Author: Mitali Mohite

Why this global investment firm ranks M&M and Indigo among its top picks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Matt Orton, Chief Market Strategist at Raymond James Investment lists Mahindra and Mahindra (M&M) and Interglobe Aviation (IndiGo) among his top picks given their significant presence in the expanding Indian market.

In an interview with CNBC-TV18, he pointed out that the automotive sector has played a significant role in driving the Indian market, serving as a pillar of strength.

“Mahindra and Mahindra is a top pick of mine because you have seen margin hold up even as the order books are kind of been going through a little bit of a reworking phase earlier this year. But it has exposure not only to light motor vehicles, and light SUVs but also to the farm side, which is going through a period of recovery. So, I think when we come out the other side, you are going to see an earnings acceleration there,” he said.

Also Read | M&M ED and CEO shares EV plans, says ready to compete with anyone amid Tesla entry news

Indigo, he believes, will benefit from the ever increasing number of travellers both within India and globally.

He highlighted the company’s strong margins and profitability, attributing it to the favourable balance between seat costs and customer demand.

Investments in widebody jets will also help Indigo expand its global reach beyond the current fleet’s capabilities, he noted.

Also Read | IndiGo only airline in the world to induct one plane every week: CEO Pieter Elbers

Overall, he thinks investors should now be selective in what they own.

“There are a number of areas of the market that have won pretty significantly. So, you want to lean into quality, you want to lean into where there is margin strength, and where you are seeing a little bit of an acceleration in earnings,” he said.

He also noted the appeal of various cyclical segments in both the US and global markets. “I have been advising to use weakness as an opportunity to put some cash to work.”

For the entire interview, watch the accompanying video

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Chicago Booth’s Anil Kashyap forecasts prolonged inflation at higher level

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Anil Kashyap, an Economics and Finance Professor at Chicago’s Booth School of Business (Chicago Booth), alerted that inflation might persist at a higher level than anticipated, possibly remaining around 3% instead of receding. Additionally, he addressed the difficulties confronting the European and Japanese economies, underlining the crucial role of central bank policies in mitigating risks.

In an interview with CNBC-TV18, Kashyap discussed in detail the global macro economy outlook, US inflation and where it is headed, adding that he expects the US Federal Reserve to wait until September for the first rate cut, citing political considerations.

Speaking further about US inflation, he stated that there are numerous signs suggesting that inflation will persist stubbornly. Therefore, he doesn’t anticipate it to simply decline back to 2% without any significant impact. It appears that inflation is hovering around 3%, which wouldn’t be historically unexpected. The notion that it would swiftly return without a period of economic slowdown is doubtful. Hence, inflation might be higher than what the market initially believed, and even presently, there could be some optimism in the markets.

When questioned about rate cut expectation, Kashyap said, “They will cut rates in September, pretty close to the election, I think they would have to have clear evidence that inflation had fallen at that point to do that. Otherwise, they will probably just wait for another meeting or so.”

Also Read | US Federal Reserve holds steady on interest rates, signals potential future cuts

Talking about global economies, he said that if Donald Trump wins the US Presidential election, he will quickly cut a deal with Russia to try to get rid of that problem as far as he sees it and that could be very chaotic for Europe. The Middle East looked like at one point they were on the verge of a huge fight between Israel and Iran, which would also be very disruptive to them as an energy price shock. So, there’s a lot of downside risk in the global economy.

“Japan is a place where there is some good news, I mean, they have managed to end their yield curve control without having the markets throw a tantrum. They will begin starting to normalise, we will see how they are able to do that and whether they can tighten a little bit. So, the direction of what central banks are going to do is more divergent than it would usually be,” Kashyap added.

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For the entire interview, watch the accompanying video

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Indian Overseas Bank targets 3.25-3.30% net interest margin in FY25

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Despite challenges from rising budget costs, Indian Overseas Bank (IOB) intends to maintain its margins around 3.25% to 3.30% going forward. The bank also plans to reduce gross non-performing assets (NPA) by 100 basis points (bps) to 2.10% by FY25, with net NPA targeted at 0.25-0.30%.

In an interview with CNBC-TV18, Ajay Kumar Srivastava, Chief Managing Director & CEO of Indian Overseas Bank, highlighted the bank’s strategy to maintain margins and reduce NPA while growing loans at a mid-teen rate.

In further discussion regarding net interest margins (NIMs), Srivastava mentioned that the bank raised interest income while simultaneously decreasing expenses on interest paid by managing its CASA (low-cost deposit accounts). They opted against acquiring high-cost bulk deposits, and a combination of these strategies led to an enhancement in NIM to 3.28%.

“There will be a challenge on the margin because the deposit is getting costlier day by day. But we have our plans concretised and we are implementing it successfully and we hope that by the same strategy will be able to maintain it,” Srivastava added.

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When discussing loan growth, the CEO stated that it would be upheld at 13-14% for FY25, with the bank aiming for double-digit growth in retail, agricultural, micro, small, and medium enterprises (MSME), as well as corporate credit segments.

The bank posted a 24% rise in its net profit to ₹808.10 crore during the January-March quarter of FY24, up from ₹650.07 crore in the corresponding period of the previous year, driven by strong growth in core earnings and a decrease in provisions.

Quarter-on-quarter (QoQ), the net profit surged by 12% from ₹722.56 crore in the third quarter of FY24.

The bank’s total income saw a notable increase of 37.43% to ₹9,112.67 crore compared to the same period last year, with net interest income (NII) climbing by 27.67% to ₹6,629 crore. Meanwhile, other income escalated to ₹2,477 crore from ₹1,430 crore in the corresponding period.

Also Read | Indian Overseas Bank targets 13-14% credit growth next year, plans fundraise

The market capitalisation of Indian Overseas Bank is around ₹1,17,383.98 crore. Its shares have gained close to 153% in the past year.

(with input from Business Standard)

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Citi forecasts India advantage, resilient global economy, and trims US rate cut predictions

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Citi anticipates a robust global economy and adjusts its earlier projection of three rate cuts for the US this year to one or two, citing disappointing inflation figures in the first quarter. Additionally, Citi highlights India’s advantageous position in rebalancing alongside China.

In an interview with CNBC-TV18, Nathan Sheets, Global Chief Economist at Citi, said that the geopolitical realities and the tensions between the United States and China are a major headwind to the Chinese economy going forward.

“So, looking at a 10-year trajectory and a 10-year horizon, I like the outlook for India a lot better than I liked the outlook for China,” he added.

Expanding on the topic of the US Federal Reserve rate cut, Sheets remarked that there has been a shift from considering the possibility of three cuts during the latter half of the year to a current debate centred more around the likelihood of one to two cuts. He said, “I am still hopeful that maybe we can get the 2 instead of the 1, but we have got to see better inflation performance than we saw during the first quarter. And the US Fed is going to have to keep rates where they are for a while longer.”

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He remarked that sentiments among global investors regarding the Indian equity market are remarkably positive, noting it as the most optimistic he has witnessed throughout his career. Much of this positivity, he attributed, stems from concerns about the geopolitical dynamics between the United States and China. Many money managers and corporations, he observed, are contemplating diversification away from China, thus viewing India favourably as a beneficiary in this rebalancing process.

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For the entire interview, watch the accompanying video

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Max Life eyeing a spot among the top three players in the protection and annuity segments

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Max Life Insurance is working on a strategy to be among the top three players in the protection and annuity businesses, the company’s MD and CEO Prashant Tripathy told CNBC-TV18.

Tripathy said the focus on these two businesses will also help in maintaining margins.

For April-March 2024-25, the value of new business (VNB) is expected to be in line with or marginally lower to the growth in annualised premium equivalents (APE).

VNB indicates the expected profitability of new policies by calculating the present value of future profits, while APE measures new business sales by combining regular premiums and one-tenth of single premiums.

Tripathy expects the VNB growth to be in high teens with margins closer to 25-26%.

In April-March 2023-24, Max Life Insurance achieved a new business margin (NBM) of 26.5%, with a slightly higher margin of 28.6% in the fourth quarter.

The company’s value of new business (VNB) reached ₹1,973 crore in FY24, marking a 1% growth over the year.

“Last few years average has been growing in early teens, between 11% and 13%, and in that context, Max Life Insurance will try to gain share. So, the plan that we are rolling forward is high teen growth, similar to how we grow this year. It will be a balancing act and we are hoping that the value of new business (VNB) growth will be either inline or marginally lower than how the sales will grow,” Tripathy said.

Also Read | Max Life Insurance AUM crosses ₹1.5 lakh crore for the first time

He expects the restructuring at Max Financial Services to start after the first half of the current financial year and it could take 18 months to conclude.

The intention is to have Max Life listed on exchanges at the end of restructuring process, he noted.

For the entire interview, watch the accompanying video

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Adani Enterprises remains a great way to play the India theme, says this foreign analyst

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Brett Knoblauch, CFA, Director of Equity Research at Cantor Fitzgerald, is optimistic about Adani Enterprises due to its involvement in various segments of the Indian economy.

He emphasised Adani Enterprises’ potential for expansion within India, especially in sectors like airports and green hydrogen.

The company’s competitive pricing and revenue-generating potential further strengthen its position.

“We are still very bullish on Adani Enterprises. We think the flagship investment vehicle is just a great way to get exposure to a lot of different aspects of India, which we are generally very bullish on,” he said.

In an interview with CNBC-TV18, Knoblauch also discussed the current state of both the Indian and US markets and the recent divestment by foreign investors in India.

During the roadshows conducted in New York, Miami, and Toronto last week, Knoblauch, who specialises in tracking Adani in India, observed significant interest from US investors.

He noted that investors were especially excited about the company’s green hydrogen business.

Also Read | Adani Enterprises Q4 net profit drops 38% to ₹451 crore; shares trade under pressure

Among other sectors, Knoblauch believes that from a risk-reward perspective, valuations are attractive across tech companies, especially at the smaller end of the market.

“Those companies are more pressured; revenue growth has come down, but valuations have come down quite considerably and if you take that into hand with rates hopefully coming down over the next year, you could see how the risk-reward for software companies which are looking to grow 15% this year and 13% a year after that, plus you get the (valuation) multiple expansion, and how it could result in good returns,” he added.

Also Read | Adani Ports Share Price: 90% analysts remain bullish; See target of up to ₹1,782

For the entire interview, watch the accompanying video

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

IGL hopes new geographical areas will aid volumes in FY25

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Indraprastha Gas (IGL) is working to grow volumes in the current financial year by expanding to newer geographies.

The company’s Managing Director Kamal Kishore Chatiwal also expects compressed natural gas (CNG) conversions to pick up during the year and this will help compensate volumes lost to electric vehicles (EVs).

In an interview with CNBC-TV18, Kishore also discussed the company’s outlook for FY25.

Kishore expects the volumes to be around 9.5 million metric standard cubic meters per day (mmscmd) in April-March 2024-25.

“We gave an exit guidance of around 9 million but achieved 8.73 in the last quarter. Full year it was 8.43. So next year, it will be 9.5 million per day, that is our guidance, slightly 2 to 3% lower than our estimate. The major reason has been declining volumes of DTC due to EV conversion,” he said.

He pointed out that the Delhi government wants to move more vehicles to EVs.

Also Read | IGL Q4 results: Indraprastha Gas net profit at ?382.8 crore; declares 250% final dividend

IGL’s net profit grew 16% on a year-on-year (YoY) basis to ₹383 crore in the January-March quarter.

The market capitalisation of Indraprastha Gas is around ₹31,780.04 crore. Its shares have gained close to 14% in the past six months.

For the entire interview, watch the accompanying video

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Energy efficiency initiatives will drive margin expansion this year, says Chambal Fertilisers CEO

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Abhay Baijal, Managing Director of Chambal Fertilisers and Chemicals, expects the recently completed energy efficiency projects to drive margin expansion in April-March 2024-25.

Chambal has spent almost ₹185 crore on the energy efficiency projects.  

The company will also recover the urea volumes lost during the January-March period due to plant maintenance shutdowns, he said.

Given the healthy cash flows, Baijal is confident that the company will be debt-free by the end of FY25. Currently, the company has debt of around ₹1,400 crore. 

In the March quarter, the company has managed to increase its profits due to a reduction in expenses compared.

The revenue from operations dipped 27% from last year. However, a sharper decrease in expenses helped profit grow by 3% year.

The company announced a dividend of ₹3 per share.

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The agrochemicals manufacturing firm headquartered in Kota possesses a market capitalisation of approximately ₹16,052.13 crore.

Over the last year, its shares have surged by nearly 33%.

For the entire interview, watch the accompanying video

Catch all the latest updates from the stock market here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bernstein bullish on this sector, shares top picks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Nikhil Nigania, Director and Senior Analyst at Bernstein is bullish on the power sector due to the favourable demand-supply dynamics.

The power industry, Nigania noted, is currently experiencing a multi-year capital expenditure cycle driven by fundamental factors.

The demand-supply balance remains strained in India, particularly during evening hours or non-solar periods, with little indication of significant change expected over the next three to four years.

“So, it will be a favourable demand-supply situation and tonnes of capex which the sector needs. So, we continue to be positive,” Nigania added.

Power public sector undertaking (PSU) companies NTPC and Power Grid are among his top picks for their strong fundamentals and attractive valuations.

While NTPC has the benefit of being able to borrow at lower rates than its peers, Power Grid benefits from India’s strong transmission network.

As renewables, electric vehicles (EVs), data centres, and hydrogen usage increase, the need for grid investment will rise.

Both NTPC and Power Grid are well-positioned and reasonably priced, trading at 15-16 times price to earnings, in line with global peers, per Nigania.

Nigania also discussed the potential impact on capex investments due to the stricter draft rules for project financing issued by the Reserve Bank of India (RBI).

In Nigania’s assessment, a renewable project, which could previously secure funds at a 9% interest rate may now need to pay around 9.3%.

“A 30-basis point rise in interest rate possible for the borrower should not change the capex cycle in our view. It’s a fundamental sustainable capex story we see in India both on infra and power,” he added.

One basis point is one-hundredth of a percentage point or 0.01%.

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Also, renewable companies tend to borrow in dollar versus rupee loans and currently, the spread between borrowing in dollar versus rupee is almost 150 basis points. So, rupee loans are much cheaper than borrowing in dollars. That also means the 30 basis points increase will not change the borrowing dynamics much, he noted.

Nigania said the new norms are a proactive move by RBI, which seems to be taking measures to ensure that lenders have more skin in the game, and are more cautious when they lend.

For the entire interview, watch the accompanying video

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Muthoot Microfin to maintain half of its portfolio from non-southern geographies

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Muthoot Microfin, the microfinance arm of the Muthoot Pappachan Group, will continue to maintain 50% of its portfolio from the southern geographies in the long term. It has added Andhra Pradesh and Telangana to the portfolio.

The northern region is currently around 23% of portfolio, east is around 12% and the balance comes from the western parts of the country.

Sadaf Sayeed, CEO of Muthoot Microfin expects credit costs in the Microfinance institution (MFI) space to remain in the range of 1.5-2% over the long term..

The company opens around 225 branches every year. Last year, they had invested upfront and that will help them in good stead in terms of growth, he said.

The company provides micro-loans to women customers (primarily for income generation purposes) with a focus on rural regions of India. Muthoot Microfin’s business model helps in driving financial inclusion, as it serves customers who belong to low-income groups.

The company’s net profit rose 27% to ₹119.76 crore for the January-March quarter.

Net interest income (NII) for the quarter rose 47% to ₹400 crore.

Muthoot Microfin’s market capitalisation stands at approximately ₹4,046.63 crore, with its shares having declined nearly 0.59% over the last month.

Also Read | Muthoot Microfin shares list at 5.40% discount to IPO price

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow