Year: 2008

HDFC Bank – HDBK has raised margins even further to 4.3% (4% previous quarter), fee income growth has jumped to over 35% (after a relatively modest sub 30% show over the last year), and while costs are a pressure point, pre-provisioning profit growth is a robust 67%. This is impressive and suggests HDBK could now be on a higher earnings growth path.

HDBK’s balance sheet, for all the above reasons, has for long been the best in the sector – this quarter is no exception. HDBK now appears to be leveraging it more aggressively – loans are up 48% yoy, the retail book is growing well above industry averages, asset quality remains under control with less than 1% NPAs.

Kotak Mahindra Bank – KTKM has recorded a bumper 3Q08 – quantitatively and qualitatively. Profits – well ahead of expectations; growth – strong and broad based across businesses; Strong and well-rounded show: margins are up (partly boosted by new capital), loan growth remains broad and 50%+, and healthy asset quality. Negative qoq deposit growth the only let-up. Distribution expansion ambitions are raised – seeking to roll out 250 branches (149 currently) by year-end.

KTKM sustains market leadership comfortably, record 76% securities revenue growth, though there is some loss in market share and yields. Expect Kotak Bank to report an EPS of Rs 24.35 and Rs 29.91 for FY08 and FY09 respectively.

New Delhi Television (NDTV) has announced that NDTV and an overseas subsidiary of NDTV have signed a MoA with NBC Universal, Inc. (NBCU) and a subsidiary of NBCU in respect of the sale / issue by an overseas subsidiary of NDTV of an effective 26% stake to an affiliate of NBCU for a consideration of US $ 150 million. The said subsidiary of NDTV is the indirect parent company of the following companies: NDTV Imagine, NDTV Convergence, NDTV Labs, NDTV Lifestyle, NDTV Emerging Markets B.V and the said subsidiary is a joint venture partner in NGEN Media Services.

The MoA also envisages that NBCU affiliates would have the option to acquire up to 50% of said subsidiary in the third year of the joint venture at the then fair market value. The MoA and the transaction contemplated therein are subject to receipt of all necessary approvals. The proposed joint venture shall not relate to news channels in India.

ICICI’s profits were ahead of expectations, if qualitatively a little mixed. Key takeaways: a) P&L pickup, on fairly broad-based gains; b) asset quality drift continues, and growth appears to be slipping away; c) business focus: subsidiaries to the fore, as its (questionable) international focus continues. Overall, the P&L shine was likely dulled a bit by the balance sheet and its direction.

While margins are up (remaining low, but getting better positioned for expansion), fee income growth has accelerated to over 33% (in spite of slackening growth), and cost pressures appear to be stabilizing. There is some evidence of ICBK’s potential to raise profitability (a long-held expectation) through its franchise.

Balance sheet issues are likely to take center stage as: a) domestic loan growth moderates further (retail 12% yoy), b) int’l ops remain a key focus, in spite of questionable economics, and challenging markets, and c) asset deterioration continues at a steady (expected) pace. In sum, there are more questions than answers.

Idea’s 3QFY08 EBITDA at Rs5,672m was in line driven by robust revenue growth (9.3%qoq) though offset by sustained increase in network opex. Idea has started accounting pre-paid revenues net of distributor discount which explains the qoq decline in marketing costs/SAC. Adjusting for this, revenues grew 12.5%qoq. Net profit at Rs2,368m was below expectations due to higher deferred tax provision.

MOUs [Minutes of usage] which had dipped in 2Q due to inactive subs/seasonality bounced back to 377, up 5% qoq though still lower than 1QFY08. Though reported ARPUs were down 3%, the decline was negligible adjusting for the impact of the accounting change on commissions. The adjusted rev/min qoq decline at ~5% though slightly more than larger peers is broadly in line with the industry trend.