Continued trend in Asset Quality improvement, steady 1QFY21 performance and attractive valuation reinforce our conviction that the bank is well placed to fight impending stress. However, the transition of the bank's top post is likely to be a key overhang. The pointers which acknowledge our conviction are: 1) In 1QFY21, gross slippages declined to 39.1bn v/s 82.9bn in the previous quarter, which resulted in decline in headline NPA ratios with GNPA at 5.44% (v/s 6.15% in 4QFY20) and NNPA at 1.86% (v/s 2.23% in 4QFY20). 2) A positive surprise on Loan under moratorium which reduced to 9.5% of loan amount against 23% declared earlier. 3) Business growth in line with industry aided by strong domestic NIMs (3.24% v/s 2.97% in the previous...

is better placed to combat COVID and build a granular portfolio with sustainable growth. Additionally capital raise (32.9bn in 1QFY21 & 25bn in 2QFY21) will further boost the balance sheet. The pointers which acknowledge our conviction being: 1) Contingent provisioning (COVID + standard + floating & others) stood 1.2% of net advances and total provisioning (including cumulative) is at 2.5% of book, 2) Moratorium at 16% of the book is likely to reduce further, 3)...

Strong COVID & Contingent provisioning and healthy 1QFY21 earnings acknowledge our conviction that ICICI Bank is preparing for sustainable, prudent and cautious growth despite some exceptional hiccups (moratorium book 17.5% V/s 30% earlier) owing to COVID. The bank has made COVID provisioning of 82.75bn in the previous two quarters. The total contingent provisioning (COVID + Standard + General) stands 2.1% of net advances which is the highest among peers. Considering the MORAT (17.5%) we expect ~2.5% of the book may come under stress post moratorium ends. The contingent provisioning is likely to be adequate to mitigate the stress. Furthermore, the bank has reported healthy 1QFY21 results with the key pointers...

Despite reporting a mixed trend on assets quality and moderate operating performance in 1QFY21, the best in class franchise, comfortable liquidity position and adequate coverage place the bank in a sweet spot. The bank used algorithm to declare fresh slippages (Slippages ratio of 1.2%, which is higher than the expectation) along with moratorium book of 9% (lowest among peers). During the quarter it reported sequentially higher provisioning expenses (38.9bn v/s 37.8bn in 4QFY20). The contingent provision stood 1.1% of loan book, while we expect ~1% of book may come under...

moratorium loans which have cleared all interests/EMIs Gold loans/loans against liquid securities. Business banking and commercial banking has the highest proportion of 42% and 35% presentation on the moratorium book gives us the confidence to estimate the future asset quality outlook. We estimate FY21E GNPA ratio of 3.2% & NNPA ratio at 1.8% against the current level of...

Subscription business to remain strong, Ad business to recover, IPL an additional boost! Q1 results in line with expectations Sun TV's Q1 FY21 numbers came in line with our expectations as Ad revenues fell sharply by 66% yoy. This was due to Covid related lockdown and absence of original programming. On the other hand, subscription revenues maintained momentum. Also absence of IPL led to yoy fall, as the base year included 2.44 bn of IPL revenues. Profitability at the bottomline was impacted due to higher amortization expenses. Lower corporate Ad spending led to a steep drop in Ad revenues. Subscription revenues were up by 11.5% yoy as Cable TV revenues went up by 34.8% yoy while...

Polycab is India's leading manufacturer of Cables & Wires with an 18% market share in the organised market with a phenomenal distribution reach spanning over 3500 dealers and distributors covering over 1.25lac retail outlets. With a highly diversified product mix, Cables & Wires accounts for 85% of its 88bn Revenues and despite being a late entrant in the FMEG ( Fast Moving Electrical Goods) segment, Polycab has been able to grow this business at a scorching pace of 43% CAGR over the past five years despite operating in a highly competitive landscape. Polycab has successfully transitioned its 20% ROE business from being a B2B business to a B2C business by leveraging its tremendous brand equity through innovative ASP strategies and CRM...

Quarterly results surprised us on positive side BEL reported earnings which were better than our expectations at 541 mn, against our expectations of a loss. Revenues de-grew by 19.7%/71.4% yoy/qoq to 16.4 bn, which were above our expectations as the company executed the ventilators order of 4 bn in the quarter. Exventilators, the revenues dropped by 40% yoy. LRSAM, Smart City business, Intelligence Gathering Systems, Thermal Imaging Cameras and Radar repairs were the other revenue contributors in Q1. Reduction in RM to sales at 49.3% led to gross margin expansion at 50.7%. EBITDA margins came in at 8.8% which were down by 780 bps yoy, but were still better than our expectations of operational loss, on gross margin beat. PAT as a result of this came in at 541 mn, which was better than...

Numbers bottomed out in Q1, heading towards recovery Resilience displayed in pandemic hit quarter Bajaj Auto posted a 61% yoy decline in the topline in COVID hit Q1, while they declined by 55% qoq. The volumes fell by 64.5% yoy and 55% qoq as there was a stringent lockdown observed in the earlier part of the quarter. Realizations grew by 9.8% yoy, which were very well supported by export realizations and a higher proportion of BS 6 vehicles. EBITDA declined by 66% yoy to 4.1 bn, while margins still showed a better performance at 13.3%, much better than street's expectations, though it was lower by 210 bps yoy. The overall underperformane stemming from...

INDIAN ENERGY EXCHANGE (IEX) | Power Exchange Facilitating Growth in the Power Market Indian Energy Exchange (IEX) is India's leading Power Exchange with a market share of ~95%/40% of spot/short term market. The IEX offers a transparent pricing mechanism and liquidity to participants on its platform. Increasing traction of short term market with shift of volumes towards the power exchanges and with the launch of new products will aid IEX...

BEL reported earnings were 12% better than our expectations as margins excelled offsetting the lackluster results in the previous nine months. Revenues grew by 49.5%/155% yoy/qoq to 58 bn, margin LRSAM project. This resulted in a 650 bps contraction in gross margins. But in line with...

Endurance Technologies | Auto and Auto Components Strong order wins to overshadow weak Q4 and FY 21Poised for a Robust FY 22 Weak Q4 led by challenging macro environment in both the geographies Endurance's Q4 numbers came below our as well as street's expectations as revenues declined by...

Cochin Shipyard Ltd (CSL) reported a healthy set of numbers in Q4 with topline growing by 3.6% yoy, though on a qoq basis they fell by 9%. The material costs saw a contraction in Q4 as they stood at 48.3%. Subcontracting costs dropped by 18.4% yoy in the quarter. EBITDA margins saw a solid surge at 20% v/s 14% yoy as the company reported strong ship repair margins at 27% on a strong execution and delivery in this business. Other income fell to 450 mn over 643 mn yoy. PBT grew by 14.8% yoy to 1.8 bn, while reporting strong margins at 22.6%. PAT came at 1.4 bn , which has grown by 42.5% yoy, while margins came at 17%. The company delivered a 1000 MT Cargo vessel for A&N; administration. The company also delivered 8 RoRo vessels (2...

In line with 36% decline in the total volumes, the topline fell by 35%. Volumes at the auto segment fell by 47% driven by 56% fall in the SUV segment. FES segment fell by just 2% as tractor demand was still intact in Q4. Margins surprised the street as they came in 70 bps higher yoy at 12.4% on the back of better product mix which was tilted towards high margin tractors, cost saving initiatives and RM tailwinds. According to management, last 7 days of March (due to COVID related lockdown) resulted in a volume loss of ~15,000 vehicles, out of which ~13,000 was on the tractors side. Despite this, the company increased its market share in tractors by 1% to ~40% and in LCVs by 3%. During the quarter, M&M; revisited their capital allocation program in which they...

Demand to improve gradually, bracing for a stronger FY22 Margins impacted by one offs, otherwise numbers in line with expectations Topline de-grew by 20.9% yoy as volumes saw 25.7% yoy fall, while realizations grew by 5% on...