Indian Equity Research and Investment Strategy
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Indian Industry beat Street Expectations in 4QFY09 Results. It’s still early days in India’s earnings season, but the first trends suggest earnings are in-line with modest expectations +2.3% vs. 3.3% est. for the Sensex (10/30).
So far, Banks, Capital Goods, Household Consumer Products, Metals and Telecom have beat expectations. (more…)
Net interest income (NII) came largely in line with ours estimates led by above industry average loan growth and marginal improvement in margins. Other income surprised positively, led by robust fee income growth, treasury gains and recovery from written-off accounts. Low cost deposits grew by 20% yoy, but the ratio declined marginally as of March 2009. Reported asset quality largely appears stable and about Rs26.6bn (about 1.85%) loans were restructured in FY09. Another Rs16bn of loan (1.0%) applications for restructuring are pending approval.
Asset quality: Reported asset quality largely remained stable on a qoq basis. In FY09, about Rs10bn were additions to opening gross NPLs, while recovery and upgradation was Rs7.4bn and writeoffs were about Rs4bn. Gross NPLs were at 1.27% (Rs18.4bn) as of March 2009 (1.5% – Rs19.2bn in December 2008) and net NPLs are 0.31% as of March 2009 (0.37% in December 2008).
At the current price, the stock trades at 6.1x FY10F earnings and 1.0x FY10F adjusted book value
HDFC Bank reported 4QFY09 earnings and here is an update on the same:
NII increased c12.8% yoy, lower than our forecast due to slower loan growth and lower margins. NIMs declined 10bp sequentially to 4.2% in 4Q09 (4.4% in 4Q08), largely due to a decline in yield on loans but supported by a higher low cost deposits (CASA) ratio. Core fee income (+46% yoy) and treasury gains (cRs2.4bn) drove other income past our estimates.
Asset Quality:
Provision for NPLs was about 0.6% of loans in 4Q09 (1.7% in FY09). Asset quality in absolute terms was largely stable on a qoq basis. The provision coverage ratio was maintained at about 68% as of March 2009. (more…)
Simon Carves, Punj Lloyds’s UK subsidiary, has received a decision in adjudication proceedings initiated on 22 December 2008, regarding the termination, by SABIC UK Petrochemicals, of a contract originally awarded in 2006. The adjudication decision has been received and is in favour of SABIC. Simon Carves is disappointed with the initial decision, the company will now proceed to the next stage of dispute resolution.
(more…)
India’s banking regulator Reserve Bank of India (RBI) has lowered its growth forecast for the current fiscal to 5.7%, down from 6% forecast of expansion that the bank had made three months ago.
The results of professional forecasters’ survey conducted by the the apex bank in March 2009 that suggested moderation in economic activity for FY09. The median forecast for GDP growth in the survey came down to 6.6% and 5.7% respectively for the last and current fiscals.
Further, the sectoral growth rate forecast for the agriculture sector has been revised downwards from 3% to 1.6% and for industry, from 4.9% to 4.1%. Services sector, however, bucked the trend and the forecast for the sector was revised upwards from 9% in the last survey to 9.3% in the current survey.
We would like to present to our readers Historical Bear market Rallies in India starting from the Harshad Mehta Securities Scam to Global Economic Crisis. The current rally from March 9th is the steepest with 38% rise until the 15th of April. (more…)
