FREE

MOSL: Morning India (8/January/19): 1. India Strategy - 3QFY19 Preview (New Year, New Forces); 2. Gruh Finance (Bandhan Bank acquires Gruh Finance in an all-stock deal); 3. Endurance Tech; 4. CESC; 5. EcoScope

MOrning India (8/January/19): 1. India Strategy - 3QFY19 Preview (New Year, New Forces); 2. Gruh Finance (Bandhan Bank acquires Gruh Finance in an all-stock deal); 3. Endurance Tech; 4. CESC; 5. EcoScope

 

 

Today’s top research idea

India Strategy - 3QFY19 Preview (New Year, New Forces); Macros turn benign, micros deteriorate; Financials hold key for earnings hereon

• In our view, the 3QFY19 earnings-report season will be a lackluster one. Global Cyclicals like Metals and Oil & Gas - the drivers of earnings growth over the last few quarters - are looking jaded, given the correction in commodity prices and are likely to post a decline of 13% in profits after five consecutive quarters of strong growth
• We expect MOSL Universe PAT to grow 2% YoY. Defensives are expected to post a 10% YoY profit decline, impacted by rising losses in Telecom and muted profit growth in Utilities. Domestic Cyclicals meanwhile are expected to post 36% growth, highest in last 28 quarters, led by Banks.
• We expect Nifty sales, EBITDA and PAT to increase by 13%, 6% and 8% on a base of 15%, 15% and 16% growth, respectively. Ex-OMC and PSU Banks, Nifty is likely to post 10% earnings growth in 3QFY19.
• Our Nifty EPS estimates for FY19/20 have been cut by 1% each to INR510/INR648. We are building in Nifty EPS growth of 12%/27% for FY19/20.

Piping hot news

Gruh finance to merge with Bandhan Bank

• Bandhan Bank said on Monday Gruh Finance would merge with it in an all-share deal valued at approximately Rs 81,800 crore based on the closing prices of shares of the two players. Shareholders of Gruh will get 568 shares of Bandhan for every1,000 shares held. The transaction helps lower the promoter stake in Bandhan Bank to 61% from 82%. This means the outstanding number of shares of Bandhan Bank will go up to close to 161 crore shares post the merger.