UBS on Banks/Microfinance
Microfinance PAR O+ (overdues) was up 110bp MoM in November tο 18.6% (up 240bp/620bp since September/March 2024)
Higher slippages expected in H2FY25
Higher Slippages From Elevated Forward Flow From Early Delinquency Buckets To 90+ DPD Will Continue
Expect Growth To Remain Muted In FY25 Due To Stress
Effect on collection efficiency of floods/festivals (some geographies) in October might have partially reversed in November
Disbursement Norms Are Also Getting Tightened By Micro Finance Industry SRO
Tightened Disbursement Norms Are Positive In Medium-term But It Would Reduce Liquidity
Neutral On Bandhan Bank (46% Book Is MFI), IndusInd (9% MFI) & AU Bank (7% MFI)
Stress might not peak out in Q3 as believed by some managements
Neutral on sector
Prefer HDFC Bank, ICICI Bank and Federal Bank
HDFC Bank- Maintain Buy, target price at Rs 2100
ICICI Bank-Maintain Buy, target price at Rs 1575
Federal Bank-Maintain Buy, target price at Rs 250
Morgan Stanley : 2024 Rewind
Sensex made a new high in 8 out of 12 months in 2024
MSCI India’s rank rose to 4th (among 24 EMs) in the EM cohort vs. 9th in 2023 and 12th in 2022
Seven out of 10 sectors delivered positive returns in 2024
In 2024, FPIs bought just US$14mn in the equity markets, vs. net buying of US$21bn in 2023, driven by primary market participation
Domestic institutions bought stocks worth US$60bn
HSBC on Power
Power demand growth turned positive in November and accelerated in December, after declining YoY in August-October
This is on a backdrop of a low base last year due to relatively muted winters
12GW of renewable projects with storage auctioned in CY24
28GW of RE capacity commissioned in 11mCY24, including 2.3GW in November
Expect another 3-5GW of thermal capacity to come online by FY25e
Low IEX prices as they averaged INR3.5 / INR3.7 in November / December to date
Morgan Stanley on RIL
OW, TP Rs 1662
Acquisition Of Oncology Platform Adds Another Stack To Diagnostic & Digital Health Ecosystem
RIL aims to leverage its technological expertise & vast distribution networks to create more integrated healthcare system-digital health platforms, telemedicine services & advanced healthcare delivery models
GAIL In Focus
US Gas prices at new 52-week high
Price increase in near months is due to colder weather outlook in the US
Such volatility is common during the winter months
European gas prices are unchanged
Higher prices will be short term negative for GAIL
It might still have US gas contracts which may be open and not fully hedged
Impact is expected to be very marginal and mainly limited to just one month
More than 70% of the contracts are already sold on a back to back contract
Investec on Adani Wilmar
Maintain Hold, TP 397
Single promoter ownership is a positive outcome
Expect the entire transaction to complete before the requisite 12 months.
Company has a stable and professional management reporting to the board which we see no change in.
All the usage of the Adani infrastructure in our view by Adani Wilmar will remain unchanged
Even after the deal as Adani and Wilmar group chalk out the finer details in the coming months.
JPM on Adani Wilmar
Maintain Underweight, TP 320
Enjoys significant sourcing, supply chain and scale advantages
Believe 40x FY26E P/E are very well pricing in the franchise strength
FY26-Value the edible oil business at an EV/EBITDA of 12x
Foods at an EV/revenue of 3x, and industry essentials at an EV/EBITDA of 8x.
CITI on Indus Tower
Reiterate our 90-day Positive Catalyst Watch, target price at Rs 485
Improved visibility of dividend reinstatement in 3Q/4Q
Upcoming pickup in tenancies from Vodafone Idea starting 3Q, with a possible inflection in tenancy ratio from 40
Declining capex aiding free cash flow generation
Trading at 6%/8% dividend yield on Buy / high risk price
Any progress on Vodafone Idea’s debt funding will be a key monitorable going forward
CITI on Vodafone Idea
Retain our Buy/High Risk rating; target price at Rs 13
With clarity on debt funding a key stock catalyst going ahead
EGM for shareholder approval on Jan 7
EGM for of the Rs 1980 CR preferential Badh allotment of shares in Voda Idea to
Vodafone Group Plc (priced at Rs11.28/sh)
Financial Stability Report-RBI
Raises concerns over rising stress in unsecured loans
Stressed microfinance loans rise from 2.15% in March to 4.3% in September
Credit card bad loan ratio at 2.2%, education loans at 2.7%
Rising unsecured loan defaults could impact secured loan repayments
RBI urges lenders to monitor risks and practice prudent lending
Alert: Unsecured loans include credit card, personal, and microfinance loans
50% of unsecured loan borrowers also have housing or vehicle loans
Kotak on RBI Financial Stability Report
Still in a comfortable zone and less worrisome overall
Early warning stress indicators are still not worrisome
Most of the increase in the stress coming from the exposure to microfinance
Loan demand has slowed, but deposit growth has converged
Report better than initially feared
Credit costs for Banks will not rise meaningfully
Nuvama on JSPL (Management Meet)
Retain Buy, TP 1292
Volume growth to resume from FY26
In the process of resolving pellet plant bottleneck, which can ramp up steel volume to ~8.3mt in FY26 from existing capacity
3.3mtpa steel capacity to be commissioned by FY25-end
Coal blocks in the last leg of approvals with mining from Q1FY26.
Capex push likely by government in Q4FY25, leading to volume growth
Q4FY25 looks promising amid higher steel prices and volumes.
Despite that, we are reducing FY25E/26E EBITDA by 6%/4% to factor in lower volumes.
3.3mtpa capacity expansion is likely by Mar-25, providing volume growth visibility that has been missing since FY22.
Kotak Inst Eqt on HDFC Life
Buy, TP Rs 850
Biz strong; regulatory concerns dominate mindshare
Growth remains strong supported by bancassurance
Management appeared fairly comfortable with momentum & trajectory of its biz
HDFC Life & prvt sector, seem well placed for steady growth
Antique in Varun Beverages
Buy, TP Rs 710
With recent acquisitions, expect co’s share of int. vol to increase to 36.5% by CY26(19.3% in CY23)
Expect VBL to deliver overall vol/ rev/ EBITDA CAGR of 21%/24%/28% over CY23-26
Revise CY24/25/26 EPS est. by -3%/+10%/+3%
