MOSL: Morning India (6/October/17)-1. 2QFY18 Preview | Financials - NBFCs (Strong growth across segments)- 2. Gujarat Gas- 3. Shilpa Medicare

​MOrning India (6/October/17): 1. 2QFY18 Preview | Financials - NBFCs (Strong growth across segments); 2. Gujarat Gas; 3. Shilpa Medicare

Today’s top research theme

NBFC | Preview 2QFY18: Strong growth across segments; Better profitability aided by declining cost of funds

• We expect gradual improvement for MFIs and vehicle financiers. Post implementation of GST, while growth has moderated, we expect improved loan demand from SMEs due to inventory restocking and cash flow mismatches.
  
• Core housing growth has moderated due to RERA implementation, and tier II and III locations are the key growth drivers. For HFCs, we expect the share of non-retail loans in overall portfolio to increase. Post implementation of RERA, we expect opportunistic growth by large players.
  
• Festive season-related demand, coupled with better availability of credit, is likely to keep growth rates healthy for segments like CDs, 2Ws and vehicle finance. Backed by easy liquidity and cheaper CoFs, NBFCs have become more competitive in corporate lending.
  
• BAF, CAFL, LTFH, PNBHF and MMFS (off a low base) are likely to post earnings growth of 30%+ YoY, which is commendable. We expect positive surprises from MMFS, SHTF and DEWH. Our top picks in this space are HDFC, DEWH, BAF, CIFC and SHTF.
  

Piping hot news

GST Council meeting today, MSMEs, exporters may get relief package

• The Goods and Services Tax Council (GST Council) chaired by finance minister Arun Jaitley is likely to announce on Friday a special package for micro, small and medium enterprises (MSMEs) that will, among other things, address the concerns of exporters, as policymakers explore ways to fix an unexpected slowdown in economic growth.