Monday, 31 October 2016

Rallis India Ltd - September Quarter Results (Q2 FY17)

Rallis India Ltd posted consolidated Net Profit of Rs. 665 million for the quarter ended September 30, 2016 as compared to Rs. 508 million for the quarter ended September 30, 2015, 31% up YOY. Net Profit has declined 62% QOQ as Net Profit stood at Rs. 1742 million in Q1 FY17 which included exceptional item of Rs.1584 million on account of profit on assignment of leasehold rights to a plot of land in the MIDC area. Profit before exceptional item & taxation in the current September quarter stood at Rs. 958 mn compared to 624 mn in Q1 FY16, rise of 53% QOQ. Other income too has increased 26% YOY at Rs.37.60 million in the current Q2 FY17. Earnings before depreciation, interest and taxation galloped 18% YOY from Rs. 912 million to Rs. 1080 million in the current September quarter. Expenditure was reported at Rs. 5034 million in Q2 FY17 against Rs.  4169 million same period previous year. Finance costs were curtailed to Rs. 11 million compared to Rs. 29 million corresponding quarter previous year. Total Income has increased from Rs. 4924 million for the quarter ended September 30, 2015 to Rs. 5966 million for the quarter ended September 30, 2016, growth of 21% YOY.


Net Profit Margin for the Bank is seen at 8.15% X FY 17E and 8.10% x FY18E respectively. EPS is seen at 7.79 x FY17E and 8.08 x FY18E respectively. The PE ratio for the bank is 27.45 x FY17E and 26.50 x FY18E respectively at CMP of Rs. 214. The P/BV ratio for the bank is at 3.96 x FY17E and 3.45 x FY18E respective. We recommend BUY for the stock at a target price of Rs. 280 for medium and long term. 

Monday, 24 October 2016



SOUTH INDIAN BANK -SEPTEMBER QUARTER RESULT FY17

South Indian Bank reported strong second quarter numbers with PAT & Net Interest Income rising 18% & 15% respectively. Profit After Tax stood at Rs. 1105 mn for the quarter against Rs. 934 mn in the same period previous year and also rose 16% sequentially. Net Interest Income stood at Rs. 4450 mn compared to Rs. 3880 mn in the corresponding quarter previous year, rising 15% YOY and 19% QOQ. Net Interest Margin (NIM) is reported at 2.75% rising by one basis point over the previous June quarter, but on yearly basis decline has been around 6 basis points. Other income also jumped 20% YOY from Rs. 1212 mn to Rs. 1459 mn in the current September quarter. Compared to the previous June quarter, other income declined by 16% in Q2 FY17. Asset Quality seems to be stable as Net NPAs have declined QOQ by 12 basis points whereas Gross NPAs were constant at 3.96%. Gross NPAs & Net NPAs stood at 3.96% & 2.77% respectively in the current September quarter FY17. Provisions for the current quarter were at Rs. 1283 mn compared to Rs. 675 in Q2 FY16, almost doubling YOY. All segments except corporate performed well in the current quarter. CASA ratio is stagnant at 22.80% YOY, though on quarterly basis it has dipped by 40 basis points. Advances witnessed QOQ growth of 5.60% whereas Deposits were constant at 4% over the previous two quarters. Advances & Deposits stood at Rs. 435480 mn & Rs. 601920 mn with yearly rise of 10% & 13% respectively in the current September quarter. South Indian Bank has around 454 branches in Kerala with a total of 854 branches & 1306 ATMs as on 30th September 2016. The bank has Capital Adequacy Ratio of 11.13%. The bank seems to be strong on profitability in the current September quarter but weak when it comes to asset quality & CASA ratio compared to other private sector competitors. The bank needs to expand to strengthen its CASA & credit growth in the long run. With new banks already in the fray along with small & payments bank, Indian banking sector is becoming more & more competitive.


Net Profit Margin for the Bank is seen at 5.33% X FY 17E and 5.19% x FY18E respectively. At CMP of Rs. 24.40, EPS is seen at 2.56 x FY17E and 2.62 x FY18E respectively. The PE ratio for the bank is seen at 9.53 x FY17E and 9.30 x FY18E respectively. P/B for the Bank is seen at 0.81 x FY17E and 0.75 x FY18E respectively. We recommend HOLD for medium and long term investment with the target price of Rs 40.



Disclaimer                                                   
                                                
The information and opinions contained in the research reports have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. The research report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including but not limited to tax advice. The reports do not take into account the particular investment objectives, financial situations, risk profile or needs of individual clients. The user assumes the entire risk of any use made of this information. This report is not to be relied upon in substitution for the exercise of independent judgment.

The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur.

Research data and reports published/ emailed/ text messaged via Short Messaging Services, Online Messengers, WhatsApp etc/transmitted through mobile application/s, including but not limited to FLIP™, Video Widget, telephony networks, print or electronic media and or those made available/uploaded on social networking sites (e.g. Facebook, Twitter, LinkedIn etc) is for informational purposes only. The reports are provided for assistance and are not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Though disseminated to clients simultaneously, not all clients may receive the reports at the same time. We will not treat recipients as clients by virtue of their receiving this report.

The reports include projections, forecasts and other predictive statements which represent our assumptions and expectations in the light of currently available information. These projections and forecasts are based on industry trends, circumstances and factors which involve risks, variables and uncertainties. The actual performance of the companies represented in the report may vary from those projected.

The opinions expressed in the reports are subject to change but we have no obligation to tell our clients when our opinions or recommendations change. The reports are non-inclusive and do not consider all the information that the recipients may consider material to investments.

We shall not be in any way responsible for any indirect, special or consequential damages that may arise to any person from any inadvertent error in the information contained in the reports nor do they take guarantee or assume liability for any omissions of the information contained therein. Information contained therein cannot be the basis for any claim, demand or cause of action. These data, reports and information do not constitute scientific publication and do not carry any evidentiary value whatsoever.

The user should consult their own advisors to determine the merits and risks of investment and also read the Risk Disclosure Documents for Capital Markets and Derivative Segments as prescribed by Securities and Exchange Board of India before investing in the Indian Markets. The securities discussed in this report may not be suitable for all investors. Investors must make their own investment decision based on their own investment objectives, goals and financial position and based on their own analysis. Prospective investors and others are cautioned that any forward-looking statements, if any, are not predictions and may be subject to change without notice.

This report may provide the addresses of, or contain hyperlinks to websites. Except to the extent to which the report refers to material we take no responsibility whatsoever for the contents therein. Such addresses or hyperlinks are provided solely for your convenience and information and the content of the linked site does not in any way form part of this report. Accessing such website or following such link through this report shall be at your own risk.


The author of this Research Report accepts no liability and will not in any way be responsible for the contents of this report or for any losses, costs, expenses, charges, including notional losses/lost opportunities incurred by a recipient as a result of acting or non-acting on any information/material contained in the report. This is not an offer to sell or a solicitation to buy any securities or an attempt to influence the opinion or behavior of investors or recipients or provide any investment/tax advice. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

Saturday, 22 October 2016


INDUSIND BANK (September Quarter FY17)

INDUSIND BANK reported its usual double digit growth numbers for the second quarter FY17. The bank exhibited all round growth in every segment with Net Interest Margin (NIM) touching a high of 4% in the current September quarter. NIM growth was 12 basis points YOY & 3 Basis points quarterly. As expected Net Profit, Net Interest Income, Deposits and Advances all reported double digit growth rates. Net Interest Income, difference between interest earned and expended was at Rs. 14603 Mn up by 33% YOY. Net Profit followed suit rising 26% YOY at Rs. 7043 Mn in the current September quarter. Asset quality has improved with Gross NPAs and Net NPAs at 0.90% and 0.37%, both declining 1 basis point QOQ. Provisions & contingencies too have been curtailed by 7% QOQ, though YOY rise has been 35% in the current Q2 FY17. Double digit growth rate is visible in both Corporate & Retail business segments, both growing at 38% & 22% respectively.

Low cost funding or CASA ratio was another star performer for the bank galloping at 210 basis points QOQ at 36.50% in Q2 FY17, supported by current accounts rising 28% quarterly. On yearly basis, the CASA jump was 180 basis points. In absolute terms CASA rose 46% YOY at Rs. 410340 Mn. Other income which accounts 22% of total income for the bank climbed 24% YOY in Q2 FY17 and stood at Rs. 9704 Mn. Growth momentum continued for core fee with yearly growth of 23% at Rs. 8256 Mn. All components except foreign exchange income grew in double digits. Deposits grew at a higher rate of 39% compared to Advances rising at 26% YOY.

Indian economy’s strong fundamentals, favorable government policies, GST implementation is going to benefit the banking sector as a whole. INDUSIND growth story is intact and offers optimal option for value investors.  IndusInd bank with CAR of 15.32% (Tier I-14.68%), credit growth rate above industry average, growing profitability and stable asset quality is poised for high growth as one of the major players in Indian banking industry. Thus we recommend BUY for medium and long term 



   Disclaimer                                                   
                                                
    The information and opinions contained in the research reports have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. The research report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including but not limited to tax advice. The reports do not take into account the particular investment objectives, financial situations, risk profile or needs of individual clients. The user assumes the entire risk of any use made of this information. This report is not to be relied upon in substitution for the exercise of independent judgment.

    The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur.

   Research data and reports published/ emailed/ text messaged via Short Messaging Services, Online Messengers, WhatsApp etc/transmitted through mobile application/s, including but not limited to FLIP™, Video Widget, telephony networks, print or electronic media and or those made available/uploaded on social networking sites (e.g. Facebook, Twitter, LinkedIn etc) is for informational purposes only. The reports are provided for assistance and are not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Though disseminated to clients simultaneously, not all clients may receive the reports at the same time. We will not treat recipients as clients by virtue of their receiving this report.

  The reports include projections, forecasts and other predictive statements which represent our assumptions and expectations in the light of currently available information. These projections and forecasts are based on industry trends, circumstances and factors which involve risks, variables and uncertainties. The actual performance of the companies represented in the report may vary from those projected.

    The opinions expressed in the reports are subject to change but we have no obligation to tell our clients when our opinions or recommendations change. The reports are non-inclusive and do not consider all the information that the recipients may consider material to investments.

  We shall not be in any way responsible for any indirect, special or consequential damages that may arise to any person from any inadvertent error in the information contained in the reports nor do they take guarantee or assume liability for any omissions of the information contained therein. Information contained therein cannot be the basis for any claim, demand or cause of action. These data, reports and information do not constitute scientific publication and do not carry any evidentiary value whatsoever.

  The user should consult their own advisors to determine the merits and risks of investment and also read the Risk Disclosure Documents for Capital Markets and Derivative Segments as prescribed by Securities and Exchange Board of India before investing in the Indian Markets. The securities discussed in this report may not be suitable for all investors. Investors must make their own investment decision based on their own investment objectives, goals and financial position and based on their own analysis. Prospective investors and others are cautioned that any forward-looking statements, if any, are not predictions and may be subject to change without notice.

   This report may provide the addresses of, or contain hyperlinks to websites. Except to the extent to which the report refers to material we take no responsibility whatsoever for the contents therein. Such addresses or hyperlinks are provided solely for your convenience and information and the content of the linked site does not in any way form part of this report. Accessing such website or following such link through this report shall be at your own risk.

   The author of this Research Report accepts no liability and will not in any way be responsible for the contents of this report or for any losses, costs, expenses, charges, including notional losses/lost opportunities incurred by a recipient as a result of acting or non-acting on any information/material contained in the report. This is not an offer to sell or a solicitation to buy any securities or an attempt to influence the opinion or behavior of investors or recipients or provide any investment/tax advice. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.



Friday, 21 October 2016

                        Reliance Industries Ltd - Consolidated (September Quarter FY17)                                                                             
Reliance Industries Ltd has posted consolidated Net Profit after taxes, minority interest and share of profit of associates and joint ventures of Rs. 72060 million for the quarter ended September 30, 2016 as compared to Rs. 93450 million for the same period previous year.  Decline of 23% in Net profit is on account of exceptional item of Rs. 43100 mn (gain on sale of EFS Midstream LLC and provision for impairment in Reliance Holding USA Inc) included in Q2 FY16. Excluding this exceptional item, Net profit has increased by 43% YOY. Total Income has increased from Rs. 759500 million for the quarter ended September 30, 2015 to Rs. 840440 million for the quarter ended September 30, 2016, rise of 11% YOY.

The company’s expenditure has increased by 8% YOY. Interest expense was curtailed by 10% YOY and stood at Rs. 8930 million compared to Rs. 9930 million same period previous year. Tax expenditure rose 35% YOY at Rs. 27080 million in Q2 FY17. Other income zoomed 64% YOY at Rs. 23930 million in the current September quarter. Gross Refining Margins, difference between value of petroleum products sold and cost of processing crude, for the September quarter stood at $ 10.1/bbl compared to $ 10.6/bbl for the corresponding quarter previous year.

Revenue from its core business, Refining and Marketing segment decreased by 0.4% YOY to Rs. 605270 million, whereas sequentially, there has been QOQ increase of 7%. RIL’s exports of refined products were at $ 4.8 billion during Q2 FY17 as compared to $ 5.5 billion in Q2 FY16. RIL’s GRM outperformed Singapore complex margins, standard for Asian refineries by $ 5.0/bbl. Revenue from Petrochemicals segment increased by 5.6% YOY to Rs. 224220 million due to increase in volumes of fiber intermediates and polyester products. EBIT for the segment was reported at Rs. 34170 million against Rs. 25220 million, growing 35% YOY due to strong volume growth and firm margin environment. EBIT margins expanded to 15.20%, 14 quarter high in the current quarter compared to 11.90% same period previous year as product deltas held up well despite lower prices. Oil & Gas revenues decreased 35.7% YOY to Rs. 13270 million. The fall was due to lower upstream production in domestic blocks coupled with lower oil and gas prices in both the domestic and US shale segments.

Revenues from organized retail grew 63% YOY to Rs. 80790 million from Rs. 49560 million in Q2 FY16. Revenues have increased on the back of growth in Digital, Fashion & lifestyle and petroleum products. During the quarter, Reliance Retail added 59 stores across various store concepts and strengthened its distribution network for consumer electronics. Reliance Jio Telecom venture is making investors anxious about its long term impact on the company’s profitability. Thus even after strong quarterly numbers, stock is down 1.80% intraday. We recommend BUY for the stock with a target price of Rs. 1160 for medium and long term investment. 



Disclaimer                                                   
                                                
The information and opinions contained in the research reports have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. The research report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including but not limited to tax advice. The reports do not take into account the particular investment objectives, financial situations, risk profile or needs of individual clients. The user assumes the entire risk of any use made of this information. This report is not to be relied upon in substitution for the exercise of independent judgment.

The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur.

Research data and reports published/ emailed/ text messaged via Short Messaging Services, Online Messengers, WhatsApp etc/transmitted through mobile application/s, including but not limited to FLIP™, Video Widget, telephony networks, print or electronic media and or those made available/uploaded on social networking sites (e.g. Facebook, Twitter, LinkedIn etc) is for informational purposes only. The reports are provided for assistance and are not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Though disseminated to clients simultaneously, not all clients may receive the reports at the same time. We will not treat recipients as clients by virtue of their receiving this report.

The reports include projections, forecasts and other predictive statements which represent our assumptions and expectations in the light of currently available information. These projections and forecasts are based on industry trends, circumstances and factors which involve risks, variables and uncertainties. The actual performance of the companies represented in the report may vary from those projected.

The opinions expressed in the reports are subject to change but we have no obligation to tell our clients when our opinions or recommendations change. The reports are non-inclusive and do not consider all the information that the recipients may consider material to investments.

We shall not be in any way responsible for any indirect, special or consequential damages that may arise to any person from any inadvertent error in the information contained in the reports nor do they take guarantee or assume liability for any omissions of the information contained therein. Information contained therein cannot be the basis for any claim, demand or cause of action. These data, reports and information do not constitute scientific publication and do not carry any evidentiary value whatsoever.

The user should consult their own advisors to determine the merits and risks of investment and also read the Risk Disclosure Documents for Capital Markets and Derivative Segments as prescribed by Securities and Exchange Board of India before investing in the Indian Markets. The securities discussed in this report may not be suitable for all investors. Investors must make their own investment decision based on their own investment objectives, goals and financial position and based on their own analysis. Prospective investors and others are cautioned that any forward-looking statements, if any, are not predictions and may be subject to change without notice.

This report may provide the addresses of, or contain hyperlinks to websites. Except to the extent to which the report refers to material we take no responsibility whatsoever for the contents therein. Such addresses or hyperlinks are provided solely for your convenience and information and the content of the linked site does not in any way form part of this report. Accessing such website or following such link through this report shall be at your own risk.


The author of this Research Report accepts no liability and will not in any way be responsible for the contents of this report or for any losses, costs, expenses, charges, including notional losses/lost opportunities incurred by a recipient as a result of acting or non-acting on any information/material contained in the report. This is not an offer to sell or a solicitation to buy any securities or an attempt to influence the opinion or behavior of investors or recipients or provide any investment/tax advice. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

Saturday, 8 October 2016

Friday, 7 October 2016

Fourth Bi- Monthly RBI Monetary Policy 2016 – Right Move at the Right time

Even his predecessor would have done the same thing and everybody would have hailed him. Our esteemed financial experts and analysts would have fainted with gratification, “At last Mr. Rajan has cut rates, when he thought was the right time”. Mr. Rajan’s unpredictability added to his larger than life image. When it comes to Mr. Patel, he is predictable from the very first day. No body cares that CPI inflation is down at 5.03% from 6.07% MOM. That he is absolutely data dependent and IIP is not galloping and the so called cost of capital is still high.

Why did he cut the repo rate by 25 basis points soo soon. He could have taken some time, adjusted to his new duties and then……… May be people here are expecting him to forecast US Elections and US interest rate hike and then take a call. I think he has already done that. December is going to be pretty volatile & uncertain for global markets and October 4th was the most appropriate timing for a repo rate cut. And what about the MPC which voted unanimously for the rate cut. For our knowledgeable experts who think the RBI is on the same page, same paragraph and even the same line with the Government, should understand that the three external MPC members with fixed term of 4 years will outlive the RBI Governor’s and even the Present Government’s tenure making them extremely independent.


Now coming to the Monetary policy, Repo rate stands at 6.25% after a 25 basis cut, Reverse Repo rate at 5.75% and both Marginal Standing Facility Rate & Policy Rate at 6.75%. RBI maintains its accommodative stance and is confident of achieving the objective of 5% CPI inflation by fourth quarter of 2016-17 and the medium-term target of 4% within a band of +/- 2 per cent.  The Central Bank has injected Rs. 20000 crore over the last two months through OMOs and surplus ranges between Rs. 60000 – Rs. 70000 crore leading to soft interest rate regime. A number of banks have already started adjusting their MCLRs. So what is needed more by the brightest economy in the world as per foreign analysts. Our own domestic ones are busy anticipating the next trigger factor, guess what…… FCNR redemptions…. then US elections in November and its implications on India if either party wins and then our own December monetary policy. Oh… my GOD…. They are so amazingly busy. I envy them and I hope they envy me some day. As for Mr. Patel, Don’t worry Sir, Time Justifies Everything.



Disclaimer

The information and opinions contained in the research reports have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. The research report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including but not limited to tax advice. The reports do not take into account the particular investment objectives, financial situations, risk profile or needs of individual clients. The user assumes the entire risk of any use made of this information. This report is not to be relied upon in substitution for the exercise of independent judgment.

The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur.

Research data and reports published/ emailed/ text messaged via Short Messaging Services, Online Messengers, WhatsApp etc/transmitted through mobile application/s, including but not limited to FLIP™, Video Widget, telephony networks, print or electronic media and or those made available/uploaded on social networking sites (e.g. Facebook, Twitter, LinkedIn etc) is for informational purposes only. The reports are provided for assistance and are not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Though disseminated to clients simultaneously, not all clients may receive the reports at the same time. We will not treat recipients as clients by virtue of their receiving this report.

The reports include projections, forecasts and other predictive statements which represent our assumptions and expectations in the light of currently available information. These projections and forecasts are based on industry trends, circumstances and factors which involve risks, variables and uncertainties. The actual performance of the companies represented in the report may vary from those projected.

The opinions expressed in the reports are subject to change but we have no obligation to tell our clients when our opinions or recommendations change. The reports are non-inclusive and do not consider all the information that the recipients may consider material to investments.

We shall not be in any way responsible for any indirect, special or consequential damages that may arise to any person from any inadvertent error in the information contained in the reports nor do they take guarantee or assume liability for any omissions of the information contained therein. Information contained therein cannot be the basis for any claim, demand or cause of action. These data, reports and information do not constitute scientific publication and do not carry any evidentiary value whatsoever.

The user should consult their own advisors to determine the merits and risks of investment and also read the Risk Disclosure Documents for Capital Markets and Derivative Segments as prescribed by Securities and Exchange Board of India before investing in the Indian Markets. The securities discussed in this report may not be suitable for all investors. Investors must make their own investment decision based on their own investment objectives, goals and financial position and based on their own analysis. Prospective investors and others are cautioned that any forward-looking statements, if any, are not predictions and may be subject to change without notice.

This report may provide the addresses of, or contain hyperlinks to websites. Except to the extent to which the report refers to material we take no responsibility whatsoever for the contents therein. Such addresses or hyperlinks are provided solely for your convenience and information and the content of the linked site does not in any way form part of this report. Accessing such website or following such link through this report shall be at your own risk.

The author of this Research Report accepts no liability and will not in any way be responsible for the contents of this report or for any losses, costs, expenses, charges, including notional losses/lost opportunities incurred by a recipient as a result of acting or non-acting on any information/material contained in the report. This is not an offer to sell or a solicitation to buy any securities or an attempt to influence the opinion or behavior of investors or recipients or provide any investment/tax advice. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.


Tuesday, 4 October 2016