EUR 120.00 For Business Accounts Only

MOSL: Morning India (08/February/19): 1. Axis Bank (Clear vision); 2. Financials; 3. EcoScope (RBI turns dovish); 4. Britannia Inds. (In-line); 5. Tata Motors (Downgrade to Neutral); 6. Grasim Inds; 7. Aurobind

MOrning India (08/February/19): 1. Axis Bank (Clear vision); 2. Financials; 3. EcoScope (RBI turns dovish); 4. Britannia Inds. (In-line); 5. Tata Motors (Downgrade to Neutral); 6. Grasim Inds; 7. Aurobindo Pharma; 8. P & G Hygiene

 

Today’s top research idea

Axis Bank: Clear vision, strong execution to drive re-rating; Three-pronged strategy to achieve 18% RoE by FY22

• With a new CEO at its helm, AXSB has charted a three pronged strategy of growth, profitability, and sustainability for FY20-22. The bank has identified credit cost, opex and business mix as the three key growth drivers to enable it to achieve 18% RoE by FY22.
• Our long-term analysis of provisioning indicates that credit cost moved to the other extreme following the turnaround in the NPL cycle. After a bad credit cycle in FY00-04, AXSB reported a sharp improvement in credit cost from 2.9% in FY04 to 13bp in the following year.
• We believe in AXSB's focus to deliver long-term sustainable growth, expecting earnings to accelerate from FY20. We, thus, expect RoA/RoE to improve to 1.3%/16.1% by FY21. We revise our PT to INR850 (2.5x FY21E ABV + INR44 per share for subs). Reiterate Buy.

Piping hot news

RBI cuts repo rate by 25 basis points to 6.25%

• The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided to reduce the key policy rate or the repo rate by 25 bps to 6.25% in the last bimonthly policy review of 2018-19 while changing the policy stance to 'neutral' from 'calibrated tightening'. The rate cut is in line with expectations as retail inflation grew by 2.2% in December its slowest in the last 18 months.