EUR 120.00 For Business Accounts Only

MOSL: MOrning India (19/November/19): 1. India Strategy (Result review 2QFY20; Operationally in line; tax cut drives PAT beat); 2. Telecom (VIL & BHARTI’s move to take a price hike); 3. Future Lifestyle (Lower

MOrning India (19/November/19): 1. India Strategy (Result review 2QFY20; Operationally in line; tax cut drives PAT beat); 2. Telecom (VIL & BHARTI’s move to take a price hike); 3. Future Lifestyle (Lower margins pull down earnings); 4. Sadbhav Engg. (Execution below expectation)

 

Today’s top research theme

India Strategy: Result review 2QFY20; Operationally in line; tax cut drives PAT beat

• The second-quarter corporate earnings season was in line with our modest expectations. While the corporate tax rate cuts helped in arresting earnings downgrades, commentaries do not suggest any imminent recovery. Demand concerns in the economy are now coming to the fore, continuation of which can raise the risk for earnings downgrades in FY21.
• Nifty sales/EBITDA/PBT/PAT grew -2.5%/2.1%/-3.1%/8.3% YoY (our estimate: -2.1%/-2.4%/-3.9%/-8%). The divergence between the PBT and PAT performance can largely be attributed to the corporate tax rate cut. We, however, note that not all companies have shifted to the new tax regime.
• Financials accounted for 90% of incremental profits for the quarter. At the PBT level, the contribution of Financials is even starker.
• Sales for both the Nifty and the MOFSL Universe declined for the first time since Jun'16, dragged by Automobiles, and Commodities like Metals and O&G.
• Our FY20/21 Nifty EPS estimates have been revised to INR538/INR683 (prior: INR539/INR691). We expect Nifty EPS to grow 12% in FY20.

Piping hot news

ICICI Bank plans ₹20,000 cr capital boost via QIP

ICICI Bank Ltd plans to raise at least ₹20,000 crore by selling shares to institutional investors, in the biggest such capital raising in India, as the nation’s largest private lender looks to expand lending and compete with rivals to fill in the void left by shadow lenders after a crisis engulfed the sector. The Mumbai-based bank has approached at least 10 investment banks on the proposed capital raising, and it may soon give a formal mandate to some of them, two people familiar with the bank’s plans said on condition of anonymity.