MOSL: Morning India (12/October/17)-1. India Strategy (Turbulence behind- Clear skies ahead)- 2. Bajaj Finance- 3. Lupin- 4. Kaveri Seeds- 5. South Indian Bank

​MOrning India (12/October/17): 1. India Strategy (Turbulence behind; Clear skies ahead); 2. Bajaj Finance; 3. Lupin; 4. Kaveri Seeds; 5. South Indian Bank; 6. Power Monthly

Today’s top research theme

• India Strategy (Turbulence behind; Clear skies ahead); OMCs and select Cyclicals drive earnings; maintain Nifty EPS estimates
  
• We highlight three key trends in our Strategy report: 1] Macros: We believe the worst is behind. 2] GST: Story of two halves-2H to be much better compared to 1H. 3] Commodity cost hardening is an emerging threat for margins.
  
• The reported numbers appear impressive (MOSL Universe PAT growth at 23%), with significant contribution from OMCs (50% of incremental profit growth), Metals (low base) and PSU Banks (low base). Excluding these three sectors, PAT growth will be muted at 4% for our MOSL Universe.Earnings breadth is still lackluster: ~35% of our Universe is expected to post an earnings decline YoY.
  
• Nifty EPS estimates remain unchanged at INR487/602 for FY18/19. We introduce our FY20 estimates, and forecast Nifty EPS of INR693 for FY20.
  
• Changes in our model portfolio: Financials (raised weight of HDFC Bank; replaced Federal with RBL; added HDFC; replaced Repco with Capital First), Consumers (replaced Colgate with Titan), Energy (added HPCL), and Metals & Utilities (replaced Power Grid with Coal India).
  

Piping hot news

Direct tax collections rise 15.8% in H1 FY’18

• Net direct tax collections for the first half of the financial year, at ₹3.86 lakh crore, were 15.8% higher than the collections in the same period of the previous year, according to official data released on Wednesday.