EUR 120.00 For Business Accounts Only

Morning India (7/April/20): 1. Strategy (Scanning for buybacks amidst debris); 2. HDFC Bank; 3. HDFC; 4. Kotak Mahindra Bank; 5. Bajaj Finance; 6. IndusInd Bank; 7. AU Small Finance Bank; 8. Mah. & Mah. Financi

Morning India (7/April/20):

Today’s top research theme
Strategy: Scanning for buybacks amidst debris; Presenting potential ‘buyback’ candidates
** Following the sharp correction in stock prices since Feb'20 and the multi-year low trailing valuations, we have analyzed and identified companies with strong cash positions and those that are potential buyback candidates.

** Over CY10-19, in the US, the S&P 500 constituents have cumulatively (a) completed USD5.3t worth of buybacks, and (b) declared USD3.5t worth dividends. During the same period, market-cap of the S&P 500 has increased from USD9.9t to USD26.7t.

** In this note, we have looked at the MOFSL coverage universe through the lens of (1) Debt/Equity, (2) Net-cash/market-cap, (3) High pay-out ratios, (4) and Trailing Valuations. Consumer, Technology and the Automobile sectors fit the bill perfectly in the aforementioned criteria.

** Additionally, we ran two screens to highlight potential buyback candidates by considering companies that have (a) higher probability of returning cash to their shareholders, and (b) earnings/cash yield >6.5%.

Piping hot news
India between Stage 2 and 3 of coronavirus pandemic: Health Ministry
India is between Stage 2 and 3 of coronavirus pandemic with large number of cases being found in particular areas, the Union Health Ministry said on Monday concurring with the AIIMS Director's remarks that localised community transmission is being observed in some pockets of the country. AIIMS Director Dr Randeep Guleria, who is also a member of a Task Force on COVID-19, on Monday reportedly said that "localised community transmission" has been seen in some pockets and that India is between Stage 2 (local transmission) and Stage 3.