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India Equity Research Reports, IPO and Stock News
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HDFC Bank: Retail loan growth strong; NIM stable in spite of rising rates [Manish Shukla]
Healthy loan demand from corporates and a pre-eminent position in retail should enable the bank to grow at a healthy pace. Its strong low-cost deposit ratio at ~50% should buffer the NIM. HDFC Bank's ability to maintain stable NIM and asset quality even in times of higher interest rates make the bank stand out. We maintain Buy with revised target price of INR570. Net profit at INR10.85bn, +33.7% YoY and -2.7% QoQ, was in line with our and consensus estimates.
Ashok Leyland Ltd: 1QFY12 results: weak numbers [Srinivas Rao]
Ashok Leyland's 1QFY12 operating results are below our forecasts. Recurring EBITDA (adjusted for change in amortization of leasehold land) at Rs 2.35bn was 7% lower than our estimate due to higher than expected employee and other costs. The variance in recurring profit (Rs 0.77bn, 33% below DB est) was even higher due to unanticipated increase in interest and depreciation. EBITDA margins fell 390bps QoQ to 9.4%. We await management commentary on the reasons for the significant increase in depreciation (Rs 847mn, 38% YoY) compared to a 10% decline in volumes.
Strategy: FY11 foodgrain production estimates raised - yet again [Abhishek Saraf]
The Govt. of India has again raised its FY11 food grain production estimates to 241mn tonnes (from 236mt est. in April and 232mt est. in Feb) implying a 10%yoy growth (highest in past 7 years) over FY10 production of 218mt. This is yet another data point in a series of positive developments for India's hinterland, which suggest that rural economy will remain one of the key drivers of domestic demand. Earlier in June, the government had raised Minimum Support Prices (MSPs) of several Kharif (autumn harvest) crops by 7%-19%, propping up rural purchasing power.
The Asia Investor Letter: Tail-Hedging China's (In)Stability Paradox [Brad Jones]
China's extraordinary economic transformation following the Deng-inspired reforms of 1978 might be considered equivalent to the Gilded Age in the US, a boom industrialization period of similar length that followed the ravages of the US Civil War. History subsequently showed this to be a springboard for US economic and military hegemony. With per capita GDP in China now approaching that of the US at the onset of World War One, yet still 6-10 times below that of the US today, some observers have suggested favorable base effects for China should ensure many more years, if not decades, of smooth prosperity gains ahead.
US Daily Economic Notes: First half real GDP growth looks to be under 2% [Joseph LaVorgna]
The June housing starts and permits report was better than expected, and the story may be the same for today’s existing home sales release given the large gain that was reported in May pending home sales (+8.2%). The latter are based off of mortgage contract signings whereas existing home sales are based off of mortgage closings. This means the monthly change in pending home sales tends to lead the monthly change in existing home sales by one to two months. Still, the projected gain in June existing home sales would only take the series back to where it was in April so we are clearly range-bound in the data.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
HDFC Bank: Retail loan growth strong; NIM stable in spite of rising rates [Manish Shukla]
Healthy loan demand from corporates and a pre-eminent position in retail should enable the bank to grow at a healthy pace. Its strong low-cost deposit ratio at ~50% should buffer the NIM. HDFC Bank's ability to maintain stable NIM and asset quality even in times of higher interest rates make the bank stand out. We maintain Buy with revised target price of INR570. Net profit at INR10.85bn, +33.7% YoY and -2.7% QoQ, was in line with our and consensus estimates.
Ashok Leyland Ltd: 1QFY12 results: weak numbers [Srinivas Rao]
Ashok Leyland's 1QFY12 operating results are below our forecasts. Recurring EBITDA (adjusted for change in amortization of leasehold land) at Rs 2.35bn was 7% lower than our estimate due to higher than expected employee and other costs. The variance in recurring profit (Rs 0.77bn, 33% below DB est) was even higher due to unanticipated increase in interest and depreciation. EBITDA margins fell 390bps QoQ to 9.4%. We await management commentary on the reasons for the significant increase in depreciation (Rs 847mn, 38% YoY) compared to a 10% decline in volumes.
Strategy: FY11 foodgrain production estimates raised - yet again [Abhishek Saraf]
The Govt. of India has again raised its FY11 food grain production estimates to 241mn tonnes (from 236mt est. in April and 232mt est. in Feb) implying a 10%yoy growth (highest in past 7 years) over FY10 production of 218mt. This is yet another data point in a series of positive developments for India's hinterland, which suggest that rural economy will remain one of the key drivers of domestic demand. Earlier in June, the government had raised Minimum Support Prices (MSPs) of several Kharif (autumn harvest) crops by 7%-19%, propping up rural purchasing power.
The Asia Investor Letter: Tail-Hedging China's (In)Stability Paradox [Brad Jones]
China's extraordinary economic transformation following the Deng-inspired reforms of 1978 might be considered equivalent to the Gilded Age in the US, a boom industrialization period of similar length that followed the ravages of the US Civil War. History subsequently showed this to be a springboard for US economic and military hegemony. With per capita GDP in China now approaching that of the US at the onset of World War One, yet still 6-10 times below that of the US today, some observers have suggested favorable base effects for China should ensure many more years, if not decades, of smooth prosperity gains ahead.
US Daily Economic Notes: First half real GDP growth looks to be under 2% [Joseph LaVorgna]
The June housing starts and permits report was better than expected, and the story may be the same for today’s existing home sales release given the large gain that was reported in May pending home sales (+8.2%). The latter are based off of mortgage contract signings whereas existing home sales are based off of mortgage closings. This means the monthly change in pending home sales tends to lead the monthly change in existing home sales by one to two months. Still, the projected gain in June existing home sales would only take the series back to where it was in April so we are clearly range-bound in the data.
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