EUR 120.00 For Business Accounts Only

MOSL: Morning India (23/October/19): 1. Axis Bank (Higher provisioning/DTA reversal drive losses); 2. Kotak Mahindra Bank; 3. Bajaj Finance; 4. Asian Paints; 5. Bharti Infratel; 6. Bosch; 7. GSK Pharma

MOrning India (23/October/19): 1. Axis Bank (Higher provisioning/DTA reversal drive losses); 2. Kotak Mahindra Bank; 3. Bajaj Finance; 4. Asian Paints; 5. Bharti Infratel; 6. Bosch; 7. GSK Pharma

 

Today’s top research idea

Axis Bank: Higher provisioning/DTA reversal drive losses, cutting estimates by 7%

• AXSB reported net loss of INR1.1b, affected by one-time DTA reversal of INR21.4b and elevated provisions. NII increased 17% YoY to INR61b as margin expanded ~10bp QoQ to 3.5%. Other income grew 45% YoY to INR38.9b, led by treasury gains of INR8.1b.
• Loans grew 14.4% YoY led by domestic loans (+19% YoY), within which retail loans grew 23% YoY, while overseas book declined 25% YoY. Deposits grew at 22% YoY led by 37% YoY growth in TD deposits.
• Fresh slippages increased to INR49.8b, of which corporate slippages stood at INR28.6b. GNPA/NNPA ratio declined 22bp/5bp QoQ to 5.0/2.0%. BB & below pool reduced to INR62.9b (3.4% of corporate loans).
• AXSB has delivered an in-line operating performance excluding the impact of DTA reversal. The challenging economic environment though has kept slippages elevated. We expect NPL formation to stay elevated as AXSB addresses the remaining stressed assets. We estimate AXSB to deliver FY21E RoA/RoE at 1.3%/14%. Maintain Buy with a TP of INR825 (2.4x FY21E ABV).

Piping hot news

Defence FDI through automatic route may be hiked to 74%

India plans to widen its doors to foreign funds in the defence sector to boost local production of armaments and cut down on imports. The department for promotion of industry and internal trade (DPIIT) and the defence ministry are in talks to ease many conditions to encourage foreign investors to set up shop here. It may also restructure the offset and export policies. “Discussions are on over further liberalisation,” a government official, privy to the deliberations, confirmed to ET.