Tag: Bernstein

This market expert projects mid-teens earnings growth for Nifty 50 this year

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

Listen to the Article (6 Minutes)

Venugopal Garre of Bernstein is factoring in mid-teens or slightly below mid-teens earnings growth for Nifty 50 companies this April-March 2024-25.

For the next financial year, the earnings growth could be even lower, he said in a conversation with CNBC-TV18.

“While for the broader mid cap index, the growth was more than 30-35% last year, it crosses 20-25% range this year, and 15% 17% range in FY 26. So that’s the broad spectrum of earnings. What is getting priced in the market is 13-14% Nifty growth for the next 15 years and 18% for midcaps continuously for the next 15 years,” he said.

He pointed out that overall at an index level there are no upward earnings revision.

A key reason why growth could be slower this year from the last year is the change in commodity prices.

“The lift (last year) was also because of the impact of commodity prices being lower, I don’t think that’s something which is going to support us, if at all, it could be a risk as well,” he noted.

Given the fairly high optimism in market right now, he said there will be a lot of fundraising activity in terms of size and scale over the next 12 months, which could suck in the liquidity.

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)

Listen to the Article (6 Minutes)

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%.

Also Read | Why shares of REC, PFC, IREDA declined as much as 12% on Monday: Explained

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

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

Rooftop solar key to meeting India’s growing energy needs, say experts

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

Listen to the Article (6 Minutes)

India’s need for energy is rising because cities are growing quickly, the economy is expanding, and more households are using energy. The increasing use of air conditioners and electric vehicles (EVs) is adding to this demand.

Solar power will be critical in handling this demand surge from homes. Installing solar panels on rooftops could help meet the growing energy needs.

In an interview with CNBC-TV18, Neeraj Kuldeep, Senior Programme Lead at Council on Energy, Environment and Water (CEEW) and Nikhil Nigania, Senior Analyst at Bernstein discussed at length the need to scale up rooftop solar and highlighted the importance of net metering and transmission capex.

They also discussed the challenges and opportunities surrounding EV adoption in India, including the unpredictability of power demand due to EV charging.

In February, Prime Minister Modi launched the PM Surya Ghar: Muft Bijli Yojana with an investment of over ₹75,000 crore for installing solar rooftops for 10 million households.

The solar power scheme seeks to offer 300 units of free electricity every month.

Also Read | PM Modi announces ‘Muft Bijli Yojana’ to provide free electricity to 1 crore households

“The solar energy ambitions were started in 2014 and we have come a long way. But the rooftop solar sector wasn’t picking up well over these last 10 years. The PM Surya Ghar scheme is now trying to provide the necessary impetus that is needed to scale up the success we have seen in the utility-scale. We want to replicate that for rooftop solar as well and have almost 10x growth in the next three years,” Kuldeep noted.

Therefore, from the perspective of reducing dependence on coal, rooftop solar in the residential sector is likely to be quite crucial, he added.

Also Read | PM Modi’s next target is zero electricity bill and wants solar panels in every household

Kuldeep noted that EVs bring unpredictability as it is difficult to gauge when the users will charge their vehicles leading to a sudden spurt in power demand. “So how do we manage that and whether we have the infrastructure there? So that is something we will have to solve as the EV adoption is growing.”

Nigania highlighted the challenges that India currently faces in solar power.

Net metering, for instance, is something which would be critical for the scheme to get implemented because big energy consumption by households typically happens in the evening hours.

‘…the rooftop solar supports the afternoon supply of power; we still need power in the evenings and that is where thermal power companies also come in,” he said.

For the entire discussion, 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 identifies three risks to India’s market rally

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

Listen to the Article (6 Minutes)

Rupal Agarwal, Senior Research Analyst – Asia Quantitative Strategy at Bernstein believes three factors could dampen the Indian market’s rally: stretched valuations, peaked earnings upgrades, and the extent of interest rate cuts the market is already pricing in.

Indian markets are currently trading at high valuations, both in terms of their historical averages and when compared to other global markets. This premium pricing, Agarwal believes, poses a significant hurdle for sustained market growth.

She also pointed out concern that the cycle of earnings upgrades, which has buoyed investor sentiment, may have reached its peak. Without a new wave of revisions or upgrades, the market could struggle to maintain its rally.

Bernstein is also skeptical about the extent of interest rate cuts in the near term. “The kind of rate cut environment that the markets are already pricing in, Indian market is pricing in 6.3% on 10-year bond yields. I don’t foresee that happening in the near term. So, that to me also remains one key risk,” she said.

Agarwal noted that while domestic flows are strong and supporting the market, but for foreign money to come back meaningfully, Indian markets need to see valuations coming down.

Also Read | PSU banks surge on likely treasury gains after fall in bond yields

At current levels, she sees more potential in larger quality names.

“Those would be the kind of pockets to look for opportunities right now. It is not that there are no opportunities but they are limited,” she said.

According to her, most public sector undertaking (PSU) banks don’t look attractive. “Private banks are not in our buy list right now but they are not in our sell list as well. So I am okay adding more on the private banks,” she noted.

Also Read | India’s equity market is now more than half the size of the Chinese market

Agarwal expects a tactical rebound in China markets with a lot of policy measures helping improve investor sentiment. “Directionally we are expecting the markets to continue to be more on that upward trajectory from here,” she explained.

Mark Matthews from Bank Julius Baer & Co, had also expressed a similar opinion in an interview with CNBC-TV18 earlier this week. He said the Chinese market might be at its lowest point. “I sense that it’s bottoming, and the next step could be quite a sizable rally,” he said.

For more, watch the accompanying video

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

Paytm’s Payment bank business at risk with RBI order: Bernstein

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

Listen to the Article (6 Minutes)

The Reserve Bank of India’s Wednesday directive ordering the cessation of operations by Paytm Payments Bank Ltd (PPBL) from February 29 effectively ends its operations, global research and broking firm Bernstein said.

In a significant blow to PPBL, the RBI on Wednesday issued a directive instructing the bank to cease all deposits, credit transactions, and top-ups in customer accounts, prepaid instruments, wallets, FASTags, and other related services from February 29, 2024. This move came as an extension of RBI’s earlier decision in March 2022, wherein the onboarding of new customers for PPBL was disallowed.

Bernstein said in a note that this latest directive marks the effective end of operations for Paytm Payments Bank. The firm notes that this development adds to the existing regulatory challenges that have cast a heavy overhang on Paytm’s business.

While the directive is not expected to immediately impact Paytm’s UPI payment business, which constitutes 70% of the Gross Merchandise Value (GMV), there is a potential risk to the payments margin. This is attributed to some of the higher-margin products, such as wallets and FASTags, being dependent on the now-restricted Payments bank entity (PPBL), the firm added,

However, Bernstein analysts indicate that there is no immediate risk to the loan distribution business – the regulatory challenges faced by Paytm extend beyond the recent directive, as the payment aggregator licence for the company is still pending approval, unlike most of its peers which have already received the licence. Additionally, recent constraints on the growth of the Buy Now Pay Later (BNPL) product suggest that regulatory pressures might have played a role in limiting its expansion, Bernstein added.

According to Global Financial Services Macquarie’s assessment of Paytm, the implications for revenue and profitability in the medium to long term could be substantial and warrant close monitoring.

“We think revenue & profitability implications in the medium to long term could be significant & remain a key item to monitor. We have seen RBI take 15 months time to revoke its ban on digital business activities of the largest private sector bank. However, in this case since the first ban (in March 2022) for onboarding new customers (22 months have lapsed), RBI has conducted a comprehensive IT audit and continued to identify non-compliance, which in our view indicates that these lapses are quite material.”

“Accordingly, we do not see any near term solution to these problems and this effectively means, in our view, that RBI is indirectly revoking the PPI (pre-paid instrument) licence of Paytm.”

“The bigger issue is Paytm has not been on the good books of the regulator and going forward, their lending partners also could possibly re-look at the relationships in our view,” it added.

Also read | FAQs: If you are a Paytm customer, here’s what you need to know about RBI restrictions on credit, deposit transactions

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 CY24 market outlook: Moderate year for India, China to bottom out

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

Listen to the Article (6 Minutes)

Rupal Agarwal, Senior Research Analyst–Asia Quantitative Strategy at Bernstein, believes a lot of the factors that supported the sharp market rally last year may not be there this year, making this a year of moderate gains.

“…it’s not negative, but it’s fading away whether it’s earnings upgrades, flow, the big disconnect that the valuations are right now having with the bond yields,” Agarwal said.

Also Read | Top Picks For 2024: Here’s what Jefferies, Citi and Bernstein recommend for the new year

Agarwal observed that some global investors have been adjusting their portfolios by trimming down their heavily weighted positions in India and slightly increasing exposure to China. However, India is still not an underweight among most investors at this point, she noted.

Also Read | Corporate loan growth set to make a comeback in 2024: Bernstein’s Pranav Gundlapalle

Technology features prominently among her sectoral bets with a buy recommendation. Another space she is positive on is consumer discretionary where there is momentum in quality names that are reasonably valued. On financials, the approach is more selective.

For more details, 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

As valuations hit peak, Bernstein says it may be time to book profits

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

Listen to the Article (6 Minutes)

Venugopal Garre, Managing Director of Bernstein advises a cautious approach in the market, noting that valuations are reaching their peak. His analysis, not rooted in negativity towards macroeconomic trends or earnings, suggests it’s an opportune time for investors to book profits.

This recommendation comes after a strong market rally in recent months. In his outlook, Garre anticipates modest returns, projecting about an 8% gain for the year.

While earnings growth appears decent, he doubts any major upward revisions, especially with last year’s low base effect and the absence of additional positive macro momentum.

Garre also mentions that positives like expected rate cuts in the US and India, and political stability, are already priced into the market. He highlights potential risks that aren’t always apparent, such as premature interest rate cuts leading to renewed inflation, El Niño’s impact on agriculture, and uncertainties in the US economy. These, he believes, are the unacknowledged macro-global risks looming on the horizon

Among sectoral picks, he suggests a selective approach in the power space. The firm’s top pick in this sector is one of the largest government-owned utilities.

Also Read | Power sector in 2023: Navigating demand spike and the rise of renewables

He advised caution in utility sector investments, urging investors to be vigilant about governance issues. While advocating for selectivity, he stressed the importance of choosing stocks wisely to mitigate sudden and random risks, especially in sectors like utilities where governance challenges might arise.

Also Read | India, Russia ink pacts on the construction of future power generating units of Kudankulam nuclear plant

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 sees short-term correction but will buy on dips; adds Zomato to portfolio

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

Listen to the Article (6 Minutes)

Venugopal Garre, Managing Director of Bernstein sees the possibility of a short-term correction but not a deep or sustained downturn. He said they are prepared to buy on dips.

In terms of the earnings outlook for India, Garre remained optimistic. He indicated that even if earnings remain in the mid to low teens, substantial downgrades for India are not anticipated.

He spoke about his company’s agnostic approach towards mid and large-cap stocks emphasising the importance of selecting business models that promise returns.

Garre revealed that Paytm, Delhivery, and Zomato are notable holdings in their India portfolio, with a focus on shorter-term evaluations of these stocks.

Also Read | Zomato gains after block deal; 9.28 crore shares change hands

He said, “We have stocks like Paytm and Delhivery; Paytm is recently added to India portfolio and Zomato. These three we are still willing to hold on for a while, but I want to highlight that I am not taking a five-year view on these stocks. We typically take a year or quarters and then we see how things evolve in these business models. So, these are three stocks that are there in India portfolio.”

Also Read | Bernstein downgrades these cement stocks, cuts target price as it sees limited improvement in margins

(with input from PTI)

For more details, watch the accompanying video

Also, catch all the updates on markets with CNBC-TV18.com’s blog

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 upgrades Delhivery to ‘outperform’ amid positive outlook and earnings rebound

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

Listen to the Article (6 Minutes)

Leading brokerage firm Bernstein in its latest analyst report has upgraded Delhivery, the Indian logistics company, to an ‘outperform’ rating. The upgrade comes as Bernstein expresses a positive outlook on the midcap and smallcap sector, with Delhivery specifically showcasing promising signs of bottoming out in terms of earnings and positive operating cashflow in the near term.

This upgrade marks a significant milestone for Delhivery after a prolonged period of stock gains, as the company has witnessed an impressive surge of more than 10 percent over the past month.

Bernstein’s decision to upgrade Delhivery is primarily driven by the brokerage firm’s favorable assessment of the company’s earnings trajectory and operating cashflow in the coming months. Delhivery has shown resilience in the face of challenging market conditions, leading Bernstein to believe that the company is on the path to recovery. This positive outlook has prompted Bernstein to raise its estimates for Delhivery’s EBITDA (earnings before interest, taxes, depreciation, and amortization) for the fiscal years 2024 and 2025 by an impressive 25-59 percent.

Also Read | Goldman Sachs, Norges Bank, BNP Paribas among 34 marquee investors buy stake in Delhivery after Carlyle exits

The upgrade from Bernstein holds significant weight as it acknowledges the company’s efforts to enhance its financial performance and strategic positioning. Delhivery has been working diligently to strengthen its foothold in the logistics industry, and the upgrade serves as a testament to the progress made. Investors and shareholders can take confidence in the fact that an esteemed institution like Bernstein has recognized Delhivery’s potential for future growth and profitability.

Delhivery’s stock has been gaining momentum recently, culminating in a notable 10 percent increase over the past month. This rise in stock price indicates a growing interest from investors and reflects the positive sentiment surrounding Delhivery’s future prospects. The upgraded rating from Bernstein is expected to provide further impetus to Delhivery’s stock performance, attracting increased attention from both institutional and retail investors.

For more details, 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 lists the reasons why it sees limited upside for Delhivery shares

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

Listen to the Article (6 Minutes)

Global wealth management firm Bernstein on Tuesday initiated coverage on logistics company Delhivery Ltd. with a ‘Market-Perform’ rating and a positive long-term view.

Bernstein gave a price target of Rs 360 on the Delhivery stock, implying an upside potential of around 11 percent from Monday’s closing level of Rs 323. The price target is 26 percent below the company’s IPO price of Rs 487.

Shares of Delhivery have declined 33 percent from their initial public offering (IPO) price last year and 54 percent from their peak, primarily due to poor execution.

Corrective actions by the management in recent months will drive a recovery in earnings, helping some recovery in the stock, said Bernstein. However, the long queue of exits by private equity (PE) investors will cap returns, it added.

“Over 40 percent of the stock is still held by PE/VCs (venture capital) who have sold over 10 percent after the IPO. This continuous churn will cap the upside for a while,” Bernstein said.

Bernstein expects a recovery in both growth and margins for Delhivery in the March quarter after three quarters of weakness. Recovery is expected as the challenges faced by Delhivery in PTL (part truck load) and e-commerce segments are getting resolved.

Delhivery acquired Spoton in 2021 to scale up its B2B (business-to-business) franchise in the PTL space. However, integration with Spoton took longer than expected, thereby impacting volumes. PTL volumes were down 14 percent year-on-year and 50 percent quarter-on-quarter in the April-June period last year.

“We expect Delhivery’s PTL revenues to decline 30 percent on a proforma basis for financial year. Post that, we have assumed a 15 percent volume growth rate until financial year 2030 — given it will reap the benefits of synergy with Spoton and launch economy PTL services,” Bernstein said in its report.

It added that a return of growth in PTL and continued scale increases in e-commerce will help Delhivery utilise its fleet better, helping it return to an operating profit on an adjusted basis in the new financial year. An accounting PAT (profit after tax) breakeven is likely only in financial year 2026, the report mentioned.

Shares of Delhivery are trading 1.3 percent higher at Rs 327.55.

Also Read: This is what top brokerages said about Delhivery even as stock slipped

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