MOSL: Morning India (23/May/19): 1. IndusInd Bank (Concerns abating); 2. Tech Mahindra (Confidence on Communications continues to inch up); 3. Cipla; 4. BOB; 5. Cummins India; 6. Ramco Cement; 7. JSPL
MOrning India (23/May/19): 1. IndusInd Bank (Concerns abating); 2. Tech Mahindra (Confidence on Communications continues to inch up); 3. Cipla; 4. BOB; 5. Cummins India; 6. Ramco Cement; 7. JSPL
Today’s top research idea
IndusInd Bank: Concerns abating; marching toward ‘business as usual’
- IIB reported PAT of INR3.6b in 4QFY19, affected by higher provisions of INR15.6b (INR11.2b toward IL&FS). NII growth moderated to 11% YoY led by interest reversal of INR1.5b. Core fees rose 28% YoY. For FY19, NII/PPoP grew 18%/22%, while PAT declined 8.5% YoY to INR33b. GNPA/NNPA almost doubled sequentially as fresh slippages spiked up to INR36.9b (downgraded IL&FS exposure of INR30b). GNPA/NNPA ratio, thus, increased to 2.1%/1.21% (+97bp/+62bp), while PCR declined by 466bp.
- IIB has accelerated its provisions toward the infra group and disclosed total fund + non-fund exposure of 1.9% toward other potentially stressed groups. The bank has achieved healthy coverage on its infra exposure, and also has healthy collateralization levels on the stressed exposure (140%), which will help limit credit cost during FY20 (guidance of 60bp). Merger with BHAFIN will strengthen the earnings profile and further boost the return ratios. We value the stock at INR1,900 (3x FY21E ABV).
Piping hot news
Three-wheelers may have to go electric from FY24
- A panel led by Niti Aayog CEO Amitabh Kant has recommended a complete switch to electric three-wheelers and two-wheelers in a phased manner, starting from March 31, 2023. A senior government official aware of the deliberations told ET that the steering committee on transformative mobility has proposed banning all internal combustion engine (ICE) threewheelers on Indian roads by March 31, 2023, and two-wheelers below 150 cc by March 31, 2025, as part of a larger plan to make India the hub for manufacturing electric vehicles.
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