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MOSL: Morning India (7/January/19): 1. Financials – Banks (3QFY19 Preview); 2. Titan Company; 3. ITC (Kerala calamity cess at 1% – marginally positive for ITC); 4. Consumer (Input cost environment turning favor

MOrning India (7/January/19): 1. Financials – Banks (3QFY19 Preview); 2. Titan Company (Healthy growth momentum across key businesses); 3. ITC (Kerala calamity cess at 1% – marginally positive for ITC); 4. Consumer (Input cost environment turning favorable); 5. Capital Goods (New project announcements down sharply to 14-year low)

 

Today’s top research idea

Financials – Banks (3QFY19 Preview): Enabling macro to drive strong earnings; Margin cycle set to recover, treasury performance to improve significantly

• We expect banking system earnings to pick up sharply, led by stable/expanding NIMs, moderate credit costs, gains on treasury/corporate bond portfolio and likely reversal of MTM provisions.
• Margin cycle is set to recover as the loan book re-prices over 2HFY19, offsetting the impact of higher cost of funds. We expect private banks to report ~25% YoY PAT growth, led by a pick-up in NII and moderation in credit costs.
• We expect private banks to record NII growth of 20.3% YoY, led by stronger growth in mid-sized private banks – IIB (~25% YoY), YES (~39% YoY) and RBL Bank (~38% YoY). Among PSUs, SBI/INBK are expected to report strong ~15%/12% YoY growth in NII, while BoB and PNB are likely to report modest growth.
• Top Picks : Axis, ICICIB, SBIN, HDFCB

Piping hot news

GST ministerial panel favours Kerala levying 1% cess for 2 years

The ministerial panel under Bihar Deputy Chief Minister Sushil Modi Sunday approved levy of 1% ‘calamity cess’ by Kerala for a period of two years to fund rehabilitation work in the state hit by floods. The goods and services, which will attract the 1% cess, would be decided by Kerala, Modi said, adding that if any other state wants to levy the ‘calamity cess’ it has to approach the GST Council for approval.