FREE

MOSL: Morning India (22/October/18): 1. HDFC Bank; 2. Financials; 3. UltraTech Cement; 4. Biocon; 5. Mphasis; 6. Persistent System

MOrning India (22/October/18): 1. HDFC Bank; 2. Financials; 3. UltraTech Cement; 4. Biocon; 5. Mphasis; 6. Persistent System

 

Today’s top research idea

HDFC Bank: Strong performance continues; business growth gaining further momentum

• HDFCB has been consistently gaining market share across retail product segments (personal loans, business banking, CC and auto loans) and the recent capital raise will enable it to sustain this growth momentum especially with Structural drivers in place with (1) CASA ratio of 42%, (2) opportunities’ for the significant market share gains, (3) improving operating efficiency led by digitalization initiatives, (4) expected traction in income due to strong expansion in branch network, and (5) best-in-class asset quality. Operating expenses have been under control and several digital initiatives have led to a consistent decline in the C/I ratio to ~40%. PPoP growth is expected to be healthy at 23%+ and PAT growth is expected to be 22% over FY18-20E.

Piping hot news

Tax treaties under scanner as Australia court says Tech Mahindra to be taxed

• The fundamental feature of tax treaty — a bilateral pact between two countries to resolve issues of double taxation — has come under question. According to a ruling by the Federal Court of Australia, the payments received by an Indian company from its clients in Australia will be taxed in Australia. The Australian superior court has treated such payments as ‘royalty’ — which can be taxed, even though such proceeds cannot be taxed under local Australian laws.