Money & Banking
Private banks are attractive investments now

While loan impairments in the system were going up, the private banks had enough profitability and capital as a buffer. Also, price-earnings multiples were inexpensive, says Morgan Stanley

Big private lenders – HDFC Bank, HDFC, ICICI Bank and Axis Bank – have been attractive investments for the last few months. Morgan Stanley’s view, in a research note, was that while impairments in the system were going up, these lenders had enough profitability and capital to buffer them. Also multiples were inexpensive. At the same time, there have been concerns about the impact of the bad loan cycle on other banks, especially SOE (state-owned enterprises) banks and niche non-bank lenders.

 

However, now the economy is stabilising and systemic risk from external factors has reduced, finds Morgan Stanley. Also, with LD (loan-deposit) ratios at around 77%, the liquidity situation is better. Against this backdrop banks will do well. “We are thus putting OW (overweight) on almost all private lenders”, says Morgan Stanley. The view on SOE banks remains the same, i.e. profitability is too low to take care of high credit costs. Also, the SOE banks face a substantial capital raising cycle – implying material dilution ahead for minority investors.

 

Morgan Stanley raises its view on the India Financials industry to Attractive. It believes that the industry is poised to give very strong returns. The stocks have lagged the broad market over 1-year and 3-year periods, driven by concerns of economic slowdown and consequently the bad loan cycle. As they recede, multiples for private lenders with strong capital should expand.

 

The performance of banks in the stock market is shown in the chart below:

 


The key forecasts with respect to private lenders is summarised in the table below:

 


In conclusion, the Morgan Stanley research note recommends profitable private lenders in the stock market to long term investors.

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Madras HC restrains Zee, News Nation from linking Dhoni with IPL scam

Dhoni had filed a defamation suit claiming Rs100 crore damages from the Zee Media for allegedly telecasting 'malicious' news that he was involved in betting, spot and match fixing of IPL matches

The Madras High Court on Tuesday restrained TV channels like Zee News and News Nation from telecasting any news linking India cricket team captain MS Dhoni with the Indian Premier League (IPL) betting or fixing scandal.

 

The interim order, effective for two weeks, was passed by Justice S Tamilvanan on a defamation suit filed by Dhoni claiming Rs100 crore damages from the Zee Media Corporation for allegedly telecasting 'malicious' news that he was involved in betting, spot and match fixing of IPL matches.

 

“I am of the view that there is a prima facie case and the balance of convenience is also in favour of the plaintiff. Hence, interim injection granted for a period of two weeks,” the judge said in his order after perusing Dhoni’s affidavit.

 

He issued notice to defendants Zee Media Corporation Ltd, Zee News Editor and Business Head Sudhir Chaudary, IPS officer G Sampath Kumar (who initially probed the IPL betting scam) and News Nation Network Pvt Ltd.

 

Dhoni, in his suit, submitted that the defendants had been carrying highly defamatory, scandalous and libellous false reports and statements since 11 February 2014.

 

The first and second defendants Zee Media Corp (Zee News) and Sudhir Chaudary, editor and business head of Zee News Channel, Essel Studios, Noida, Uttar Pradesh, in collusion with the third defendant IPS officer G Sampath Kumar have been telecasting and broadcasting and posting in their websites false reports insinuating that Dhoni was involved in illegal activities of betting, match fixing and spot fixing.

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COMMENTS

Amol Chavan

3 years ago

Zee news was earlier involved in similar activity with jindals. What happened about that case?

Definitely I do not believe these media channels for their news. They will do anything, report any unproven news or hide any true news. They have been broadcasting their stand when jindal filed a case against them. They also accepted that they were doing sting operation. I do believe that their is some fishy business with jindal but zee news is a wrong player too.

Nandan Nilekani: From meritocracy to reservation politics!

Nandan Nilekani, while heading Infosys, never had second thoughts on recruiting people other than those who secured the highest grade. However, he is now all for reservations and wooing 'poor' voters

Many people are surprised at the rapid conversion of Nandan Nilekani, the former head honcho of Infosys into a 'typical' political leader of the Congress party. His remarks over the weekend about reservation in the private sector left many people wondering as to why this was not implemented when he was heading Infosys, the country's second largest IT company.

 

Speaking with reporters at Bangalore Press Club, Nilekani said that reservations in private sector are necessary. “In India, certain sections of the society because of historical reasons were handicapped and thus require a leg up through reservations. Even at Infosys we tried encouraging people of all backgrounds," Nilekani was quoted as saying in a report from firstbiz.com.

 

Even in his book, ‘Imagining India’, Nilekani had advocated a 'marks subsidy' for backward classes (page 302, Extra Marks in Exams). The question, however, is what stopped Nilekani from implementing this when he was heading the country's second top IT services company. Interestingly, even today, Infosys employs only people who have scored high(est) grade in first attempt and there is no reservation policy. It is proud to be a merit-based organisation

 

Reacting indirectly on Nilekani's views about reservation in private sector, TV Mohandas Pai, former chief financial officer and head of human resources, tweeted: "selling his soul for power; made his money in the company wedded to meritocracy."

 

What Nilekani has spoken is all his party bosses are trying to use as an election gimmick to woo voters. According to a report from Economic Times, Congress, which goes into the general elections facing a major anti-incumbency wave, is desperate to woo its traditional vote base of dalits and scheduled tribes that has been weaned away by parties such as BSP and BJP.

 

"In the recent assembly elections, Congress has won only six of the 91 reserved seats for scheduled castes, down from 38 seats in 2008. The party hopes the slew of promises in education, employment and quality of life for these groups will help it win back some of their support. A major cornerstone of this approach would be reservation in private sector jobs, a move that was proposed in the 2004 and 2009 manifestos but could not be pushed by UPA," the report says.

 

According to media reports, Congress is trying to include a proposal to legislate job reservations for scheduled class and scheduled tribes (SC/STs) in private companies with investments worth Rs100 crore or employing 1,000 people. It also wants to introduce reservation in private schools for class I admissions, free post-matriculate education and a Rs25,000 voucher for every graduate.

 

Nilekani, who till last week was chairman of the Unique Identification Authority of India (UIDAI) and had been enforcing the Aadhaar number based on biometrics on Indians. On Thursday, he resigned as chief of UIDAI and jumped into 'active' politics on Sunday as Congress candidate from south Bengaluru constituency.

 

While the Supreme Court has ruled that the unique identification (UID) number or Aadhaar is not mandatory to avail essential services from the government, it was Nilekani who was making sure that it is made mandatory by using governmental clout with oil companies and banks. This is because, he was either heading or part of every committee or group that was turning the 'voluntary' Aadhaar number into mandatory one. (Nandan Nilekani is part of every committee and group that is making Aadhaar mandatory )

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COMMENTS

Gaurav Juneja

8 months ago

Its a well known fact that team runs at the pace of its slowest team member, same is applicable for a Nation. If you put weakest section of the society on the top , Nation will fall. as happened once with the Greece ,they were the strongest culture once and now the weakest in Europe , not able to sustain themselves even with the huge aids and favours

Gaurav

8 months ago

Reservation has only slowed and at times stopped the Growth of this country, knowing this , politicians want to further hinder the growth by allowing reservations in private sector!! Govt. will fall , people will fight and kill each other , their will only be chaos and destruction - mark it, bad to worst times are ahead.

MOHAN

3 years ago

EXPOSING THE UNDERBELLY OF AADHAAR - A COBRAPOST INVESTIGATION

http://cobrapost.com/index.php/news-deta...

Narayanaswami Natarajan

3 years ago

It just shows what a deadly virus politics is. The transformation of Nandan as a politician had already begun a couple of years back. he had decided to maintain opacity ( No RTI or Parliamentary disclosures) regarding the financial contracts doled out to private players for thousands of crores to dubious Foreign companies and Indians. Obviously he had cooperated with the manipulators of the Government. . FIRs have been registered against some Indian contractors. Next he gave a certificate of character to ruling politicians. Now he has turned totally local and parochial as if he is fighting a municipal election, forgetting he is standing for Lok Sabha where national priorities have to be furthered. He wants to bat for Bengaluru and its wards! He wants reservations in the private sector based on caste and religion.One only hopes he will be be rejected by the electorate. Otherwise being the richest bidder he may realize his ambitions and it will be bode well for the country.

Satish Bhopale

3 years ago

I pray, he should loose election. AADHAAR is a big burden on Indian economy. He made all the efforts to make profit to Congress govt by introducing this NIRADHAAR scheme. He will not win from Bangalre. Even No man from Busines win the election, if he win he will apply his power to grow his business. During Nandan Nilekani removed more employees from Infosys. He will not allow to make changes in poor labor low of India

Sanjeev

3 years ago

People should come out and vote out the parties which speak of reservation in corporate sector. That's the only solace left after our children secure 99.99% in school exams. Don't let the politicians snatch away this!

Politicians: pls invest to elevate "lower" caste people through right to education bill and not through reservations.

MAHENDRA

3 years ago

Is that what Lessons Nandan got from from IIT?

Surprising really? No.... the environment is made so deeply corrupt, Politicos want to maintain these levels of Sub-casts, Poovery so low that like last 65 years they can rule another 65 decades! Issues systematically brought up before and are closed immediately after elections.
Why do we need this hippocratic Democracy following Leaders?

...& even Nandan has to follow?

M Muralidharan

3 years ago

Disgusting face of Nandan ...

REPLY

B Ramesh Adiga

In Reply to M Muralidharan 3 years ago

. . . Hopefully, he may not enter parliament.

Mahesh Kumar Tennati

3 years ago

Mr. Pai's comment is spot on. No doubt there is a need for reservation, but there should be level playing field for all and merit should be the only criteria for jobs/education/promotion etc. Reservation my means of financial assistance should be adopted rather than killing talent.

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