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Momentum in balance sheet growth has further picked up with loan growth of 35% driven by across segments. While NII growth of 21% is in line with our expectations, PAT growth of 5% is tad above our expectations. While ILFS exposure of Rs30bn is still standard, bank has made standard asset provision of Rs2.5bn during the quarter in addition to Rs2.8bn made during last quarter. We have cut our earnings by 5% for FY19, factoring in additional provision for ILFS in Q4. We retain our BUY rating with a TP of Rs1,935 (Rs1,980 earlier)...
Asian markets are trading lower after reports that Chinese inflation data for the month of December came in below estimates. China's December consumer inflation rose 1.9 % on year vs estimates of2.1%. Nikkei is trading lower by 1.40%, Shanghai is trading lower by 0.29% and Hangseng is trading lowe..
We attended the Analyst Day of Bharti Infratel wherein the management apprised on the Indus merger update and its aspirational growth path ahead. They maintained that merger with Indus is on track (currently awaiting NCLT approvals) and is expected to be complete by June, 2019. As a targeted area for future growth, the company has identified small cells, in-building solutions, fibre sharing, Wi-Fi, smart cities and managed services. Management also envisages these new services contributing at least a third of overall revenues, in the next five years. We note that amid...
IIB's earnings of Rs9.85bn (PLe: Rs9.96bn) was largely in-line with estimates but PPOP of Rs21.2bn (PLe: Rs20.8bn) beat estimates on strong treasury gains. It continued to make contingent provisions of Rs2.5bn (Rs2.75bn in Q2FY19) on IL&FS; exposure, taking total provisions to >Rs6.0bn (30% PCR). Management guided that there could be some acceleration in provisions ahead to get PCR to desired level of 40-50% as clarity on haircut & asset cover on holdco is emerging, while there could be classification towards NPA ahead as account is in SMA1&2. Operationally bank continues to cruise smoothly...
9 January 2019 IndusInd Banks (IIB) PAT grew by a muted 5% YoY to INR9.8b in 3QFY19 due to contingent provision of INR2.55b (toward infra group). NII grew 21% YoY, while NIM was largely flat at 3.83% on account of a rise in cost of funds. Total income increased 22% YoY on the back of healthy other income growth of 24% YoY. Core fees grew 18% YoY, led by higher forex income and loan processing fees. Opex growth (+16% YoY) trailed total income growth, resulting in robust 27% YoY growth in PPoP. Loan growth came in at 35% YoY, led by robust growth in the corporate segment. Consumer portfolio grew 28% YoY (+7% QoQ), led by strong traction in CV loans, equipment financing and credit card segments. The share of retail loans in total book stands at 39% (45% including business banking). MFI book stood at INR75.2b (4.34% of loans).
Despite lower OPEC production, Brent Crude oil price softens further by 13.8% MoM to average US$56.5/bbl in Dec'18 on the back of rising concern on oil demand growth. OPEC production declined 1.5% MoM to 32.6mbpd mainly led by lower production from Iran, Libya and Saudi Arabia. OPEC and other large oil producers including Russia agreed in Dec'18 to cut their crude output by ~1.2+mbpd from Jan'19 to halt a decline in oil prices. From January onwards, we expect OPEC production to come down led by Saudi Arabia which may support oil prices in near term. Non-OPEC production remained almost flattish MoM to 60mbpd for the month of Nov'18. US Crude oil inventory remained flattish at 441mn bbls for the month of Dec'18. Singapore Gross Refining margin (GRM) declined to 9-year low in Dec'18 to average US$2.9/bbl from US$4.7/bbl in Nov'18 owing to significant decline in crack spreads in gasoline, gasoil and Jet Kero. US refinery utilization improved by 2.6% MoM to average 95.2% in the month of Dec'18. Arab Light-Arab Heavy differential declined further by 21% MoM to US$1.9/bbl whereas INR appreciated by 1.5% MoM to Rs70.7/US$ in the month of Dec'18....
We believe, CUB with superior NIM, best return profile, grip on asset quality with greater bottom-line visibility over the medium term should continue to fetch higher multiple. Initiate BUY with a Target Price of Rs 228/sh (2.9x FY21E ABV ).
Asian markets are trading higher as investors continue to focus on trade talks which are set to extend into an unscheduled third day today. Nikkei is trading higher by 1.27%, Shanghai is trading higher by 1.57% and Hangseng is trading higher by 2.41%. Indian indices are expected to open in the green
Key monitorables: (1) Outlook and commentary of CY19 client IT budgets and evolving US/UK macros, (2) Performance of digital business, (3) Deal trends and outlook of key verticals (BFSI, Retail, CPG), (4) Large account metrics, large deal wins and supply indicators (attrition, sub-contracting), (5) Legacy erosion and rebid pricing pressure and (6) Possible acceleration of non-linear trends like AI, automation. Tier-1 IT is expected to post the strongest 3Q sequential growth (USD terms) since FY14 on (1) Improved deal trajectory and (2) Revival of core verticals and geographies. Revenue growth for IT sector (coverage universe) is expected at 1.7/8.3% QoQ/YoY (3.9/20.4% QoQ/YoY in INR terms). Tier-1 is expected to grow 1.7/7.6% QoQ/YoY led by HCL Tech and Tier-2 is estimated to grow at 2.1/13.1% QoQ/YoY. Among Tier-2, L&T; Infotech and L&T; Tech are expected to lead the growth.
