MOSL: Morning India (20/April/20): 1. India Strategy - 4QFY20 PREVIEW (Covid halts earnings recovery); 2. HDFC Bank (High contingent provisions drive flat PBT); 3. Financials; 4. Tata Motors; 5. Cholamand. Inv.
Morning India (20/April/20):
Today’s top research theme
India Strategy - 4QFY20 Preview: Covid halts earnings recovery; Slow grind ahead
** 4QFY20 earnings-report season is in throes of an unprecedented global pandemic, FY21 too has begun on a lackluster note with India and several world economies in an extended lockdown. This has impacted the underlying demand/supply dynamics and is expected to have an adverse impact on the economy and corporate earnings.
** We estimate MOFSL Universe's 4QFY20 PBT/PAT to decline 22%/25% YoY, with the laggards being Autos/Oil and Gas/ Metals. In fact, these three sectors are expected to account for the entire 25% YoY decline in MOFSL Universe's earnings in 4QFY20. Consumer/Private Banks (benefit of low base)/ Healthcare are expected to be the key outperformers this quarter.
** We estimate Nifty sales to decline 10% YoY, while EBITDA/PBT/PAT should decrease 9%/21%/20% YoY in 4QFY20.
** Our FY20/FY21 Nifty EPS estimates are revised downwards by 8%/27%. The earlier expectations of a sharp earnings revival in FY21 now stand belied. Thus, we project FY20 Nifty EPS to remain flat at INR485 while FY21 Nifty EPS is expected at a muted 3% to INR499.
Piping hot news
Oil Drops to 21-Year Low With Storage Filling as Demand Shrivels
Oil extended its slide, falling to the lowest in more than two decades, on concern the world is rapidly running out of places to store crude after output cuts proved insufficient to cope with plunging demand. Futures in New York fell 16% to around $15 a barrel after losing almost a fifth of their value last week as the deal by OPEC+ and other producers failed to counter the loss of demand from a crippled global economy. The current May contract expires Tuesday, however, with the more active June futures only down by less than half as much.
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