MOSL: Morning India (06/November/18): 1. State Bank of India; 2. Technology (2QFY19: Hits, Misses and Key Trends); 3. ONGC; 4. Power Grid Corp; 5. GAIL; 6. Bosch; 7. Cipla; 8. Exide Inds; 9. Indraprastha Gas; 1
MOrning India (06/November/18): 1. State Bank of India; 2. Technology (2QFY19: Hits, Misses and Key Trends); 3. ONGC; 4. Power Grid Corp; 5. GAIL; 6. Bosch; 7. Cipla; 8. Exide Inds; 9. Indraprastha Gas; 10. Tata Chemicals
Today’s top research idea
State Bank of India: Asset quality pressure easing; earnings set to accelerate
- Among PSU banks, SBIN remains the best play on a recovery in the Indian economy, with NSL at ~6%, relatively healthy PCR, healthy capitalization (Tier 1 of ~10.4%), a strong liability franchise, and a focus on core operating profitability.
- Credit cycle is clearly showing recovery signs, as evident in the declining size of watch-list (~1% of advances) and the lower slippages from the core corporate pool. We expect slippages to moderate further in 2HFY19, while resolution of stressed power assets remains an important event to watch for in the near term (66% of power assets are rated A- or above).
- We expect RoA/RoE to improve to 0.6%/11.4% by FY20. Maintain Buy with a revised target price of INR370.
Piping hot news
US renews Iran sanctions; India, China get oil waivers
- The United States snapped sanctions back in place on Monday to choke Iran’s oil and shipping industries, while temporarily allowing top customers such as India and China to keep buying crude from the Islamic Republic. Having abandoned a 2015 Iran nuclear deal, Donald Trump is trying to cripple Iran’s oil-dependent economy and force Tehran to quash not only its missile and nuclear programmes, but also diminish its influence in the Middle East.
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