MOSL: Morning India (20/July/17)-1. L&T Finance (IC); 2. Tata Steel; 3. Bajaj Finance; 4. UltraTech Cement; 5. Aurobindo Pharma; 6. Havells India
​MOrning India (20/July/17): 1. L&T Finance (Focused approach); 2. Tata Steel; 3. Bajaj Finance; 4. UltraTech Cement; 5. Aurobindo Pharma; 6. Havells India; 7. Canara Bank; 8. Sanofi India
Today’s top research idea
L&T Finance (Initiating Coverage): Focused approach; Strong execution toward stated goals to boost profitability; Buy with TP of INR180, 20% Upside
LTFH is a quintessential turnaround story, in our view. From a company with 20+ product lines and sub-standard return ratios, it is gradually transforming itself to a focused financier with eight product lines across three verticals, with a target to achieve 18-20% RoE by FY20 (~12% in FY17).
LTFH is one of the market leaders in many of the segments it operates in. A well-diversified book, strong growth, and a decline in expense ratio and credit costs should elevate RoA/RoE from 1.5%/12.4% in FY17 to 2.3%/19.2% in FY20. While the stock has re-rated well over the past year due to strong execution by management, we expect re-rating to continue. We thus initiate coverage on LTHF with a Buy rating and TP of INR180 (3.0x FY19E BVPS).
Piping hot news
Cabinet clears HPCL stake sale to ONGC, but combo entity falls short of mega scale
- ​State-run hydrocarbon producer ONGC will buy the government's 51.1% stake in public-sector oil refiner-cum-marketer HPCL and make it a listed subsidiary, with the Cabinet on Wednesday giving in-principle nod for the transaction.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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