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MOSL: Morning India (6/October/21): 1. Financials 2QFY22 Preview (a. Banks and Insurance: Earnings momentum gaining traction; b. NBFCs: Healthy improvement in disbursements and collections ); 2. Consumer 2QFY22

MOrning India (6/October/21): 1. Financials 2QFY22 Preview (a. Banks and Insurance: Earnings momentum gaining traction; b. NBFCs: Healthy improvement in disbursements and collections ); 2. Consumer 2QFY22; 3. Gujarat Gas; 4. Bajaj Finance; 5. Godrej Consumer

 

Today’s top research idea

Financials | Banks and Insurance 2QFY22 Preview: Earnings momentum gaining traction

• The outlook for business recovery has improved since Jun'21, led by an uptick in economic activity and the rising pace of vaccinations. Most sub-segments within Retail and SME are showing healthy signs of revival, while corporate trends remain muted with higher un-utilized limits. The Credit Cards business is also seeing strong momentum, with spends higher v/s Mar'21 levels. We thus estimate systemic loans to grow 6.6%/11.8% for FY22E/FY23E.
• We estimate slippages would remain elevated, led by the Retail and SME segment; however, the quantum is likely to moderate, keeping asset quality in check - barring mid-sized banks, which could see marginal deterioration. Moreover, restructuring is likely to increase, led by the Vehicle and MFI segments, while the Corporate segment would remain resilient.
• Provisions would remain mixed, with some banks continue to build up their provision buffers while others are likely to maintain their provision buffers given the persisting fear around a potential third wave. Overall, we estimate our Banking Coverage Universe to deliver ~8%/20% PPoP/PAT growth in 2QFY22E.

Piping hot news

Coal shortage 'beyond normal', situation may not ease soon

A sharp increase in energy demand as the economy opened up post pandemic restrictions is causing a "beyond normal" shortage of coal in the country which could last as long as six months. Union Power Minister R K Singh told the Indian Express that bridging the gap between available coal and the coal needed to fire power stations would be a "touch and go" till then, though the demand is likely to come down after mid October with cooler weather.