Author - Aniket Khanolkar

  • Aniket Khanolkar
29 Jun

Cement prices have managed to hold up – Heidelberg Cement

Update on the Indian Equity Market:

On Friday Nifty closed 0.9% higher at 10,383. Among the sectoral indices, IT (+4.1%), PSU Bank (+1.0%), Metal (+0.6%) closed higher. FMCG (-1.2%), Realty (-0.9%) and Pharma (-0.5%) closed lower. Infosys (+6.6%), BPCL (+6.5%) and TCS (+4.9%) closed on a positive note. Bajaj Finance (-3.1%), ITC (-3.1%) and Bharti Infratel (-2.8%) were among the top losers.

Excerpts from an interview of Mr Jamshed N Cooper, MD, Heidelberg Cement with ET Now 25th June 2020:

  • Cement prices have managed to hold up even when the construction activity has halted. Mr. Cooper said it is a different mix and varies from state to state.
  • Government spending is higher in many of the projects, the company is trying to complete before monsoon sets in.
  • The labor availability is better in central India and South is weak as the market depends on migrant labor.
  • Capacity utilization will be between 55% and 60%. Many of the cement companies have a very high breakeven. Most of the companies have high debt and to serve high debt with lower volume is a task. The cement companies have a pressure to keep price up as they have to maintain margins with lower volumes.
  • The construction industry is not going to be hit so badly except for the monsoon period. Building industry, construction industry is one of the largest employers of the labor workforce, with their employment the infrastructure industry will come in picture.
  • Either the government will provide employment or somehow employment is going to get generated in the building industry because there is a huge demand for housing. He added that it is the best time for the government to use this work force to start building rural houses for the poor so that this cycle can continue.
  • About lockdown effect he said a mistake was made by keeping cement plant shut during lockdown. The cement was not getting in market place and labor force was ideal which had a cascading effect.
  • A little bit of slowdown is expected in the construction industry and hence in the demand for cement. Going forward the labor will start returning after the monsoons sowing happens.
  • It is expected that at least 60% of the labor is likely to return after Diwali. Once workforce gets back to their workplace’s things should be moving perfectly well.
  • On housing infrastructure push led by the government, he said whole push has to be from the housing sector because 60% of the cement is used in the housing sector and in this at least another 5-7% will come from the government.
  • The pricing is here to stay as companies cannot breakeven with lower volumes and if they don’t breakeven the companies will get in trouble.

Consensus Estimate: (Source: market screener and Investing.com websites)

  • The closing price of Heidelberg cement was ₹ 182/- as of 26-June-2020.  It traded at 19.5x/ 12.2x the consensus Earnings per share estimate of ₹ 9.3/14.8 for FY21E/ FY22E respectively.
  • The consensus average target price for Heidelberg is ₹ 197/- which implies a PE multiple of 13.3x on FY22E EPS of ₹14.8/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

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19 Jun

Debt continues to be an issue – Tata Communications

Update on the Indian Equity Market:

On Thursday Nifty closed2.1% higher at 10,091. Among the sectoral indices Bank (+3.8%), Fin services(+3.7%), and PVT Bank (+3.6%) closed higher. Nifty Pharma (-0.02%) was the only sector that closed lower. Bajaj Finserv (+8.2%), Coal India (+6.3%) and Bajaj Finance (+5.5%) closed on a positive note. TCS (-0.6%), HUL (-0.5%) and Bharti airtel (-0.4%) were among the top losers.

Excerpts from an interview of Mr Amur SLakshminarayanan,Tata Communications with ET Now dated 15th June 20:

  • In his first interaction with the media since taking over as CEO,MrLakshminarayanan said Covid-19 has impacted the deal pipeline, delaying conversions and the company is hopeful that the second half of FY2021 will be better than the first.
  • Debt continues to be an issue and the company is looking at various options to bring it down, including infusing equity, paring investments and selling its land parcels.
  • Speaking about changes after his joining, he said the company is looking to enable borderless growth. The focusis to serve B2B manufacturing world where people are shifting from pure manufacturing products to services.
  • There is a continuing focus on efficiency and productivity through automation and manage risks.
  • From customer perspective, he said the shift that the company is planning to make is to be more solution oriented rather than a product company.
  • About challenges, he said the pipeline conversion would be too slow because what has been in the pipeline or ready to close has been sort of closed.In many places even if they were to award a contract it will be highly difficult for the company to go and install the equipment and connect.
  • Teams did a phenomenal job of helping thousands of users and more than 150 enterprise customers to work from home.
  • Speaking about verticals, he said IT, IT services, cloud and OTT providers are very large, and possibly banking and manufacturing are top verticals.
  • Serving an enterprise customer is different because it needs to be a lot more robust, secure and scalable, so in that sense the company is engineered to serve them.
  • About FY21, he said things will improve in the second half. People would want to look at more innovative ways of reaching out to their consumers and collaboration would get stronger.
  • 98% people are working from home and that when it shifts back to normal, it will shift back to around 50-60% still working from home.
  • On legal tussle with DoT, he said the case is not taken up to the SC and it is not a relevant judgment of late last year. There has been demand from DoT but that does not take into account accessible charges which should be deducted. They have given certificates and proof for paid basis, DoT has to deduct that and give a revised demand which the company has not received.

Consensus Estimate: (Source: market screener and Investing.com websites)

  • The closing price of Tata Communications was ₹ 593/- as of 18-June-2020.  It traded at 32.4x/ 24.6x the consensus Earnings per share estimate of ₹ 18.3/24.1forFY21E/ FY22E respectively.
  • The consensus average target price for Tata Communicationsis ₹ 550/- which implies a PE multiple of 22.8x on FY22E EPS of ₹ 24.1/-

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Tata Communications , 0 Comments Read more...
09 Jun

Bank has started collections in non- containment zones-Bandhan Bank

Update on the Indian Equity Market:

On Monday, Nifty closed 0.3%higher at 10,167. Among the sectoral indices, IT(+1.8%), PVT Bank (+1.3%), Bank (+0.7%)closed higher, whereas Media (-1.7%), PHARMA (-1.4%) and PSU Bank (-1.2%) closed lower. Among the stocks GAIL (+7.5%), IndusInd Bank (+7.3%),and BPCL (+7.0%) closed on a positive note.ZEEL (-4.5%), ShreeCement (-3.9%) and Eicher Motor (-3.4%) were among the top losers.

Excerpts from an interview of Mr.Chandra Shekhar Ghosh, CEO, Bandhan Bankwith Mint dated  8thJune 2020:

  • The pandemic has brought in a whole new set of risks for banks which are both internal and external.
  • The bank is asking its customers to use more digital modes of transaction in the changed scenario.
  • Branches were operational throughout the lockdown by observing government and administration rules.For Bandhan Bank, there were not many people working remotely.
  • He said some things can be done virtually. Earlier all regional managers were mandated to come to the head office for meetings but now the bank is doing it virtually and it is working.These efforts are saving expenses on travel.
  • Every sector cannot work from home and in banking some jobs might be possible but not all.
  • For Bandhan Bank, there is not a greater degree of acceptability to work – from- home.There are a lot of security issues related to bankers working remotely and that includes possible violations of agreements with customers, bound by data-security clauses.
  • The bank will have to take a deeper look into how these risks could be mitigated and only then banks will be able to move towards a work-from-home model.
  • On recoveries, he saidcollections have just started and at the ground level, the borrowers, especially in micro-credit involved in livelihood projects and agriculture, are continuing their businesses. Due to lockdown the bank is not being able to reach them.
  • The bank has started collections in the non-containment zone. However, the problem is that collection executives are facing difficulties in collecting loans from villages, as local residents are not allowing outsiders to access those places, citing covid-19 risks.
  • Speaking about post covid-19 opportunities, he said secured credit is the area where there are big opportunities.
  • There are customers who have been regularly paying all equated monthly installments (EMIs) and are eligible for more funds. These are small businesses which are running despite the lockdown.
  • When the rural demand recovers, pick-up in two-wheelers and other vehicles popularly used in these areas will see demand, and so will bank loans in these segments. Demand for gold loans is also coming quite strong.

Consensus Estimate: (Source: market screener and Investing.com websites)

  • The closing price of Bandhan Bankwas ₹ 264/- as of 8-June-2020.  It traded at 2.4x/ 2.0x theconsensus book value estimate of ₹ 107/127for FY21E/ FY22E respectively.
  • The consensus average target price for Bandhan Bank is ₹284/- which implies a PB multiple of 2.2x on FY22E BV of ₹127/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Bandhan Bank, Bank, Uncategorized 0 Comments Read more...
29 May

Cash flow will be a challenge for the hospitality industry – Prestige Group

Update on the Indian Equity Market:

On Friday Nifty closed 1.9%higher at 9,490. Among the sectoral indices Auto (+3.7%), Media (+3.6%), and PVT Bank (+2.79%) closed higher. PSU Bank (-0.4%) was the only sector that closed lower.ZEEL (+9.6%), Eicher Motor (+7.3%) and L&T (+5.8%) closed on a positive note. Wipro (-0.9%), ITC (-0.6%) and CIPLA (-0.5%) were among the top losers.

Excerpts from an interview of MrZaid Sadiq,Executive Director, Prestigegroupwith ET Now:

  • Before the crisis hit, the Indian hospitality industry along with tourism was one of the key segments driving the growth of the services sector in the Indian economy.
  • The pandemic and lockdown has brought things to a standstill and the hospitality industry is taking stock and reinventing them to successfully revive the sector in the post Covid world.
  • Speaking about the long term effect of Covid-19 on the industry he saidgiven the dynamic and the unprecedented nature of this global crisis, it is expected to witness the ripple effects of Covid-19 across socio-economic sectors for at least another year.
  • There is a hope to begin the journey towards recovery by June 2020 – provided India manages to flatten the corona virus curve.
  • Speaking about the post covid-19 strategy to garner business, he added thatthe pandemic is changing the world, and businesses that are able to come up with innovative solutions to offer the right customer experience will be in a position to seize the opportunity and accelerate the recovery journey.
  • The company is working closely with domestic partners and collaboration will be the key strategy. It will focus on the home-grown business; the ideal revenue stream will be Food & Beverage, including catering.
  • The focus on room business will be back after the economy stabilizes.
  • Speaking about the government, he saidthe Indian government has done a remarkable job of combating the global outbreak, the exact trajectory of which is still unknown.
  • The government should consider extending the option of delaying of loan repayment / EMIs to business entities and slashing GST rates as cash flow will be a challenge for hospitality industry.
  • The Covid-19 pandemic has taught us the importance of business agility, disaster preparedness, collaboration and compassion. The company is finding innovative ways to cut costs, manage unknown risks and work with fewer resources.

Consensus Estimate: (Source: market screener and Investing.com websites)

  • The closing price of Prestige Estate Projects was ₹ 145/- as of 28-May-2020.  It traded at 12.3x/ 10.75x the consensus Earnings per share estimate of ₹ 11.7/13.5 forFY21E/ FY22E respectively.
  • The consensus average target price for Prestige Estate Projects is ₹ 318/- which implies a PE multiple of 23.5x on FY22E EPS of ₹ 13.5/-

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

 

By Miscellaneous , 0 Comments Read more...
19 May

No asset quality challenges in gold loans- Manappuram Finance

Update on the Indian Equity Market:

On Monday, Nifty closed 3.4% lower at 8,823. Among the sectoral indices PVT Bank (-6.9%), Bank (-6.7%), Fin Services (-6.6%) closed lower. ITand Pharma closed marginally higher. Cipla (+5.5%),TCS (+2.5%), and INFRATEL (+2.3%) closed on a positive note. Indusind bank (-9.6%), Zee (-9.5%) and Eicher Motor(-7.9%) were among the top losers.

Excerpts from an interview of MrVP Nandakumar,MD & CEO, Manappuram Finance with ET Now 15thMay 2020:

  • Speaking about 4QFY20 profit jump, Mr.Nandakumar said the main gold business has grown well sequentially and in other businesses the growth is steady.
  • Speaking about provisions he said it is rather as a caution and that is the only reason for the higher provisioning.
  • Collections use to be higher in March-April period in non-gold portfolio, vehicle finance and home finance. But this time, March has been rather dull.From the very beginning, there were signs of lockdown in many places, particularly in places like Kerala. So from the second-third week of March, the collections slowed down. This also led to some increase in the provisioning.
  • Around 70% of branches are operational now and there is good demand for gold loans. At the same time there are lot of redemptions, people want to monetize the gold.
  • The demand for gold is at sub normal levels, as entire demand has not picked up.
  • Guiding for FY21 he said the first one or two quarters the company may not be able to grow gold loans, but there is expectation to grow in third and fourth quarter by 7-8%.
  • Speaking about non gold business share which declined from 34% to 33% on QoQ basis, he saidlast year there were advantages of price as well as demand, and the gold loan growth was much more than what was expected.The company have turned a little more conservative on non-gold business.Also there is some sluggishness in various economic activities.
  • Speaking about asset quality, he saidgold loan currently is around 69% and the company does not see any challenges in asset quality in gold loans. Gold loan tenure is three months and online gold loan is around 60%, even now regular transactions are taking place to the extent of Rs 700-800 crores, the interest collection is also taking place.
  • In other segments like vehicle finance, many of our customers have opted for moratorium. The collections are coming now through the online mode to the extent of 40-45%. Lending is primarily to the lower end that is light commercial vehicles and small commercial vehicles.
  • Another major part of portfolio is two-wheelers and the customer profile is self employed as well as salaried people and the collections are better there.

Consensus Estimate: (Source: market screener and Investing.com websites)

  • The closing price of Manappuram Financewas ₹ 122/- as of 18-May-2020.  It traded at 1.5x/ 1.25x the consensus Book value estimate of ₹ 80/97 for FY21E/ FY22E respectively.
  • The consensus average target price forManappuram Finance is ₹ 153/- which implies a PB multiple of 1.5x on FY22E BV of ₹97/-.

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

 

 

 

 

 

By Gold loan NBFC, Manappuram Finance 0 Comments Read more...
08 May

Company sticks to its debt reduction initiative- Mr Naveen Jindal

Excerpts from an interview of Mr.Naveen Jindal, Chairman, Jindal Steel & Power Limited (JSPL) with ET Now on 5th May 2020:

Update on the Indian Equity Market:

On Thursday Nifty closed -0.8% lower at 9,199. Among the sectoral indices FIN Services (-1.6%), FMCG (-1.4%) and Bank (-1.0%) closed lower. NIFTY PSU Bank (+0.1%), NIFTY Media (+0.1%) closed on a positive side. Bharti Infratel (7.1%), Indusind Bank (6.6%) and Adani ports (4.4%) closed on a positive note. NTPC (-4.3%), BPCL (-4.2%) and ONGC (-4.2%) were among the top losers.

  • Jindal Steel & Power (JSPL) is looking for a strategic partner to offload part of its stake in its subsidiary in Oman, marking a significant shift from its earlier plan for an IPO as the Covid-19 pandemic impacts industries.
  • The company plans to stick to its debt reduction initiative by reducing overall debt to Rs. 25,000 crore in two years.
  • The pandemic has impacted functioning and production of steel industry, JSPL’s plants at Raigarh and Angul are fully operational since the start of the lockdown.
  • As domestic demand is impacted, the company is looking for exports. The company is exporting 80% of production these days.
  • The company is exporting steel to China, Malaysia, Europe, the USA, export order of rail blooms from France. In the domestic market the company had received supply orders from Rail Vikas Nigam for Kolkata Metro.
  • Domestic steel demand has seen a major fall post-March, due to complete lockdown. Demand will pick up up before the monsoon season, post lockdown, as infrastructure projects and construction activities will resume.
  • A stimulus is necessary and the government should frontload its $250 billion spending plan under the National Infrastructure Pipeline. The government should also announce a sizeable package to compensate loss of income suffered by Indian industry.
  • JSPL is looking to raise money but not considering equity.
  • On overseas front plants and mines are doing well for the company.
  • The company had applied for a moratorium, like many other corporate.

 

Consensus Estimate: (Source: market screener and Investing.com websites)

  • The closing price of JSPL was ₹ 90/- as of 7-May-2020.  It traded at -20.5x/-20.3x/11.7x the consensus earnings per share estimate of ₹ -4.39/-4.43/7.65 for FY20E/ FY21E/ FY22E respectively.
  • The consensus average target price for JSPL is ₹179/- which implies a PE multiple of 23.3x on FY22E EPS of ₹7.65/-.

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

By Jindal Steel & Power Limited , 0 Comments Read more...
28 Apr

Current situation not comparable with 2008 financial crisis- Mr Salil Parekh

Excerpts from an interview of Mr.Salil Parekh,CEO, Infosys with ET Now on 27th April 2020:

Update on the Indian Equity Market:

On Monday Nifty closed 1.4% higher at 9,282. Among the sectoral indices PVT bank (3.0%), IT(2.4%), FIN Services (2.1%) closed higher. None of the sectors close negatively. Britannia (+7.0%), Indusind Bank (+6.6%) and Bajaj Finserv (+6.2%)closed on a positive note. NTPC (-1.1%), HDFC Bank (-0.9%) and M&M (-0.8%) were among the top losers.

  • The company doesn’t see any clients in this situation to go bankrupt as there is tremendous amount of fiscal support in the US market.
  • There will be some near-term challenges as there are some requests for price cuts and credit extensions. Due to this reason the company has suspended revenue guidance.
  • The US government’s massive $2-trillion stimulus is expected to provide liquidity to companies, including banking and financial services that are the biggest outsourcers of IT.
  • Infosys gets 31% of its revenue from banking, financial services and insurance (BFSI). Infosys admitted in its recent earnings call that the vertical would be impacted negatively due to lower interest rates, deferred loan payments and low premiums.
  • While comparing the current situation with 2008 global financial crisis, he said the current situation has affected everyone every geography, every sector at the same time and in a way nothing from recent experience is equivalent with current situation.
  • Speaking on whether clients would look to reduce their dependence on India, particularly for BPM, given the disruptions in these operations because of lockdowns, he said even if there is any impact it will be on the smaller players.
  • On-shore 98% of employees are working from home and In India it is 93%, including BPM. Due to the strength which the company has demonstrated many large clients are going to focus on Infosys and some of the smaller players will lose out on that.
  • Clients are seeing Infosys as a stable partner with a very strong financial position and with $3.6 billion in cash reserve the company in a stable position.
  • He said the company is having discussions with clients on vendor consolidation, on how they want to look at some captives, a lot of discussions in the cloud, movement on virtualization, workforce transformation.
  • Speaking about the whistleblower allegations made against the company in October 2019, he said the company is extremely transparent and the management is committed to keep focus on clients, shareholders and employees.

Consensus Estimate: (Source: market screener and Investing.com websites)

  • The closing price of Infosys was ₹ 665/- as of 27-April-2020.  It traded at 17.7 x/ 15.6x/ 14.3x the consensus earnings per share estimate of ₹ 37.4/42.6/46.3 for FY20E/ FY21E/ FY22E respectively.
  • The consensus average target price forInfosys is ₹ 725/- which implies a PE multiple of 15.6x on FY22E EPS of ₹46.3/-.

 

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

 

By Infosys, IT , 0 Comments Read more...
17 Apr

India will bounce back faster- Mr RC Bhargava

Update on the Indian Equity Market:

On Thursday Nifty closed marginallyhigher at 8,993. Among the sectoral indices NIFTY IT (-1.8%), NIFTY FMCG (-O.59%) closed lower. NIFTY Media (+2.6%), NIFTY Bank (+1.8%) and NIFTY Pharma (+1.8%) closed higher. NTPC (+6.9%), VEDL (+5.2%) and Hindalco (+5.1%) closed on a positive note.HCL Tech (-4.0%), Tech M(-3.8%) and Kotak Bank (-3.3%) were among the top losers.

Excerpts from an interview of Mr.R.C.Bhargava, Chairman, Maruti Suzuki India with ET Now on 15th April 2020:

  • Speaking about the partial lockdown, Mr. Bhargava said starting their own undertaking or factory is not enough as all other components required in cars must be available. That means all the company’s vendors must be functioning anywhere in the country.
  • But as per the current situation, this is not likely to happen because several vendors are in the containment zone and that is one issue.
  • If the company can get all the components by finding alternative sources and get the retail going, then all systems will be in place for starting production.
  • According to him, even if the lockdown is lifted on May 3rd, still the company will have to monitor the situations in red zones.
  • He refrained from giving any guidance as it will depend on the productions and kind of demand that gets developed in the market.
  • Speaking on change in consumer behavior of a car buyer, he said there is one school of thought which says that there is a likelihood of consumers holding back because of the uncertainty about what is happening and not making big-ticket purchases. There is another school of thought which points out what happened in China where after the lockdown was lifted, consumers started to buy more and more personal transport because they are reluctant to use public transport. Now here in India, the situation could be either of the two or something in between.
  • Cost-cutting and becoming more competitive was even earlier a very important thing for India but now, it is something which has become much more important now than it ever was.
  • It is an area where both industry, as well as governments, should pay attention because competitiveness is going to be the key going forward.
  • In his opinion, it will be a challenge for companies which are not cash rich. The promoters and management will have to live a frugal life so that more cash can remain within the company.
  • Speaking about the changes in the way a car is sold, he said the company had experienced a sharp uptick in the number of digital enquiries. People will still come to showrooms and the company will ensure every possible safety measure is taken.
  • India will bounce back much faster because of the demand situation in India and if the measures taken by the government do resolve in making the manufacturing more competitive, then the economy will bounce back faster in India than any other place in the world.
  • Speaking about launching new models he said people are developing new models and they are in different stages of development and there is no particular reason for postponing the introduction of a new model.
  • The lower end vehicles will recover faster. On Job losses he added, 2020-21 may not be very exciting but there will be a lot of opportunities. It is not the time to get rid of people as it is not easy to get people with skills.

Consensus Estimate: (Source: market screener and Investing.com websites)

  • The closing price of Maruti Suzuki was ₹ 5,148/- as of 16-April-2020.  It traded at 26.4x/ 23.5x/ 18.2x the consensus earnings per share estimate of ₹ 195/219/282 for FY20E/ FY21E/ FY22E respectively.
  • The consensus average target price for Maruti Suzuki is ₹ 6,830/- which implies a PE multiple of 24.2x on FY22E EPS of ₹282/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Auto, Maruti Suzuki 0 Comments Read more...
03 Apr

To some extend pain is addressed by RBI- Mr Dinesh Khara, SBI

Update on the Indian Equity Market:

On Wednesday Nifty closed -4.0% lower at 8,253. Among the sectoral indices NIFTY IT (-5.5%), NIFTY Bank (-4.9%), NIFTY PVT Bank (-4.9%) closed lower. None of the sectors closed on a positive note. Tech Mahindra (-9.4%), Kotak Bank (-8.7%), and AXIS Bank (-6.2%) led the losing stocks. Hero Motocorp (+2.5%), Bajaj Auto (+1.0%), Bajaj Finance (+0.5%) were among the top gainers.

Excerpts from an interview of Mr Dinesh Khara, MD- Global Banking and subsidiaries of State Bank Of India with CNBC-TV18 dated 31st March 2020:

  • Speaking on recent measures by RBI Mr Khara said the steps taken by RBI have mitigated the stress which the bank would have seen on account of the 21-days lockdown which has been announced.
  • However, the only thing could be the special mention accounts – SMA-I and SMA-II, which normally has a tendency of seeing the recovery towards the latter half of the month. So there, the bank might face some kind of a situation but that also is being resorted through follow up mechanism.
  • He added the pain has been addressed to an extent of about 90 %.
  • Speaking about the moratorium, he said everybody is entitled to the moratorium unless they opt-out.
  • For the next quarter, on the margin front, the bank has not looked at this point as the issue is evolving.
  • On asset quality, Mr Khara said the bank is in the process of evaluating the impact and it would be too early to say anything.
  • On SMEs, SBI announced an emergency package for SMEs, which is 10 per cent of the working capital for all the accounts which are performing. This package was announced even before the steps taken by RBI.
  • Speaking about loan growth he said after the lockdown is taken off, there would be pent-up demand and to meet that demand, the corporates might go for shoring up their working capital too. Apart from that, there is bound to be some kind of reconstruction effort post COVID-19 and the bank is confident that will also bring in opportunities for credit growth.

Consensus Estimate: (Source: market screener and Investing.com websites)

  • The closing price of SBI was ₹ 187/- as of 01-April-2020.  It traded at 0.7x/ 0.6x/ 0.5x the consensus Book value per share estimate of ₹ 249/277/312 for FY20E/ FY21E/ FY22E respectively.
  • The consensus average target price for SBI is ₹ 384/- which implies a PB multiple of 1.2x on FY22E BVPS of ₹312/-.
By Bank, SBI, Uncategorized 0 Comments Read more...
24 Mar

Hydroxychloroquine drug useful in clinical trials for Covid-19 infection: Cadila Chairman

Update on the Indian Equity Market:

After hitting the lower circuit in the first half of the day Nifty closed 13% lower at 7,610. Among the sectoral indices, NIFTY PVT Bank (-17.4%), NIFTY Bank (-16.2%), NIFTY Fin Services (-15.5%) closed lower. None of the sectors closed on a positive note. AXIS Bank (-27.6%), Bajaj Finserv (-27.5%), IndusInd Bank (-23.9%) closed lower. None of the NIFTY stocks closed on a positive note.

Excerpts from an interview of Mr Pankaj Patel, Chairman, Zydus Cadila with CNBC-TV18:

  • Anti-malaria drug Hydroxychloroquine has found to be useful in clinical trials of some patients with Covid-19 infection and Cadila is in a position to increase the production.
  • On Janta curfew, Mr Patel said that it is a unique idea and it will prepare everyone for a lockdown situation if any.
  • He said it is a positive step and with respect to clinical research being done, there are more than 10 drugs being tried out as a treatment for coronavirus infection.
  • A recent report by France researchers showed that hydroxychloroquine has found to be effective. So there is a possibility of use of it in the treatment of infection.
  • The company is closely watching this situation and is in a position to produce more as and when needed.
  • The manufacturing is dependent on local raw materials and there is no dependence on imported inputs so the company can supply this drug in sufficient quantity.
  • Speaking about Covid-19 impact on the company, Mr Patel said, the company does not see a challenge as the US supply will continue unless restrictions are imposed by the government. So there should not be any problem supplying drugs to the US and other markets.
  • As far as approvals are concerned, the process in on, not that for every drug approval there is an inspection necessary.
  • He added there will be some slowdown in the approval process as there is a slowdown and in the US people are working from home. However, it is not a major challenge.

Consensus Estimate: (Source: market screener website)

  • The closing price of Cadila was ₹ 281/- as of 23-March-2020.  It traded at 21.6x/ 17.5x/ 15.7x the consensus EPS estimate of ₹ 13/16/17.8 for FY20E/ FY21E/ FY22E respectively.
  • The consensus average target price for Cadila is ₹ 300/- which implies a PE multiple of 16.8x on FY22E EPS of ₹ 15.7/-.

 

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