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MOSL: Morning India (29/May/19): 1. HDFC Bank (Getting bigger, better and stronger); 2. EcoScope (Gross domestic savings, not financial, matter for the economy); 3. Sun Pharma; 4. GAIL; 5. PNB

MOrning India (29/May/19): 1. HDFC Bank (Getting bigger, better and stronger); 2. EcoScope (Gross domestic savings, not financial, matter for the economy); 3. Sun Pharma; 4. GAIL; 5. PNB; 6. Aurobindo Pharma; 7. NMDC; 8. Info Edge

 

Today’s top research idea

HDFC Bank: Getting bigger, better and stronger

• We attended HDFC Bank’s annual analyst meet wherein it highlighted the progress that different businesses are making and the steps that the bank is taking to maintain strong competitive positioning. The bank remains confident about its strategy to deepen presence in suburban/rural region and offer full product suite while strong analytics, faster turn-around-time and targeted customer servicing will ensure higher relationship value. The management shared their views on various areas ranging from succession planning, digital initiatives, competitive positioning, and subsidiary performance.
• Valuation and view: HDFCB has been consistently gaining market share across retail product segments. The bank’s strong capitalization and liquidity levels are likely to help it sustain this growth momentum. We expect HDFCBK to deliver 22%/22% loan book/PAT CAGR over FY19-21. Margins are likely to remain stable, while strong control on operating leverage is likely to result in steady return ratios (RoA/RoE of 1.9%/17.2% in FY21E). Maintain Buy with a TP of INR2,780 (3.8x FY21E ABV).

Piping hot news

Airtel looking to raise up to $1 billion with LSE listing of African unit

• Bharti Airtel Ltd has sought approval of the UK financial regulator for an initial public offering of its African unit in London as it seeks to cut debt and expand its network. Airtel Africa Ltd, the continent’s second-largest mobile operator, is aiming to raise around $1 billion in a June equity offering, a person familiar with the development told Reuters.