Category: Equity Research

Kotak Mahindra Bank’s heavy exposure to Capital markets for income has led it to a downgrade by Morgan Stanley. Market turnover in India is down 55% from peak levels. Kotak has multiple leverage to markets with both earnings and multiples, which are, dependent on the strength of the equity markets. Even now it is trading at 25x F2009E earnings (which could be revised down further if markets remain weak). (more…)

Citigroup in a report released just minutes ago has pushed the “EXIT” button on the stock. Citi analyst underestimated the cost that Suzlon would have to pay in executing its strategy to become the top 3 WTG manufacturers in each market it operates and the pressures that it would put on management bandwidth in managing so many moving parts of a complex supply chain.

Adding to Suzlon’s woes are – (1) Supply delays, (2) tower shortages, (3) key component shortages, (4) negative forex movements, and (5) nacelle custom duty changes in the US. (more…)

HSBC in a report released just a while ago has downgraded Television Eighteen to Neutral from OVERWEIGHT. TV18 runs India’s worst Business News Channel – CNBC TV18. Revenues have grown at a steady clip, expenses have grown in line. HSBC expected operating expenses to increase by 20% y-o-y but while staff costs and other production expenses have increased by 23% and 21% respectively, increase in marketing expenses by 373% has resulted in the overall expenditure increasing in line with revenues. (more…)

Morgan Stanley is bullish on the prospects of Glaxo Smithkline Pharma after the meeting with the management. GSK management team guided to early-single-digit sales growth in 2008 and 2009 (Morgan expcts 14-15% EPS growth) and re-iterated its business plan to launch new “exclusive” drugs in 2008. These launches have multi-year visibility, with Cervarix, in-licensed critical-care drug, allermist and Infanrix Hexa planned for 2009, and eltrombopag and synflorix planned for 2010.

Simultaneously, the company has planned new initiatives to grow its matured portfolio – focus on hospitals and rural penetration, re-organization of field force and contract field force for non-promoted drugs. (more…)

We have covered some immediate views about the Budget here – Part-1, and Part-2.

We are now analyzing the impact of Budget-09 on each and every Individual Sector of the Indian Economy.

Automobile:
Overall Expected Budget Impact: Positive
Reduction in Cenvat to be applicable for Commercial vehicles (trucks, light vehicles) can be retained to absorb increase in raw material prices – Positive for Tata Motors and Ashok Leyland.

Reduction in Excise duty for small cars, two and three wheelers, buses and bus body chassis to be largely passed on, but could result in higher demand – Positive for Maruti, Bajaj Auto, TVS Motors and Hero Honda in that order (more…)

With the mega merger of HDFC Bank [HDBK] and Centurion Bank of Punjab, HSBC Equity research & Deutsche have maintained a BUY on HDFC Bank.

The share swap ratio of 1:29 translates into a 10% dilution on an expanded capital base of 361 million shares (of the merged entity) and values CBoP at INR9.97bn. Post merger, HDBK’s loan book will be bigger by 20%, its branch network larger by 52% and its employee base higher by 35%. Apart from having a pan India presence, the branch network of CboP should give HDBK a strong regional flavour, with more than 150 branches in Punjab and the northern belt of the country alone. (more…)