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MOSL: Morning India (1/February/18): 1. Oil & Gas; 2. Jet Airways; 3. ICICI Bank; 4. Larsen & Toubro; 5. NTPC; 6. Vedanta

MOrning India (1/February/18): 1. Oil & Gas; 2. Jet Airways; 3. ICICI Bank; 4. Larsen & Toubro; 5. NTPC; 6. Vedanta; 7. JSW Steel; 8. Dabur India; 9. Bharat Electronics; 10. Chola Invs & Fin

 

Today’s top research idea

ICICI Bank: Asset quality holding well; return ratios to improve gradually

• ICICIBC reported 3QFY18 PAT of INR16.56b (21% miss), affected by elevated provisions and weak other income (93% YoY decline in treasury income at INR660m).
• However asset quality held stable with slippages coming in on expected lines at INR43.8b (largely from stressed assets) despite absorption of full divergence amount – which the bank chose not to disclose as the same was <15% of FY17 GNPL.
• While credit cost is likely to stay elevated in the near term (NPL ageing + requirement toward the second list), we expect it to moderate from 2HFY19E thus enabling ICICIBC to deliver ~12% RoE by FY20E. Reiterate Buy with an SOTP of INR405 which corresponds to 1.9x Mar-20E ABV. Subs account for ~30% of our target valuation.

Piping hot news

GST e-way bill to go live on budget day, industry fears disruption

• The e-way bill, key to preventing tax evasion under the goods and services tax (GST), will be rolled out nationwide from Thursday, the day finance minister Arun Jaitley will present the Union Budget 2018, amid persistent concerns in some quarters that its enforcement could trigger fresh economic disruption.The GST e-way bill, an electronic documentation tracking the movement of goods, is mandatory for all inter-state movement of goods from 1 February.