Weak 1QFY18 direct tax revenues suggest growth pangs - Kotak Sec

Weak 1QFY18 direct tax revenues suggest growth pangs.

The modest growth in direct tax revenues in 1QFY18 probably reflects (1) underlying weakness in the economy and/or (2) companies’ assessment of a weak FY2018. We were hopeful about an uptick in tax revenues post demonetization from higher declaration of unreported income. However, overall dire

20/07/2017 3:28:18 PM | Posted in Special Event Reports read full news
Accumulate Hindustan Unilever Ltd For Target Rs.1,216.00 - Kotak Sec

HUL reported a strong set of results, as volume growth, as well as margins came in ahead of estimates. The company has displayed an ability to drive margin expansion and also committed to a continued improvement in margins along with a healthy topline growth. We raise our EPS estimates by 4% following the results, and believe the results shall be viewed positively by the market as a signal for

20/07/2017 12:07:24 PM | Posted in Broking Firm Views - Long Term Report read full news
Banking Sector Update Gap between assets and liabilities at the lowest point in the past decade - Kotak Sec

One more risk fading away.

In FY2017 the gap between retirement assets and liabilities were at the lowest point in the past decade for public banks. Retirement costs contribute ~20% to overall staff costs. The sharp decline in interest rates only increased the present value of future liabilities by 12% yoy; employee payouts declining yoy, the decline

19/07/2017 1:36:38 PM | Posted in Broking Firm Views - Sector Report read full news
Accumulate Gujarat State Petronet Ltd For Target Rs.182.00 - Kotak Sec

Pipeline tariff revision, Softer LNG prices and higher gas volumes are the key triggers

Multiple positive triggers in the offering for GSPL in FY18E and onwards which maintains our positive bias for the stock. In the immediate future softening of LNG prices, recent rupee appreciation, and possibility of ban on use of polluting fuels like furnace oil a

19/07/2017 12:00:45 PM | Posted in Broking Firm Views - Long Term Report read full news
Buy Allcargo Logistics Ltd For Target Rs.205.00 - Kotak Sec

Weak Exim trade, demonetisation, weak global trade and competition in the CFS segment impacted the performance of the company in FY17. However, with improvement in volumes at major ports at 2.25 mn TEUS in Q1FY18 (from 2.12 mn TEUs in Q1FY17) is a positive sign for ALL. Also, the fourth container terminal at JNPT (total capacity = 4.8 mn TEUs and partially operational by end of CY17) and the st

19/07/2017 11:30:36 AM | Posted in Broking Firm Views - Long Term Report read full news
Banking Sector Update Where is capital consumption in public banks - Kotak Sec

Where is capital consumption in public banks?

Overall tier-1 ratio improved by ~30bps yoy to 9.7% but core tier-1 ratio was broadly flat yoy at 8.8% of loans. Interestingly, despite NPLs increasing 55% since FY2015, RWA growth was muted at 2%. Public banks received a capital infusion of US$~4bn in FY2017 mostly from the Government. They need ~US$ 7bn t

18/07/2017 3:33:24 PM | Posted in Broking Firm Views - Sector Report read full news
Buy Karnataka Bank Ltd For Target Rs.220.00 - Kotak Sec

Key Highlights of Karnataka Bank's Q1FY2018 Result

* Karnataka Bank reported a 10.1% yoy rise in its net profit for Q1FY2018 to Rs.133.85 crore as compared to Rs.121.54 crore. Provisions for the quarter grew by 45.9% yoy to Rs.198.88 crore as compared to Rs.136.31 crore;

* Whereas operating profit during the quarter grew by 18.2% yoy to R

18/07/2017 2:35:28 PM | Posted in Broking Firm Views - Long Term Report read full news
Reduce Venkys India Ltd For Target Rs.2,200.00 - Kotak Sec

A fortnight ago, we published our report on Venky’s (India), with a price target of Rs 2150 (i.e. 50% upside over nine months), and a belief that the stock had potential to rise to ~ Rs 2900 over a two-year horizon, incumbent on certain assumptions. The stock breached our price target in five sessions, and has been consistently trading ahead of our (March’ 18) price target. As of no

18/07/2017 2:23:50 PM | Posted in Broking Firm Views - Long Term Report read full news
Oil and Gas Sector update Petroleum consumption grows 0.4% in June after growing 3-5% in April and May - Kotak Sec

Slow and unsteady.

Petroleum consumption grew modestly by 0.4% yoy in June despite 6.5-12% growth in diesel and gasoline from a lower base, reflecting decline in off-take of industrial fuels, presumably impacted before the implementation of GST. 1QFY18 growth at 3% was better than 3% decline post-demonetization in 4QFY17; however, it still remains sub

18/07/2017 11:26:29 AM | Posted in Broking Firm Views - Sector Report read full news
Liquidity surplus to tighten further this week - Kotak Sec

* Liquidity surplus to tighten further this week.

Expectedly, the liquidity surplus tightened last week led by heavy auction related outflows along with the last leg of custom and excise duty. The banking system average liquidity surplus tightened to ~Rs 3 tn for the week ending July 15 compared to Rs 3.65 tn for the week ending Jul 7. The overnight f

18/07/2017 11:17:49 AM | Posted in Special Event Reports read full news
WPI inflation: overall dynamics benign - Kotak Sec

WPI inflation: overall dynamics benign.

Some upside pressure was visible in food articles, but WPI inflation surprised on the downside as core inflation dynamics remained benign. Sharp input price pressures are unlikely to manifest given benign global commodity price cycle in the near-to-medium term. This should bode well for retail prices too, especi

15/07/2017 2:09:14 PM | Posted in Special Event Reports read full news
Buy Sutlej Textiles and Industries Ltd For Target Rs.1,220.00 - Kotak Sec

We initiate BUY recommendation on Sutlej Textiles and Ind. Ltd (STIL)

Sutlej Textiles and Industries Ltd was incorporated on 22.06.2005 and was created out of a corporate restructuring exercise in which the textiles division of Sutlej Industries Ltd. (SIL) and Daman Ganga Processors Ltd were demerged w.e.f. July 1, 2005. A flagship unit of the multibu

15/07/2017 10:24:51 AM | Posted in Broking Firm Views - Long Term Report read full news
Reduce Cyient Ltd For Target Rs.521.30 - Kotak Sec

Cyients 1QFY18 revenue declined 0.24% QoQ to USD140.65mn v/s our estimates of USD142.7mn. Services business reported good growth of 3.1% sequentially whereas DLM business disappointed with a sharp decline of 26% sequentially. Growth within service business was led by communication, semiconductor and transportation growing at 10%, 11% and 11.7% respectively. We expect traction to continue in com

15/07/2017 9:59:34 AM | Posted in Broking Firm Views - Long Term Report read full news
FX outlook: No radical turning of tide - Kotak Sec

FX outlook: No radical turning of tide.

The recent hawkish rhetoric of DM central banks has again reminded markets of the impending global financial tightening. But we are far from another taper tantrum and expect low inflation to constrain the pace of DM policy tightening. We do not expect the recent DXY weakening to sustain and expect marginal catch

Q1FY18 Results Preview - Kotak Sec

Commodities to lead the revenue growth

We expect sectors, Capital Goods, Cement, Commodities (Metals / Oil & Gas), Agro Products, O & G and Paints are expected to predominantly propel this growth. On the other hand, IT, Media and Auto are expected to be a drag on the overall growth rates on a YoY basis. In terms of profits, Metals is projected

12/07/2017 4:06:15 PM | Posted in Special Event Reports read full news
Buy South Indian Bank Ltd For Target Rs.33.30 - Kotak Sec

Key Highlights of South Indian Bank's Q1FY2018 Result

South Indian Bank's Q1FY2018 result was quite below our expectations, however we continue to reiterate our BUY on the stock looking at its attractive valuations and the receding asset quality stress

* South Indian Bank (SIB) reported mere 6.7% rise in its net profit for Q1FY2018 t

12/07/2017 3:52:50 PM | Posted in Broking Firm Views - Long Term Report read full news
Update On Rajoo Engineers Ltd - Kotak Sec

Rajoo Engineers Ltd (REL)is India’s prominent manufacturer of plastic industry processing machines specifically, extrusion and post extrusion machines for producing plastic products that find application in flexible packaging, drip irrigation, infrastructure, automobile and healthcare industry. Founded in 1986, located in Rajkot (Gujarat), REL has gradually expanded its operatios in India

11/07/2017 3:43:14 PM | Posted in Broking Firm Views - Long Term Report read full news
Banking Sector Update Slippages decline 17% yoy to 4% of loans; still above average levels - Kotak Sec

Marginal improvement.

In FY2017, fresh slippages declined 17% yoy largely led by public banks. Gross NPLs increased 24% yoy largely due to weak recovery environment and elevated slippages. Provision coverage ratio improved ~270bps to 45% yoy nudged by18% yoy growth in operating profits. Restructured loans declined 140bps yoy to 2.8% of loans. We do se

11/07/2017 3:30:45 PM | Posted in Broking Firm Views - Sector Report read full news
Infrastructure Sector Update Government preparing for a 10% medium-term CAGR in LPG consumption - Kotak Sec

LPG – at the forefront of growth.

Our recent meeting with the Ministry of Petroleum and Natural Gas helps us better appreciate the preparedness for a sustained double-digit growth in LPG consumption. With a willingness to pay for LPG, BPL families have started contributing to its growth. Such impetus to growth will only strengthen, with increasi

11/07/2017 3:25:01 PM | Posted in Broking Firm Views - Sector Report read full news
Power Sector Update OMCs weak profitability driven by low distillate spreads and inventory losses - Kotak Sec

1QFY18E preview—weak for OMCs and RIL; strong for CGDs.

We expect OMCs to report weak profitability driven by lower refining margins and inventory losses. RIL’s results are expected to be weak as well, further impacted by a reduction in light-heavy differential and appreciation in rupee against US dollar. Upstream PSUs will be impacted by l

11/07/2017 3:18:16 PM | Posted in Broking Firm Views - Sector Report read full news
Update On Ion Exchange (India) Ltd - Kotak Sec

We recently met the management of ion Exchange (IEL). IEL has a strong position in the water treatment market in India having set up projects for prestigious clients in India and abroad. The company has recently won a large order from Sri Lanka which has boosted its order book.

In view of the strong order book, the profit outlook for the company has improved. Given the rising focus on

10/07/2017 3:15:27 PM | Posted in Broking Firm Views - Long Term Report read full news
We expect 'convergence' in the aforesaid parameters over the next few months - Kotak Sec

Divergence and convergence.

We note the growing divergence between key global and domestic macro variables—(1) rising global bond yields and low global inflation, (2) high domestic nominal and real interest rates and low domestic inflation and (3) rich valuations and muted earnings outlook for the Indian market. We expect ‘convergence&rsqu

10/07/2017 2:51:06 PM | Posted in Special Event Reports read full news
Innerwear Sector Update Indian Innerwear Gearing up for premiumization - Kotak Sec

Indian Innerwear: Gearing up for premiumization

Indian Innerwear industry is estimated to grow at 13% CAGR led by increasing urbanization, unorganized to organized shift, preference towards branded products, organized retailing, premiumization, etc. We believe that the introduction of GST could be a game changer for highly unorganized innerwear indust

8/07/2017 1:43:59 PM | Posted in Broking Firm Views - Sector Report read full news
Economy India Cautiously scaling the FDI ladder - Kotak Sec

Cautiously scaling the FDI ladder.

Even as India’s FDI profile remains steady amid slowing global investment flows, some cracks have started to appear. E-comm/start-up space lost steam significantly in CY2016, after being favored most by foreign PEs in CY2015. Telecom was the top FDI equity recipient in CY2016 largely due to Vodafone related flo

8/07/2017 1:38:35 PM | Posted in Special Event Reports read full news
Update On Bhansali Engineerng Polymer Ltd - Kotak Sec

We met the management of BEPL to understand the company's business and industry insight. The company is a vertically integrated petrochemical company in the field of Acrylonitrile Butadiene Styrene (ABS) manufacturing in India. The current installed capacity stands at 80,000 tonnes, spread across two manufacturing facilities in Abu Road, Rajasthan and Satnoor, Madhya Pradesh. ABS acts as a

6/07/2017 2:19:23 PM | Posted in Broking Firm Views - Long Term Report read full news