MOSL: Morning India (20/February/20): 1. Voices (Mixed commentary; short-term respite not visible yet!); 2. Hero MotoCorp (R&D ramp up to accelerate transformation)
Morning India (20/February/20):
Today’s top research theme
Voices (3QFY20): Mixed commentary; short-term respite not visible yet!
** Nifty and MOFSL Universe earnings were in line with our expectations. Financials drove 100%+ of incremental earnings as expected while Metals and O&G dragged the aggregates.
** Corporate commentaries remained mixed with very few pockets of optimism and emerging concerns around the potential impact on supply chain in the wake of coronavirus outbreak in China.
** In BFSI, Banks have reported slowdown in corporate loan growth, reflecting the weak macro and the lower utilization limits by the corporates. Also, Banks are maintaining a cautious and conservative stance toward wholesale lending, while retail loan growth remains steady (ex-auto segment).
** Consumer companies across the board were cautious on the outlook, given the weak rural scenario and the ongoing moderation in personal care products demand.
** In Autos, OEMs expect the demand scenario to remain weak during the BS6 transition phase. They do not expect a revival before 2HFY21.
** In IT, margins improved sequentially as companies work their way on cost-optimization levers, but shrank on an annual basis due to structural changes in industry.
Piping hot news
SBI approves Suzlon’s debt revamp proposal
State Bank of India (SBI) has approved a restructuring plan proposed by Suzlon Energy Ltd as the first step towards saving the stressed wind power firm, according to two bankers familiar with the matter. Under the plan, Suzlon’s debt of ₹12,700 crore will be converted into sustainable and unsustainable debt and will be repaid over 20 years. Sustainable debt, which is 32-35% of the total, will be repaid over the first 10 years, after which unsustainable debt, including non-convertible debentures and compulsorily convertible preference shares (CCPs), will be repaid.
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