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MOSL: Morning India (18/August/21): 1. India Strategy - 1QFY22 Review (Strong start to FY22); 2. GSK Pharma (Step change in growth and business mix); 3. Repco Home Finance

MOrning India (18/August/21): 1. India Strategy - 1QFY22 Review (Strong start to FY22); 2. GSK Pharma (Step change in growth and business mix); 3. Repco Home Finance

 

Today’s top research theme

India Strategy | 1QFY22 Results Review: Strong start to FY22

• Corporate earnings in the first quarter of FY22 have been in line with the elevated expectations, aided by the deflated base of 1QFY21 and localized and less stringent lockdowns v/s 1QFY21. Sectoral earnings have diverged sharply on account of the impact of second Covid-19 wave and higher commodity prices impacting the margins of select sectors (Auto, Consumer Staples, and Durables). On the flip side, cyclical sectors such as Metals and Oil and Gas (O&G) have benefitted, driving in-line aggregate earnings. For the MOFSL Coverage Universe, the earnings downgrade to upgrade ratio for FY22 stands at 6:5 - as 59 companies have seen downgrades > 5%, while 47 companies have been upgraded by > 5%.
• Nifty sales have been in-line (50% YoY; est. 48%), while EBITDA/PBT/PAT growth has come in at 41%/103%/101% YoY (est. 38%/89%/94%). Of the Nifty constituents, 42% have reported beats on our PAT estimates, while 34% have missed expectations
• The MOFSL Universe has reported sales/EBITDA/PBT/PAT growth of 51%/50%/120%/117% YoY (est. 46%/46%/111%/114%) . Ex-Metals, EBITDA/PBT/PAT growth for the MOFSL Universe has come in at 30%/70%/62% YoY (v/s est. 26%/60%/58% YoY). On a two-year CAGR basis, the MOFSL Universe has reported EBITDA/PBT/PAT growth of 12%/14%/16%.
• The Nifty FY22E/FY23E EPS estimate has remained steady at INR732/INR865 (earlier: INR733/INR868). The downgrades in Auto & NBFC sectors have been compensated by upgrades in Metals and Cement sectors.

Piping hot news

HDFC Bank gets to sign up credit card users as RBI relents

The Reserve Bank of India (RBI) has partially lifted restrictions imposed last December on HDFC Bank, allowing it to resume issuing credit cards, a person aware of the development said. However, restrictions on new digital launches remain.