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.
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.
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 )