Indian Equity Research and Investment Strategy
Indian Equity Research and Stock Recommendation
Shriram Transport Finance (SHFT) reported earnings were 13% above our estimates (net profit of Rs2.64bn in 4QFY10, 72% yoy growth), both in terms of quality and quantity. NII growth came in at 45% yoy, driven by expansion in NIMs (on average AUM) by 100bp yoy and 46bp qoq, and AUM growth of 25% yoy.
SHFT is attempting to move towards a business model, whereby they leverage their niche franchise to grow faster by securitizing (more…)
HDFC Ltd reported net profit of Rs9.3B, up 26% y/y, higher than our and consensus estimates. The earnings surprise arose mainly from higher loan growth and better-than-expected margins (spreads improved from 50bp y/y to ~3.5%). For full year FY10, net profit increased by 24% y/y to Rs28.2B.
Margins even adjusted for the sale of loans to HDFC Bank improved by 20bp to 3.3%. The dual rate loan re-introduced recently would (more…)
HDFC Bank’s 4Q earnings were 6% above expectations, driven by margin surprise and significantly lower provisions vs. expectations. Margins surprised at 4.4% (although guided down for this year), there was a pick-up in wholesale loans (particularly retail vehicle loans), with stable cost ratios and improving asset quality.
It is entering a new credit cycle (more…)
Goldman Sachs in a report released just a while ago has recommended a SELL on Sun Pharmaceutical Industries. The latest verdict on Protonix has added another layer of risk around Sun. With Caraco’s sales continuing to decline, Sun’s US revenues in recent months have been dependent on generic Protonix. Sun has stated that it will continue to sell Protonix in the US. Coupled with these (more…)
Nestle India reported 1QCY10 results on April 22. Net sales were Rs14.8bn (+16.9% yoy) vs.consensus of Rs15bn and our estimate of Rs15.2bn. Net income reported was Rs2,019 mn (+2.3% yoy), 11.1% lower than consensus of Rs2,270 mn and 18.5% lower than our estimate of Rs2,477 mn. EPS reported was Rs20.94 (+2.3% yoy) vs. estimate of Rs25.69. (more…)
BOFA Merrill has initiated coverage on Adani Enteprises with a BUY Rating. Adani is transforming its business model to sustainable annuities with high-margin / RoE (23.9% / 34.7% by FY12E) and heavy capex from a volatile, low capex, and low margin / RoE (3.8% / 16.7%) trading business. It plans to invest Rs412bn over FY10-13E with IPP and coal mining accounting for 74%, which imparts visibility to scale. Its control over coal mine to power value chain shall drive superior margins. (more…)