MOSL: Morning India (8/January/18): 1. INDIA STRATEGY (3QFY18 PREVIEW: End of a long drought) 2. AU Small Finance Bank (Initiating Coverage) 3. Economy (Fuel or Engines)

​MOrning India (8/January/18): 1. INDIA STRATEGY (3QFY18 PREVIEW: End of a long drought); 2. AU Small Finance Bank (Initiating Coverage); 3. Economy (Fuel or Engines)

Today’s top research theme

INDIA STRATEGY | 3QFY18 PREVIEW: End of a long drought; Earnings revival finally on the horizon

• Earnings drought coming to an end; Rebound led by global cyclicals - We expect MOSL Universe PAT to grow 19.6% YoY. MOSL Universe sales growth is expected to come in at 16.2%, the highest in 21 quarters, led by Autos, Cement, Metals, Oil & Gas and Mid-caps.
  
• Nifty highlights: Sales, EBITDA and PAT to growth 16.5%, 11% and 18%, respectively.
  
• Sector growth trends: 1] Leaders – Metals (81%), Autos (76%), PSU Banks (32%), NBFC (31%), O&G (22%), Cement (21%), Capital Goods (21%). 3] Drags: IT (-4%), Healthcare(-11%), Telecom (Profit to Loss).
  
• Nifty EPS changes: FY18:INR487 v/s INR481 earlier, FY19: INR598 v/s INR609 earlier and FY20:INR708 v/s INR704 earlier. We are now building in earnings growth of 16%/23%/18% for the Nifty for FY18/19/20.
  
• Three important trends to focus on: 1] Macro growth - bottoming out, but rebound to be gradual. 2] Consumption revival, especially Rural, the dominant theme of 2018. 3] 3QFY18 growth not entirely led by low base of Demonetization.
  

Piping hot news

1,463 bad loan accounts owe 21 PSU banks Rs100 crore or more

• As many as 1,463 entities account for bad loans of Rs100 crore or more in 21 public sector banks (PSBs), finance ministry data showed. In State Bank of India (SBI) alone, 265 accounts had bad loans of more than Rs100 crore each, totalling Rs77,538 crore, at the end of the September quarter. Among the nationalised banks, Punjab National Bank topped the chart with 143 non-performing asset (NPA) accounts carrying over Rs100 crore each.