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MOSL: Morning India (29/October/18): 1. ICICI Bank; 2. ITC; 3. Bharti Airtel; 4. Nestle India; 5. Dr Reddy's Labs; 6. Biocon; 7. Divi's Lab; 8. UPL; 9. Shriram Transport; 10. Bharat Electronics

MOrning India (29/October/18): 1. ICICI Bank; 2. ITC; 3. Bharti Airtel; 4. Nestle India; 5. Dr Reddy's Labs; 6. Biocon; 7. Divi's Lab; 8. UPL; 9. Shriram Transport; 10. Bharat Electronics

 

Today’s top research idea

ICICI Bank: Earnings normalization on track; performing well on asset quality front

• Near term business growth will be driven by retail business and the share of high profit making products (mainly by cross sell) like credit cards, personal loans and business banking is likely to go up. Within corporate loans, working capital and transaction banking related loans are likely to be the key drivers. Other matrix a) Average CASA ratio of ~47% b) Contribution to fees at 72% c) Higher share of secured loans (~90% of retail loans) and continued healthy growth.
• Strong capitalization (tier I of 15.4%), significant improvement in granularity of book (~62% retail + SME) and sustained improvement in liability profile are the key positives. ICICIBC is in the midst of an improvement in operating environment (stressed asset resolution and growth pick-up) and is showing healthy signs of earnings normalization. With challenges related to the management transition getting addressed the focus of the banks is now to grow the core operating profits.
• We expect the bank to deliver an all-round improvement in asset quality, growth and margins over next few years.

Piping hot news

Festive season: Bad news for car & bike industry! Lower than expected sales this year

• Going by the very muted demand for cars and bikes, it’s going to be a dull Diwali. Demand is all but fizzling out according to dealers who say sales during the Navratri period has been down by10-20%. How subdued the sentiment is clear from the observations of RC Bhargava, chairman, Maruti Suzuki India, late last week. “The market doesn’t seem to be showing any kind of buoyancy which is expected during the festival season. The sentiment is not bright,” Bhargava said.