EUR 120.00 For Business Accounts Only

MOSL: Morning India (13/September/19): 1. Piramal Enterprises (Financial Services’ domination increases; Moderating growth); 2. Cement ; 3. EcoScope; 4. Power & Coal monthly

MOrning India (13/September/19): 1. Piramal Enterprises (Financial Services’ domination increases; Moderating growth); 2. Cement ; 3. EcoScope; 4. Power & Coal monthly

 

Today’s top research Idea

Piramal Enterprises - Annual Report update: Financial Services’ domination increases; Moderating growth

• The liquidity crisis, lag impact of demonetization, RERA implementation and stress in the Real Estate financing space has weighed down the growth of PIEL's Financial Services (FS) business. FY19 saw PIEL's customer assets grow by 34% YoY to INR566b v/s 50%+ in the past few years. Nevertheless, dominance of FS in overall revenue and operating profitability continue to rise with share of 53%/67% v/s 47%/67% in FY18.
• Pressure on margins (partially led by move towards low yielding Retail Housing loans) and cost of Retail rollout weighed on profitability. ROAs declined ~50bp to 3.1%.
• Stress loans increased with stage 2/3 loan share at 1.9% v/s 0.9% a year ago. Outstanding provisions on the balance sheet stand at 1.8% of loans (stable YoY).
• In the FS business, banks (71%), mutual funds (11%) and insurance companies (8%) are the largest sources of funding. The share of CPs is down to 12% v/s 18% a year ago.

Piping hot news

RBI reduces risk weight for consumer credit, including personal loans, to 100%

The Reserve Bank of India (RBI) on Thursday said it has reduced the risk weight requirement for consumer loans to 100 per cent, a move that will reduce cost of such loans. Currently, the risk weight requirement for such loans is 125 per cent. The relaxed requirement would not be applicable to credit cards.