Category: Economy, Markets and Macro Views

Merill Lynch has downgraded the price target for IndiaBulls Financial Services by 46% on the back of the sharp earnings cut due to lower loan growth.

Indiabulls’ 4QFY08 earnings, up 56% yoy and 16% qoq were in line with expectations due to lower provisions. However, net interest income growth was lower than expected at 39% yoy and flat qoq. This was, in part, driven by IFSL’s desire to ensure ample liquidity for itself. Hence, it borrowed aggressively during the 4Q. The cash equivalent in the balance sheet is now Rs7.2bn (US$1.8bn) which is almost +40% of the total assets. (more…)

Citigroup in a report released just minutes ago has downgraded the Target Price set on ICICI Bank because of lack of direction and decision. There was almost no growth in the quarter – disappointing, but very acceptable in challenging times.P&L has done well – employee cost control with suggestions of more, fee growth acceleration to 35%+, and continued trading gains. These could provide significant earnings leverage. However, margins – the big P&L lever and hope – disappoint, with only limited expansion; outlook too appears a little muted. (more…)

The best quarter in FY08. Axis Bank reported Q4FY08 net profit of INR3.61bn, +71% y-o-y, and c30% above our estimate. Strong net interest income growth on the back of unabated credit offtake and robust fee income growth were the key drivers. The Bank continued to focus on the large & mid corporate and the SME segments for driving its loan growth, though retail also showed signs of picking up.

Axis Bank reported its Q4 and it is worthwhile to read two research reports – one published by HSBC and the other by Morgan Stanley. While the former is Overweight, the latter is Underweight. They have Zameen Aasman difference in their 12 months price targets 🙂 (more…)

HDFC Sec recommends a BUY on Hanung Toys & Textiles from a 6 months perspective.There is a lot of outsourcing opportunities due to lower labour cost in India & companies like HTTL, which are aggressively ramping up capacities, would be able to cater to the growing demand. HTTL’s new Home Furnishings facility at Roorkee with an installed capacity of 35 mn meters of fabrics processing p.a. is expected to contribute 47% to the total revenues by FY09, thus becoming a major growth driver. (more…)

Jaiprakash Associates [JA] is a play on India’s Infrastructure sector. JA derives its value from combination of Construction and Development. Kotak sec has initiated coverage on JP Associates with a BUY recommendation.

JA will emerge as a leading developer of Real Estate and Power generation. The company has the expertise to bag mega projects. JA has the right to develop 6,250 acres of land on the Taj Expressway corridor. (more…)

Deepak Fertalizer”DFPCL is setting up a 0.3 mtpa Greenfield nitric acid and ammonium nitrate plant in Paradeep, Orissa at a capex of about Rs 5 bn. The company intends to divest 49% stake in this project to YARA International, a global major in fertilizers.DFPCL has its gas supply met from ONGC’s Mumbai Offshore; however, due to a problem at their end, the gas supplies fell in FY08E. We expect the situation to turn into normalcy and DFPCL to get higher volumes of gas from ONGC. (more…)