in non-performing loans (NPLs), the overall stress has declined. Further, it said that the balance sheet now is more exposed to interest rate movements than other banks. Meanwhile, slippages increased largely due to restructured loans, it said, adding that it is expecting strong and steady trends for Fy18/19.
Brokerage: CIMB | Rating: Add | Target: Rs 1,715
CIMB said that the stock is one of the best plays due to retail loan growth. Productivity gains and above-industry growth rates should follow, it added. Further, it sees 26 percent earnings CAGR over FY19-20. Slow growth and rise in delinquencies are key risks, it added.
Brokerage: Bank of America Merrill Lynch | Rating: Buy | Target: Rs 1,800
The global research firm said that growth and margins sustained and the overall asset quality was comfortable with headline gross NPLs at 109 basis points. The highlight of the quarter was a stronger corporate loan growth at 26 percent year on year
Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 1,750
Morgan Stanley observed that higher provisions and muted vehicle loan growth were softer aspects in the first quarter. Further, it added that it doesn’t expect them to be mute going forward. Among key positives are stable margin, strong savings deposit/fee growth as well as higher capital, it added.
Brokerage: Jefferies | Rating: Hold | Target: Rs 1,500
Jefferies said that utilization of past provisions to improve provision coverage is a positive development. It expects the stock to deliver returns in line with the earnings growth and tweaks estimates by +1.5 percent in FY18 by -2 percent in FY19/20. Sustained loan growth and higher than expected fall in funding cost are the key upside risk, while slower loan growth and asset quality are key downside risks.
Brokerage: CLSA | Rating: Buy
CLSA highlighted that Jio’s reduction in promotion benefits aims at maximizing subscriber retention. Further, stable & high-speed data performance should make Jio a favoured network.
It now awaits clarity if the company will start expensing Jio from the second quarter of this fiscal. It also believes that investors will overlook initial losses during promotional periods and will focus on subscriber retention and slow monetisation.
(Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd)
Autos
Brokerage: CLSA
CLSA expects Eicher Motors, Motherson, and TVS to report best profit growth in Q1. Two-wheeler original equipment manufacturers (OEMs), except Bajaj, could report healthy double digit earnings growth. Meanwhile, it sees Maruti to have a steady quarter. Volume of M&HCVs declined sharply, which should drag the performance of commercial vehicle companies. Further, it sees some impact on margins from higher discounting in June. Maruti EBITDA & profit should grow 11% & 14% yoy respectively, it added.
CLSA also expects JLR EBITDA margin to decline to 13%. Further, it said that Tata’s India business may remain loss-making. At a consolidated level, Tata Motors’ EBITDA should decline 8% yoy & profit could fall 41% yoy.
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