MOSL: Morning India (26/October/17)-1. RBL Bank- 2. Hindustan Unilever- 3. Kotak Mah. Bank- 4. HCL Tech- 5. Emami- 6. PNB Housing- 7. M&M Financial Services- 8. Tata Communications
​MOrning India (26/October/17): 1. RBL Bank; 2. Hindustan Unilever; 3. Kotak Mah. Bank; 4. HCL Tech; 5. Emami; 6. PNB Housing; 7. M&M Financial Services; 8. Tata Communications
Today’s top research idea
- RBL Bank: Strong growth with improving profitability and healthy asset quality
- -Key positives are from 2QFY18: a) Loan growth of 8% QoQ and 35% YoY. b) Fee income growth of 38% YoY, driven by a 150% increase in distribution/CC fees. c) Margin improvement of 20bp QoQ to 3.7%, driven partly by a reduction in cost of funds from CASA inflows and partly by capital from QIP
- -Loan growth was led by non-wholesale book growth of 41% YoY, increasing the share of non-wholesale to 40.4% from 38.8% a year ago. Strong CASA growth of 56% YoY (ahead of deposit growth of 31% YoY) led to CASA ratio improving 380bp YoY (+160bp QoQ) to 23.7
- -With a diverse product portfolio, no legacy issues, highly capable management and low market share, we expect RBL to report industry-leading loan CAGR of ~35% over FY17-20.
- -We maintain Buy with a TP of INR665 based on 3.5x Sept-19E BV.
Piping hot news
Sensex at record, new data signal a revival in sentiment
A day after the government unveiled the massive PSU bank recapitalisation plan, coupled with a big push for road construction, stock markets scaled a lifetime high on Wednesday as investors and analysts cheered the moves to lift economic growth. Separately, Hindustan Unilever Ltd (HUL), India’s biggest packaged consumer goods maker, reported a recovery in rural demand in its second-quarter results and growth in air traffic accelerated in September to 16%
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