EUR 120.00 For Business Accounts Only

MOSL:Morning India (10/April/19): 1. Ind-AS (Lease accounting undergoes revision); 2. Laurus Labs (At an inflexion point); 3. Tata Motors (JLR’s wholesales in line at 70.2k units in Mar’19); 4. Technology (ISG

MOrning India (11/April/19): 1. Ind-AS (Lease accounting undergoes revision); 2. Laurus Labs (At an inflexion point); 3. Tata Motors (JLR’s wholesales in line at 70.2k units in Mar’19); 4. Technology (ISG Index - Growth in deal wins continues)

 

Today’s top research theme

Ind-AS: Lease accounting undergoes revision; Operating leases to be capitalized, facilitate better comparability

• Ind-AS 116 accounting for leases comes into effect from FY20, which requires long-term liability toward operating lease payment to be recognized in the balance sheet with a corresponding intangible asset in the form of right-to-use the asset. This will bring a paradigm change in the reported earnings, return ratios, leverage and valuation multiples, improving the comparability in financials of players.
• This will primarily impact companies operating in the airline, retail, quick service restaurants, telecom and entertainment sectors.
• In this note, we have analyzed 13 BSE-500 companies with significant non-cancellable lease liabilities. For these companies, based on our assumptions for FY18, (i) EBITDA will increase by 68%, (ii) D/E will rise from 0.7x to 1.5x and (iii) asset turns will decline from 1.0x to 0.8x.

Piping hot news

Public sector banks to get more govt capital in H1FY20

Having infused around Rs 1.06 lakh crore in FY19, the government is unlikely to provide more capital to state-run banks in the first half of this fiscal, as they are well capitalised at the moment, sources said on Wednesday. Consolidation of public sector banks (PSBs), however, could dominate the reforms agenda in the current fiscal, subject to political clearance, they added. “PSBs had already been adequately capitalised in FY19 and are now focusing on recoveries and external (non-government) sources of funding.