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MOSL: Morning India (11/December/18): 1. India Roads (Financial closure concerns for HAM projects); 2. EcoScope (RBI governor resigns); 3. Healthcare – Expert Speak; 4. Financials – NBFC; 5. Tata Motors (JLR’s

MOrning India (11/December/18): 1. India Roads (Financial closure concerns for HAM projects receding); 2. EcoScope (RBI governor resigns with immediate effect); 3. Healthcare – Expert Speak; 4. Financials – NBFC; 5. Tata Motors (JLR’s Nos)

 

Today’s top research idea

India Roads: Financial closure concerns for HAM projects receding

• Order awarding should see a decline in FY19 to INR800-900b from INR1.2t in FY18 given previously awarded projects are yet to enter execution cycle, general elections would be held in FY20 and due to delays in land acquisition by NHAI for the year.
• However, concerns regarding financial closure for newly-awarded HAM projects have receded as 80% of the awarded projects have been able to achieve financial sanctions from banks, and now ~20% are in the process to achieve financial closure.
• Given that HAM projects have witnessed difficulty in achieving financial closure, we expect award activity in FY19 to be in favor of EPC projects. Current live tenders indicate 56% tenders are from EPC, 6% from ToT and balance 38% from HAM.
• We maintain our preference for EPC players and asset developers with healthy balance sheets to play the sector and maintain our preferred plays as KNR (Buy, TP: INR280) and Ashoka Buildcon (Buy, TP: INR170).

Piping hot news

Urjit Patel resigns as RBI Governor

• Citing personal reasons, Urjit Patel has resigned as the Reserve Bank of India. His resignation comes against the backdrop of increasing tensions between the Finance ministry and the Reserve Bank of India. Urjit Patel, 55, who took over as the 24th Governor of the central bank on September 5, 2016, had the shortest tenure since the year 1992.