12 July 2017
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Today’s top research idea
IndusInd Bank: Mixed asset quality; strong operating
IIB’s 1QFY18 PAT grew 31% YoY to INR8.4b. Strong loan growth of 24% YoY
and steady NIM at 4% drove robust NII performance (+31% YoY; 5% beat).
Robust NII performance and strong fee income growth (25%+) enabled the
bank to deliver impressive 29% core PPoP growth. Both corporate (+26% YoY)
and consumer (+22% YoY) loans exhibited healthy growth.
GNPAs increased 21% QoQ to 1.1% of loans (0.9% in FY17), led by high
slippages in both CCB and CFD divisions.
Strong core profitability, an improving CASA profile and healthy return ratios
(RoA of 1.9%+ and RoE of 16-18%) are the key positives. We largely maintain
with a target price of INR1,800 (3.8x June 2019E BV).
Equities - India
10 Yrs G-Sec
10 Yrs AAA Corp
Flows (USD b)
Note: YTD is calendar year, *Avg
South India Bank
Mixed asset quality; strong operating performance
Flash Note: PPOP growth marred by provisions; balance sheet cleanup
1QFY18 Preview: Channel facing hurdles of GST implementation
Piping hot news
Liquor ban not applicable along denotified highways in cities: Supreme
In a major concession for hotels and restaurants hit by the recent Supreme
Court ruling banning any liquor joint along 500 metres of any state or national
highways, the apex court on Tuesday clarified that any such executive action
would not fall foul of the law if the highway was within the city limits.
Chart of the Day: India Strategy - Trajectory of profit growth of B2C sectors changing materially in 2H v/s
1H due to GST disruption in 1HFY18 and low base of 2HFY17
India Strategy: PAT change YoY (%)
Research Team (Gautam.Duggad@MotilalOswal.com)
Source: MOSL, Company
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