Companies & Sectors
Railways, roads and housing to drive cement demand in FY14: Credit Suisse

A new report released by Credit Suisse has revealed that roads and railways are likely to drive up demand for cement, albeit at a gradual pace over the next 12 months

Indian cement sector is poised to pick up, albeit gradually during FY 2014 and it is expected that the the next 12 months would be good for the industry as a whole as it provides raw materials to key ancillary industries namely road, housing and railways, all of which are expected to pick up, says Credit Suisse.
 

The investment bank in a report said, “We expect accretive price increases for the cement sector in FY14 as demand growth improves to 7% (5% in FY13). The recovery should be driven by strong growth in rural housing and pick-up in roads and railways investment.”
 

One of the key focuses for the government and policymakers is to provide low-cost housing and rural housing, all of which require pucca (and therefore cement) houses. As much as 85% of the cement demand for rural housing stems from pucca houses, it said.


Even rising rural incomes is expected to drive demand for housing. Currently, the penetration of pucca housing is low, at only 52%. To facilitate increased housing for the poor, the government has set its budget 70% higher. “Under the Indira Awas Yojna (IAY), the central government has increased allocation per household by 55% to Rs70,000 and thus the FY14 budget is set 70% higher than FY13,” Credit Suisse said.
 

Another key catalyst is investment on construction of roads, which has been suffering for the past three years due to policy inaction, tight financing and poor implementation. Credit Suisse feels this could change. The report states, “If initiatives taken by the NHAI (National Highway Authority of India) to revive road sector to bear fruit, it should further add to cement demand growth. Railways investment grew by 16% in FY13 and should grow 20% in FY14 with project awards expected for a dedicated freight corridor.”
 

However, some of the big initiatives by the government may go a long way to speeding up road construction. One of them is delinking of environmental clearance from forest clearance, in which the NHAI has moved the Supreme Court on this matter, according to Credit Suisse. Earlier, infrastructure companies had to obtain not just environmental clearance but also forest clearance which resulted in many projects being stymied or stuck. If the Supreme Court verdict is positive, it will be a big plus for the cement sector.
 

The second key factor is the recent Reserve Bank of India (RBI) circular which could result in banks being more lenient and more free to issue loans and bonds to infrastructure and construction companies. The  circular RBI/2012-13/445 dated 18 March 2013, stated: “Prudential Norms on Advances to Infrastructure Sector to treat annuities under Build-Operate-Transfer model in respect of road/highway projects and toll collection rights, where there are provisions to compensate the project sponsor if a certain level of traffic is not achieved, as tangible securities. This is subject to the condition that banks’ right to receive annuities and toll collection rights is legally enforceable and irrevocable.” While this is more of a technicality, it could also saddle banks with more bad loans.


It is expected that railways increase investment outlay towards the Dedicated Freight Corridor (DFC) by as much as five times, to Rs7,100 crore. This would mean speedier transport (due to wide gauge) and little traffic, plus more cargo that can be carried on double-decker trains, all at cheaper rates. Cement companies, by and large, transport their cement through trains as it is cheaper than road transport.
 

The report expects cement sector to slowly expand margins albeit at a gradual pace for the 2014 fiscal. The report said, “Overall, we expect 7% cement demand growth in FY14 with housing growing at 8% and infrastructure at 5%. As the demand growth required to break-even new capacity is 6%, we expect margin expansion in FY14.”
 


Credit Suisse has picked Ambuja and ACC to perform well. “Ambuja and ACC both have strong balance sheets, with net cash at 15% of market cap and ROE at 18-19% with next two years earnings CAGR expected at 18-19%. We prefer Ambuja because of its superior regional exposure (high exposure to North India and low exposure to South India), while ACC has the highest sensitivity to both price and volumes and low exposure to Western and Central India, which are our least preferred regions due to high supply pressure,” said the report by Credit Suisse.
 

Earlier, Credit Suisse had written a report on cement sector which can be accessed here: Cement industry to pick up steam over the next two years: Credit Suisse

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COMMENTS

moladi

4 years ago

“Simplicity is the ultimate sophistication” – Leonardo Da Vinci - moladi moulds mortar - addressing the huge housing backlog

TDS not accounted for by I-T dept? Delhi HC order provides some succour

The Delhi High Court, while giving its judgement on the problems encountered by the public in the matter of assessment of tax, said, “Rejection of TDS or failure to get credit for TDS puts the tax payer through needless harassment, inconvenience and costs. The problem, being systematic and institutional, has to be addressed on a general scale”

One more financial year has just come to an end and with that the job of collecting all income certificates, TDS certificates, etc has just begun to enable us to file our income tax (I-T) returns before the end of July 2013. Tax deducted at Source, or TDS for short, has been a pain in the neck for all middle class assesses and despite repeated representations, the government has not agreed to do away with the TDS, particularly in respect of bank deposits.
 

As per the amendment to the Finance Act last year senior citizens are not required to pay any advance tax before the close of the year, but need to pay appropriate tax, if liable, before filing the tax return. But this is only a half-hearted measure, as the government has not waived TDS even for senior citizens even though they are not required to pay advance tax, thereby putting them into great inconvenience.
 

Tax raised is fine but what about accountability in spending it?
 

Problems encountered by tax paying public:
 

Recently, the Federation of Tax Practitioners had filed a writ petition in the Delhi High Court seeking remedies for some of the following problems encountered by the public in the matter of assessment of tax.
 

1. While banks are prompt in deducting tax while paying interest, they do not bother to file TDS returns promptly due to which the tax deducted by them is not reflected in the Form AS 26 of the individual tax payer appearing in the Income Tax website, consequent to which the tax department sends notices to assessees demanding payment of tax.
 

2. Even if the TDS return is filed by banks, many a times, it is wrongly filed resulting in Income Tax Officers (ITOs) refusing to give appropriate credit to assessees for the tax paid by them, despite filing record of tax payments.
 

3. The Central Processing Unit (CPU) of the Income Tax department at Bangalore has, in respect of those assessees who have filed returns on-line, started issuing notices of late to assessees on the basis of wrong entries made in the income tax website showing tax due in respect of earlier years, and asking them to get the same rectified through their ITO, if it is not due from them. This is causing avoidable harassment to all those assessees who have no dues outstanding of earlier years and have a clean record of tax payment.
 

4. Even in such cases, when the assessees seek rectification of tax dues wrongly shown under their name, the ITOs do not respond promptly to such requests resulting in the CPU unilaterally adjusting the refund due for the current year to the non-existing dues shown as outstanding for earlier years, depriving the assesses the rightful refund due to them. 
 

Judgment of the Delhi High Court providing succour to tax payers:
 

Surprisingly the tax authorities have admitted to the Delhi High Court that the data uploaded in their website and relied upon by their Central Processing Unit has errors and mistakes. According to this data a sum of Rs2.33 lakh crore was due and payable as past arrears (payable before 31 March 2010) by the taxpayers.
 

The high court in its judgment dated 14 March 2013, observed as under: 
 

 “The magnitude and number of taxpayers adversely affected can be appreciated from the past arrears figure of Rs2.33 lakh crore, which the tax authorities accept may not be correct,” states the Delhi HC order.

“This effectively means that 23 lakh taxpayers were denied refund or have been refused full refund on account of past arrears,” observes the Delhi HC order.”
 

Should banks pay interest on current accounts as well?
 

The court further said, “Rejection of TDS or failure to get credit for TDS which has been deducted and paid hurts the tax payer and puts him through needless harassment, inconvenience and costs. The problem, being systematic and institutional, has to be addressed on a general scale.”
 

The court has, therefore, in its judgment has given directions to the tax authorities to ensure compliance of the following instructions for the benefit of the public:

  1. Dispose off rectification applications filed by taxpayers regarding non credit of TDS expeditiously. (a separate register for such applications be kept)                             
  2.  Do not adjust refunds against past outstanding demands without prior intimation to the taxpayers.  
  3. If refunds have been suo-moto adjusted, transfer the matter to the concerned tax officer for remedial action in a time bound manner.
  4. Pay interest on delayed refunds where the taxpayer is not at fault
  5. If demand orders for past arrears (for the period prior to 31 March 2010) were not properly communicated to taxpayers, they will be treated as invalid, unless the tax authorities can prove otherwise 
  6. Communicate with tax deductors in case of mistakes made by them in uploading TDS details and get it rectified 
  7. Give the benefit of TDS when taxpayers furnish evidence, even if the tax deductor has made mistakes in uploading details.

If a tax payer faces any of the problems mentioned above, it is advisable to take up the matter with the jurisdictional income tax officer referring to this judgment of the Delhi High Court and seek redress if you find that the tax department is at fault and require remedial action. 

 

 

Other stories by Gurpur
 

(The author is a banking analyst and he writes for Moneylife under the pen-name ‘Gurpur’)

User

COMMENTS

S BHASKARA NARAYANA

4 years ago

I too was affected by the IT dept's CPC, B'lore wing. They have not relied upon the form 16 provided by my employer. The Assessing Officer raised demand notice on me alone to my e-mail address, leaving my colleagues, since there is no credit in 26AS for the last quarter.

Even my employer came to my risk.
Can I ask the IT assessing officer to seek my employer, who issued the Form 16 duly verified.---ABXPS0727J

Navin

4 years ago

I'm facing a similar problem. For a particular Financial year i was supposed to receive a Refund and this i did. However, in the CPC data they showed a demand and adjusted this demand through the refund amount which i was supposed to get in the subsequent years. Had been visiting the local I.tax office at Patna but no result.

REPLY

Gurpur

In Reply to Navin 4 years ago

Mr. Navin, you may write a letter to the Income Tax Officer of your jurisdiction bringing to his notice the mistake committed by CPC in adjusting the refund due to you to the fictitious demand shown in their website and asking for setting right the records to enable you to get back the refund due to you. You can also quote this judgement of the Delhi High Court and seek immediate redressal of your grievance.

If you do not get a proper reply from the ITO within a month, you may approach the Commissioner of income Tax (Grievance Cell) at Patna itself and take up this matter with him for redressal. You may also specify the Delhi High Court order and seek immediate release of refund due to you.
If you do not get any positive response from the Commissioner's office within a month, the next course will be to approach the Income Tax Ombudsman of Patna, the details of which are available on the website of Income Tax dept.Govt. of India.

Kindly proceed as above and I am sure you will succeed in your efforts.
Gurpur.

Gurpur

In Reply to Navin 4 years ago

Mr. Navin, you may write a letter to the Income Tax Officer of your jurisdiction bringing to his notice the mistake committed by CPC in adjusting the refund due to you to the fictitious demand shown in their website and asking for setting right the records to enable you to get back the refund due to you. You can also quote this judgement of the Delhi High Court and seek immediate redressal of your grievance.

If you do not get a proper reply from the ITO within a month, you may approach the Commissioner of income Tax (Grievance Cell) at Patna itself and take up this matter with him for redressal. You may also specify the Delhi High Court order and seek immediate release of refund due to you.
If you do not get any positive response from the Commissioner's office within a month, the next course will be to approach the Income Tax Ombudsman of Patna, the details of which are available on the website of Income Tax dept.Govt. of India.

Kindly proceed as above and I am sure you will succeed in your efforts.
Gurpur.

TIHARwale

4 years ago

Communicate with tax deductors in case of mistakes made by them in uploading TDS details and get it rectified.

this itself would ensure IT returns are assed without difficulty. another thing which calls for attention is if Tax Payer has to file returns by 31 July, TDS should file the details by 15 May and AS26 should be available by 30 June so that Tax payers can make self assessment by 10 July and returns can be filed by 31July

SuchindranathAiyerS

4 years ago

There will be no real relief unless the erring parties are promptly penalized for the benefit of those who suffer. This is just "work in progress" for the Quota-Corruption Raj.

PRABHAT

4 years ago

THE JUDGEMENT IS HIGHLY APPRECIABLE . A TAX PAYER IS NOT CONCERNED WITH TDS RECONCILIATION, IF HE IS HOLDING CERTIFICATE FOR THE TAX PAID / DEPOSITED . IN CASE OF ANY MISMATCH , I TAX DEPTT. SHOULD ASK FOR THAT BEFORE COMPLETING ASSESSMENT . BUT DEPTT. IS INTERESTED TO CREATE PANIC FOR THEIR CONVENIENCE .

A LARGE NUMBER OF TAX PAYERS ARE AFFECTED .

VIKAS SIVARAMAN

4 years ago

It's about time the TaxPayer took a stand. Why pay tax when the processing of tax details and dues are so tedious and so flawed? After all it is hard earned money that the govt - by law - says is due from the taxpayer but then we all know how much of that money getts to where it should go. Look at the misuse and criminal malpractice in the NREGA. IT IS NOW APPARENT THAT ALMOST HALF THE ALLOCATED FUNDS ARE BEING SIPHONED OFF. So why pay taxes? To a Govt that is culpable and incapable of protecting that money and ensuring it reaches where it should? STOP PAYING TAXES TILL GOVERNANCE ENSURES THAT OUR HARD EARNED MONEY IS CORRECTLY AND SAFELY DEPLOYED TO THE LAST PAISA is my recommendation. I'm seriously considering this option. Should not you too?? Think.......

Q4 net profit of private banks may go up 23%, PSBs to falter says Nomura

Nomura Equity Research, in its earnings preview for the financial sector, has forecast a 22.3% y-o-y PAT growth for private banks and a negative 13% growth y-o-y for PSU banks in the fourth quarter of the 2012-13 fiscal

Nomura Equity Research, in its earnings preview for the financial sector, has forecast a 22.3% y-o-y PAT (profit after tax) growth for private banks and a negative 13% growth y-o-y for PSU banks in the fourth quarter of the 2012-13 fiscal (4QFY13F). It adds that robust PAT growth for private banks will be driven by a 19.9% y-o-y growth in net interest income on the back of a loan growth of 21.5%. It does not expect any significant deterioration in the asset quality of private banks and is factoring in a q-o-q rise in gross non-performing loans (GNPL) of 2.9%. On the other hand, state-run banks are likely to see a y-o-y decline in PAT to the tune of 13%.

 

The brokerage expects PSU banks (SBI, PNB and BOB) to have an average loan growth of 16.5% (SBI skewing the picture higher) and continue to see deterioration in asset quality. It is building in an 11.9% q-o-q rise in provisions driven by a 9.2% q-o-q growth in GNPL.
 


While the aggregate loan growth continues to be weak (14% as on 22nd March), sectors such as agriculture, retail, power, roads, engineering and iron & steel are seeing robust growth. Nomura expects retail to continue to drive loan growth as most banks are focusing on retail loans, given the weak corporate loan demand. Restructuring activity at the corporate debt restructuring (CDR) cell is a mixed bag as new applications have increased q-o-q, while cases approved have registered a sharp decline q-o-q. More important, successful exits from the CDR cell are likely to continue in the reporting quarter (4QFY13) as well, believes Nomura.

 

Nomura Equity Research reiterates ‘Buy’ on IndusInd Bank (trading price: Rs520; trades at 2.5x FY14F ABV), ICICI Bank (trading price: Rs1,390; trades at 1.35x FY14F ABV), Yes Bank (trading price: Rs615; trades at 1.9x FY14F ABV), Axis Bank (trading price: Rs1,620;  trades at 1.7x FY14F ABV) and Shriram Transport Finance Company trading price: Rs840; trades at 1.9x FY14F ABV) as it does not see significant earnings risk in these stocks for FY14F and find the risk-reward attractive at current levels.

 

The latest aggregate loan data from the Reserve Bank of India (RBI), as on 22 March 2013, indicate a y-o-y loan growth of 14%. More detailed monthly sector-wise loan data indicate that while the overall loan growth remains weak, sectors such as agriculture, retail, power, roads, engineering and iron & steel are seeing robust growth.

 

“We expect retail to continue to drive the loan growth as most banks are focusing on retail loans given the weak corporate loan demand. Agriculture should also continue to remain strong in this quarter due to seasonal factors related to meeting priority sector requirements. We expect PSU banks (except for SBI) to register a relatively lower growth. We expect SBI is likely to grow its loan book above the sector average helped by a lower base rate which should give the bank higher refinancing opportunities and greater competing ability in the retail mortgage market. Private banks are likely to grow their loan books at a run-rate similar to the level seen in the third quarter, according to Nomura’s analysts.

 

Deposit growth is picking up pace relative to loan growth and as on 22 March 2013, a deposit growth of 14.4% y-o-y was clocked. In addition, a weaker current and savings account (CASA) growth (especially CA growth) could lead to further decline in the CASA ratio in the quarter, further adding some pressure to net interest margins (NIMs). On the CASA front, the brokerage expects IndusInd Bank and Yes bank to continue to do well, in line with 3Q trends. Whereas other banks under our coverage may report a flat to declining CASA ratio, opines Nomura.

 

Nomura is not comfortable on PSU banks as they are likely to continue to face delinquency pressure. A sequential growth in GNPLs may taper off in 4QFY13F and banks may report a flat to declining GNPL ratio due to heavier write-off and recoveries that are typical of 4Q. Also, many PSU banks have guided vastly improved recoveries this quarter.

 

Data attributed to the CDR cell indicate that loan restructuring cases have approved in

4QFY13 at Rs156 billion compared with RS246 billion in 3QFY13 and cases referred were at Rs300 billion compared with Rs210 billion in 3QFY13.

 

PSUs under tracked by Nomura have received capital infusion from the government during the quarter, with PNB raising Rs12.5 billion, SBI raising Rs30.1 billion and BOB raising RsR8.5 billion. Among private banks, Axis Bank has raised Rs55.3 billion early in the quarter. On the margin front, the benefit of capital infusion will be negligible for PSU banks as the capital is received in the quarter end and the benefit of the same will be seen in ensuing quarters both in terms of NIM and loan growth, according to the brokerage.

 

Axis Bank, which raised capital in the start of the quarter and IndusInd Bank which raised capital in 3Q could see some margin and growth benefit in the quarter; however, the margin benefit for Axis bank is likely to be more than offset by the margin pressure due to heavy Q4 priority sector lending which takes place in the March quarter.

 

Nomura believes NIMs for most of the banks under its coverage will continue to remain under pressure largely due to following reasons:

1) a marginal cut in the base rate in January2013 and an increase in the deposit rate in March 2013 to put pressure on the spreads for most PSU banks,

2) the seasonal nature of priority sector lending to put further pressure on NIM due to the low yielding nature of the portfolio,

3) banks will unlikely benefit from the recent capital infusion as the full impact of the capital will only come in coming quarters,

4) an increase in borrowing rates (certificate of deposit rates) due to tighter liquidity in the quarter will impact the NIM for wholesale funds dependant banks.

 

However, it expects ICICI Bank to remain resilient to this trend and may further improve its NIM as it expects its international NIM to continue to improve. HDFC Bank is also unlikely to face any NIM decline pressure due to the higher CASA base and better distributed priority sector lending, according to Nomura.

 

Nomura expects fee income to remain under pressure as the corporate fee pool continues to decline on lower corporate loan demand. Banks may continue to see single digit fee income growth, lagging their loan look growth as the corporate fee share continues to decline and increment retail loans are given at lower or zero processing fees. During the quarter, bond yields have declined marginally (9bps). Based on this, it expects banks to book some bond gains in this quarter. The brokerage has factored in lower trading profits in 4QFY13F relative to 3QFY13.

 

Nomura Equity Research expects Axis bank to deliver a PAT of Rs13.6 billion, on the back of a marginal decline in NIM of 5bps q-o-q at 3.5% and higher NPL provisions of Rs3.8 billion in 4Q. It forecasts loan growth of 21% y-o-y for the quarter, to be driven by a strong retail growth and an improvement in corporate loan growth at 16% y-o-y compared with 12.5% in 3Q. The capital infusion in January 2013 will help Axis Bank grow its loan book at a faster pace. On the asset quality front, it expects delinquencies to the tune of Rs5.8 billion compared with Rs5.4 billion in 3Q with loan loss provisions (LLPs) of 87bps in the quarter (79bps in 3Q). It expects deposit growth for the bank to decline to 15% y-o-y from 17% y-o-y in 3Q, with a flat q-o-q CASA ratio at 40%.

 

The brokerage expects Bank of Baroda to continue to see pain in the asset quality, given the tough macro environment and the new management may continue to clean up the book further. Nomura expects delinquencies to remain high at Rs17 billion (Rs20 billion in 3Q) with LLPs of 108bps (110bps in the previous quarter). It expects the GNPL ratio to increase 20bps q-o-q to 2.6% from 2.4% in 3Q. Besides, Nomura does not anticipate new management making a significant addition to the loan book until it cleans up the book. BOB’s loan growth is expected to decline further to 13%, down from 14.8% in the previous quarter. It expects a deposit growth of 16% y-o-y with a marginal decline in the CASA ratio q-o-q at 25.6%. On the P&L side, It estimates the bank to grow by 7% at a PPOP level; however, due to the higher potential NPL provisions of Rs8.4 billion, we forecast a 38% decline in PAT at Rs9.6 billion (a 6% decline q-o-q).

 

Nomura expects HDFC Bank to continue to deliver a stable PAT growth, given the higher retail loan share, higher CASA ratio and stable asset quality. The bank is expected to deliver another 30% PAT growth in the quarter driven by stable to marginal improvement in NIM q-o-q and a loan growth of 24.8% y-o-y. It estimates the CASA ratio to remain flat at 45.5% with a deposit growth of 19% y-o-y. Nomura forecasts the cost-income ratio to inch back up to 47% from 46% in 3Q (an averaging 48% in 9MFY13). “Expect the GNPL ratio to remain flat at 0.9% with LLPs of 41bps during the quarter. Fee income should remain healthy and largely track the balance sheet growth for the bank, growing by 20% y-o-y, on our estimates,” said Nomura in its note.

 

ICICI Bank is expected to deliver a PAT of Rs23.6 billion, on the back of marginal improvement in NIM and above-industry loan growth of 17.8% y-o-y. Loan growth for the quarter would be driven by the continued traction in the retail loan segment.

 

The CASA ratio of ICICI Bank is expected to remain flat at 41% with a deposit growth of 15.4% y-o-y. On the asset quality front, it anticipates the GNPL ratio to continue to decline to 3.28 (3 bps lower than the previous quarter). Nomura forecasts delinquencies to the tune of Rs8.7 billion with total LLPs of 48bps for the quarter (53bps in the previous quarter). Fee income will remain weak for the bank, growing merely by 6% y-o-y against the 17.8% y-o-y loan growth in 4QFY13F as the corporate fee pool continues to decline, based on Nomura’s estimates.

 

Nomura expects IndusInd Bank to register a robust PAT of Rs2.9 billion on account of the 10bps q-o-q expansion in NIM at 3.65% and a strong loan growth. Loans are expected to grow by 30% y-o-y, driven by the strong retail loan growth of 36% y-o-y, taking retail loans as a percentage of total loans higher to 51.6%, thus supporting NIM improvement.

 

The brokerage expects IndusInd Bank to continue to add CASA at a similar pace of the previous quarter, leading to a 50bps q-o-q improvement in the CASA ratio at 29.2%. Saving deposit is expected to grow by 50% y-o-y and the current deposit to grow by 29% y-o-y while asset quality is estimated to remain benign for the bank with delinquencies to the tune of Rs1.3 billion (Rs1.9 billion in 3Q) and LLPs of 47bps during the quarter.

 

Nomura expects asset quality to start normalizing from the exceptionally low delinquencies in the previous quarter; however, delinquencies will remain lower than what Punjab National Bank had seen in the first two quarters of the fiscal year. It forecasts delinquencies of Rs24 billion during the quarter against Rs3.6 billion in 3Q and an average Rs36.6 billion in both 1Q and 2Q.

 

LLPs of PNB will also inch higher to 100bps levels from 63bps in the last quarter, however, lower than 123bps in 1Q and 156bps in 2Q, according to Nomura’s estimates. It forecasts a loan growth of 13% y-o-y, given the lower retail share, weaker SME and corporate growth. It also expects NIM to remain flat or decline marginally from 3Q levels. Deposit growth is expected to remain weak, increasing by 10% y-o-y with a CASA ratio of 36% (compared with 37% in last quarter).

 

SBI is expected to deliver a PAT of Rs39 billion in the fourth quarter on the back of a strong loan growth of 18.7% y-o-y and a marginal improvement in NIMs to 3.4%. Mortgage and auto loans are expected to drive higher than the industry loan growth for SBI while deposits are expected to grow by 15.7% y-o-y for the bank with a CASA ratio of 44.4% (down 40bps y-o-y).

 

Despite higher loan growth, the brokerage estimates fee income to decline by 14% y-o-y (a 3% fall in 3Q) as incremental loans contribute lower fees. It expects delinquencies of Rs77.9 billion compared to Rs81.8 billion in 3Q with a GNPL ratio of 5.4% and LLPs of 107bps for the quarter.

 

Yes Bank is expected to deliver a PAT of Rs3.5 billion on the back of a strong loan growth of 23% y-o-y and an improvement in NIMs to 3.1%. Deposits are estimated to grow by 22.5% y-o-y for the bank with a CASA deposit growth of 56% y-o-y (a CASA ratio of 19.2%- 90bps improvement q-o-q).

 

DCB Bank is expected to deliver a PAT of Rs288 million on the back of a loan growth of 20.4% y-o-y and flat NIMs of 3.4%. The brokerage estimates deposits to grow by 26% y-o-y for the bank with a CASA ratio of 28.6% (down 30bps q-o-q). It expects the bank to maintain a steady fee income rate of Rs300 million and NPL provisions of Rs74 million (LLPs of 48bps for the quarter).

 

Nomura expects IDFC to register a net interest income growth of 21.7% and a non-interest income growth of 37.1%, on the back of a loan growth of 17.4% y-o-y. It forecasts q-o-q PAT growth of 15% y-o-y (42% y-o-y for 4QFY13).

 

Mortgage lender HDFC is expected to register a net interest income growth of 21.5% backed by loan growth of 20.4% (loans to individuals growing at 24.8% y-o-y). Nomura forecasts a non-interest income growth of 6.2% and a y-o-y PAT growth of 17.3%. GNPL ratio is estimated to be largely flat q-o-q at 0.74%.

 

Nomura expects Shriram Transport Finance Company to deliver a PAT of Rs3.6 billion on the back of a 19.4% y-o-y AUM growth and calculated NIMs to AUM to be 7% (20bps lower than 3Q). It forecasts used CVs and new CV book to increase at 23% and 7.5%, respectively. The brokerage is also building in Rs30 billion of securitization in 4Q. LLPs are expected to be 182bps for 4Q (flat q-o-q). An uptick in AUM growth and the movement in spread and LLPs would be key metrics to watch for the stock, said Nomura Equity Research.

 

Mahindra & Mahindra Financial Services is expected to deliver a PAT of Rs2.5 billion on the back of a strong AUM growth of 30% y-o-y and calculated NIMs on average AUM to be 9.9% for Q4. Nomura estimates 27% and 36% y-o-y increases in its UV and car finance book, respectively.

 

Nomura forecasts Power Finance Corporation (PFC) to deliver a PAT of Rs10.5 billion on the back of a strong loan growth of 22% y-o-y. It estimates 4Q sanctions and disbursals of Rs124 billion and Rs171 billion, respectively. Key things to watch for in 4Q would be the commentary on SEB (state electricity board) restructuring and related disbursal, movement in asset quality and fresh sanctions, opines Nomura.

 

Rural Electrification Corporation is expected to deliver a PAT of Rs9.4 billion on the back of a strong loan growth of 23% y-o-y. The brokerage estimates sanctions and disbursals of Rs120 billion and Rs84 billion, respectively, for 4Q.

 

Nomura expects LIC Housing Finance to register a net interest income growth of 12.5% y-o-y on the back of a loan growth of 21.4% y-o-y. However, PAT is likely to decline 7.4% against a 12.9% q-o-q growth in NII as we build in higher LLPs and a weakening asset quality. Loans to the developer segment, FY14 guidance on spread and plans for a new bank license are the key factors to watch, the brokerage opines.

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