FREE

MOSL: Morning India (29/November/18): 1. Federal Bank (Corner Office)-2. Zensar Technology-3. EcoScope-4. Automobile-5. Telecom

MOrning India (29/November/18): 1. Federal Bank (Corner Office – Business momentum remains strong); 2. Zensar Technology; 3. EcoScope (CSO releases back series estimates for new GDP series); 4. Automobile; 5. Telecom

 

Today’s top research idea

Federal Bank: Business momentum remains strong; Asset quality and earnings profile to improve going forward

• FB’s cautious approach to loan growth over the past few years is now beginning to manifest itself in a calibrated loan mix towards highly-rated corporate assets and retail loans, resulting in an upward trend in risk-adjusted NIMs. On the back of a consistently stable deposit franchise and rising confidence in its conscious asset-side strategy, we believe FB’s loan growth engine is perfectly poised to fire.
• FB has delivered relatively strong performance in a quarter that looked challenging on account of the Kerala floods and continued cleansing of the balance sheet. The bank has maintained healthy levels of business growth and is well positioned to gain market share in both the corporate and retail segments. Management sounds confident of maintaining gross slippages at INR14-15b for FY19E and aims to deliver an exit RoA of 1%.

Piping hot news

Wall St surges on hints of fewer US Fed rate hikes

• Comments by US Federal Reserve chair Jerome Powell that benchmark US interest rates were “just below” neutral sparked a sharp rally on Wall Street Wednesday, easing investor worries about the pace of rate hikes by the US central bank next year. Hopes that the US and China could call a trade war ceasefire at the upcoming G20 summit in Argentina also boosted stocks around the globe.