Indian Equity Research and Investment Strategy
The H1-2015 earnings from Indian Banks confirm acceleration in market share gains for private banks given the rising capital constraints and stressed financials of PSU banks. Private banks have taken a 30% share of incremental loans in past 12 months and 50% share of loans in last six months, as compared to their market share of 20% of the total banking system loans.
While, private banks have even historically had (more…)
The BJP Government led by Shri Narendra Modi has taken some bold decisions in the Oil & Gas and Energy sector. Retail diesel price deregulation, providing predictability to improved cash flows of oil marketing companies (OMCs), setting the sector up for better marketing margins and private-sector competition, 2) Two-tier natural gas pricing with 47% rise in price of current production to US$6.19/mmBtu (from 1 Nov 2014 with 6 monthly review) and other incentives for future gas discoveries from the more expensive types of projects and finally, direct cash subsidy transfer to retail LPG consumers by June 2015, further improving OMC cash flows (more…)
Prime Minister Shri Narendra Modi, along with other key ministers, today unveiled the Make in India campaign. Under the campaign the government aims to increase the growth rate in the manufacturing sector in India to 10% y-o-y (-0.1% in FY14) and raise its share to 25% in the overall GDP (around 15%). Key highlights of the campaign are, (more…)
A Rising Tide Lifts All Boats so it was True with Banking Stocks. Indian banks are up 42% YTD – the key driver being growing confidence in the economy, hence better asset quality.
The first leg is driven by expectations around better asset quality. As tail risk recedes, stocks move sharply to normalized multiples – that has (more…)
The sharp slowdown in economic growth under the Corrupt Congress Regime led by Sonia Gandhi, from a peak of 9% three years ago to about half of that level today has resulted in a 50% jump in Gross NPL ratios in the banking sector, not helped by lending to the weaker segments like agri and SMEs. Also, large corporate exposures have struggled due to extraneous reasons (project delays).
Now the Big Question is – Will NPL recovery = ROA recovery for PSU Banks ? Yes to a Small Extent but not the extent the Indian Stock Market (more…)
India continues to trade at a premium to the region, but given its stronger growth expectations under Narendra Modi (#NamoBullRun), it seems well placed on a PEG basis vs. peers. Most market indicators also indicate valuations FAIRLY PRICED with NIFTY quoting at 7,900. With a firm government in place, we think the implementation of reforms could jumpstart earnings in coming years.
Which Sectors of NIFTY Have Reached Peak Valuation ?
Out analyst has beautifully constructed (more…)