MOSL: Morning India (5/January/18)-1. Financials/NBFCs (3QFY18 Preview)-2. Idea Cellular-3. Godrej Consumer Products FY17 (ART)

​MOrning India (5/January/18): 1. Financials/NBFCs (3QFY18 Preview); 2. Idea Cellular; 3. Godrej Consumer Products FY17 (ART)

Today’s top research theme

Financials – Bank 3QFY18 Preview; Earnings growth to remain modest

• On a sequential basis, we expect profit growth to pick up for state-owned banks as a whole with moderation in provisions. YoY growth is expected to be strong on a benign base, more so for state-owned banks. We expect incremental stress addition for ICICIBC and AXSB to decline significantly.
  
• However, credit costs will remain high, weighing down on profitability. Loan growth at the system level has picked up to ~10% after several quarters of mid-single digits growth. However, corporate credit growth may not happen immediately. While utilization levels are expected to pick up for core sectors, companies are expected to bid for stressed asset sales under NCLT before making greenfield investments.
  
• Our top picks are HDFCB, ICICIBC and SBIN among the large banks. We like KMB and RBL among the emerging names
  

Piping hot news

Banks requests RBI to allow them to spread losses over two quarters

• A group of state-owned banks has approached the Reserve Bank of India seeking exemption from recognising mark-to-market losses on their government bond portfolios in the December quarter.