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HDFC Bank’s Q2 numbers show positive signs, analysts see 15-20% stock upside

by 5paisa Research Team 18/10/2021

HDFC Bank posted robust earnings growth for the second quarter, thanks to a rise in advances due to a pickup in retail lending as well as strong commercial and rural loans.

Improved asset quality and thereby lower provisioning costs also helped India’s most valued lender match street estimates for quarterly earnings.

HDFC Bank: Basic Numbers

HDFC Bank’s standalone net profit rose 17.6% to Rs 8,834 crore for the three months ended September 30 from Rs 7,513 crore a year earlier.

Some analysts had expected a slightly higher profit, but this was more or less in line with general consensus. The bank’s net interest margins stayed at 4.1%, which took away some sheen off the bottom line.

Net interest income at Rs 17,684.4 crore increased 12.1% year-on-year and 4% from the first quarter ended June 30.

HDFC Bank: Credit growth

HDFC Bank’s credit growth improved to 15.5% compared to the same quarter last year and 4.4% sequentially, backed by a pickup in retail loans that grew nearly 13% even as wholesale loan growth moderated to 6%. Retail credit growth was driven by advances in home, auto, personal loans and payment products (including cards).

This is a critical sign as it shows pickup in consumer sentiment and sets the right tone for the current quarter where retail advances could improve net interest margins for the bank, thereby shining the profit numbers. Since the Reserve Bank of India has lifted a ban on the company’s new credit card customer acquisition programme, it is also likely to provide a fillip for the bank.

The bank’s credit growth was in the 20% range before the pandemic hit the economy. But with two consecutive quarters of sequential improvement, HDFC Bank appears to have seen the worst and is set for better credit picture in the current quarter.

HDFC Bank: Asset quality and provisioning

The bank’s gross non-performing assets (GNPA) ratio improved to 1.35% in Q2 from 1.47% in Q1. The net NPA ratio declined to 0.4% from 0.48% in Q1 and 0.5% in the preceding quarter ended March 31, 2021.

Its NBFC arm, HDB Financial Services, also reported an improvement in the GNPA to 6.1% from 7.8% in Q1.

Provision and contingencies rose 6% year on year to Rs 3,924.7 crore, though the amount declined by nearly a fifth from Rs 4,830.8 crore in Q1.

Analysts’ view

As the most valued lender in the country, HDFC Bank is also seen a bellwether for the credit growth scenario for the economy and especially consumer sentiment due to its large presence in the retail loans space. Over the last year or so, banking sector stocks have underperformed as investors remain wary of asset quality as well as concerns about credit offtake. To that extent, the improving financial picture of HDFC Bank rings the right bells.

Most brokerage houses have a buy call on the stock with the average target price around Rs 1,950-2,050 a share. This leaves room for 15-20% upside on the stock.

Emkay: The brokerage has a buy rating with a target price of Rs 2,050 a share. “We believe that growth acceleration and the lifting of the embargo on the credit card business are positive. However, lower margins and higher restructuring in Q2 were a tad disappointing,” it said.

Nirmal Bang: It maintains a buy call on the stock with a target price of Rs 1,962 a share. The brokerage said the pick-up in the retail segment, where growth had been lacklustre in the last few quarters, was encouraging.

“Accordingly, we expect margins to improve progressively and NII should revert to 15% YoY growth level in a few quarters. We remain sanguine about the bank’s growth prospects given that it is taking multiple measures to capture emerging opportunities in commercial/rural and retail banking.”

ICICI Securities: The brokerage has also maintained a buy rating but has increased the target price from Rs 1,818 to Rs 1,955 a share.

Motilal Oswal: It has also maintained its buy call on the stock and revised the target price to Rs 2,000 per share. “High provision coverage and contingent provision buffer provide comfort on asset quality. A pickup in loan growth particularly retail would aid NII and margins, which would drive profitability,” it said.

IDBI: The brokerage has a buy rating with the new target price of Rs 2,020 compared with Rs 1,790 earlier.

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PNB Housing Finance hits 5% lower circuit after scrapping Carlyle stake sale.

PNB Housing Finance hits 5% lower circuit after scrapping Carlyle stake sale.
by 5paisa Research Team 18/10/2021

Concerns regarding asset quality and growth re-emerge with the deal being called off.

The stock on PNB Housing Finance hit its lower circuit of 5% in the early trading session on Monday in reaction to the board decision of terminating the Rs 4,000 crore stake sale to investors led by Carlyle Group.

The Carlyle Group affiliate Pluto Investments has initiated the process to withdraw the open offer, the mortgage lender said in an exchange filing. The cause of the deal termination is said to be caused by delays in pending legal proceedings. Had the deal gone through, the Carlyle Group would have held close to 50% in PNB Housing Finance, helping to ease concerns about capital availability and growth.

In May 2021, investors led by Carlyle announced an investment of Rs 4,000 crore in PNB Housing. The investment by Carlyle was crucial for PNB Housing because it came at a time when the mortgage lenders financials were hit by liquidity crunch that hit NBFCs following the collapse of Infrastructure Leasing and Financial Services Ltd (IL&FS) in September 2018 and then followed by the pandemic.

However, the transaction soon came under the scrutiny of the Securities and Exchange Board of India (SEBI) after the Stakeholders Empowerment Services (SES) termed the deal ‘unfair and abusive’ to the minority shareholders. The market regulator halted the stake sale and asked PNB Housing Finance to conduct an independent valuation before pricing any capital-raising deal.

PNB Housing Finance challenged the regulators directive at Securities Appellate Tribunal (SAT), which allowed the company to seek shareholders approval. This was followed by SEBI approaching the Supreme Court after SAT delivered a split verdict.

With the eventual cancellation of the deal, the mortgage lender will have to look at other funding sources to support growth. The company has been looking to raise funds over the past few years however, the Reserve Bank of India (RBI) barred parent Punjab National Bank from infusing capital into its housing finance subsidiary.

In the early trading session on Monday, the stock of PNB Housing Finance was locked in its lower circuit of 5%. The trading was suspended at Rs 607.10 per share, down by 5% or Rs 31.95 on the BSE. The stock’s 52-week high is Rs 924 and the 52-week low is Rs 315.85 on BSE.

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These Penny Stocks are locked in the Upper Circuit on Monday.

These Penny Stocks are locked in the Upper Circuit on Monday.
by 5paisa Research Team 18/10/2021

The markets are trading at high levels with benchmark indices holding on to the early gains with Sensex crossing the 61,000 mark and Nifty around the 18500 level. Vedanta is the top BSE Sensex gainer with attractive gains of 12.31% while Hindalco and JSW Steel have gained by more than 6.03% and 3.54% each.

The BSE Metal Index is leading the sectoral peers and is up by 4.29%. Vedanta is seen shining the BSE Metal index on an intraday basis, up by 12.79%.

The broader market is seen outperforming the frontline indices with the BSE Midcap index up by 1.33% and SmallCap index up by 1.12%.

Tata Power is the top BSE Midcap index gainer, the stock has jumped attractively from its previous weeks close. On Monday, the stock is up by more than 15%, while NHPC has zoomed more than 13% and SJVN has soared by more than 10%.

BSE Oil & Gas, BSE IT, BSE Bankex and BSE Power indices are outperforming the benchmark indices on Monday.

In the small caps space, Vishwaraj Sugar Industries has given a positive breakout. The stock has broken the current resistance level on charts and is trading with a positive RSI.

Amid the bullish sentiment in the markets on Monday, several penny stocks were seen outperforming the markets.

Here is the list of penny stocks that are locked in the upper circuit on Monday:

  

Sr No   

Stock Name   

LTP   

Price gain (%)   

1  

Vikas Multicorp   

3.7  

4.23  

2  

FCS Software   

1.6  

3.23  

3  

Llyods Steels   

4.7  

4.44  

4  

Prakash Steel   

2.45  

8.89  

5  

Rolta India  

3.2  

4.92  

6  

Sintex Industries   

4.55  

4.6  

7  

Viji Finance   

2.1  

5  

8  

Gayatri Highways   

0.9  

5.88  

9  

National Steel and Agro Industries 

5.5  

4.76  

10  

Indosolar   

3.05  

3.39  

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Superstar Stocks: BTST Trading and stocks that could deliver good returns till October 19, 2021.

Superstar Stocks: BTST Trading and stocks that could deliver good returns till October 19, 2021.
by 5paisa Research Team 18/10/2021

Stocks that are in focus, Stocks to buy for tomorrow, Superstar Stocks selected on basis of a three-factor model, Rain Industries, Reliance Industries and JK Tyre.

Many times market participants see a stock opening with a gap-up and wish they should have bought this superstar stock a day before to take advantage of the gap-up move. To fulfil this wish, we have come out with a unique system, which would help us to get the list of candidates that can be the probable superstar stocks for tomorrow.

The superstar stocks for tomorrow selected are based on a three-factor prudent model. The first important factor for this model is price, the second key factor is pattern, and last but not least is the combination of momentum with volume. If a stock passes all these filters, it would flash in our system and as a result, will help traders to spot the superstar stocks for tomorrow at the right time!  

Here are the superstar BTST stocks for October 19, 2021.

Rain Industries: The stock has gained nearly 4.5% on Monday and it has formed a supersized bullish candle along with a surge in the volumes. The volume for the day has already surpassed its previous trading session. The RSI on an hourly, daily and weekly time frame is in the bullish territory. The stock can probably test levels of Rs 259 followed by Rs 264 on the upside, while on the downside, support is seen around Rs 244.

Reliance Industries: The stock of Reliance Industries is among the top two contributors to the Nifty 50 index as it has contributed nearly 31 points to Nifty’s kitty. The stock has logged a fresh 52-week high on Monday. The stock has formed a supersized bullish candle along with a surge in the volumes. The stock has already surpassed the volume of its previous trading session. The 14-period RSI is in the bullish super territory on hourly, daily and weekly time frame. The stock has the potential to test levels of Rs 2785 followed by Rs 2800 on the upside. On the downside, the level of Rs 2685 is likely to act as immediate support for the stock.

JK Tyre: The stock is seeing good action on Monday as it has gained over 4% along with a rise in volumes. The volume for the day is the highest single-day volume since September 3. The RSI on the hourly, daily and weekly chart is in bullish territory. The stock has the potential to test levels of Rs 164-166 and immediate support for the stock is placed at Rs 155.5.

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Hospital chain GPT Healthcare files DRHP for IPO as profit doubles. Find out more

by 5paisa Research Team 18/10/2021

GPT Healthcare Ltd, which operates mid-sized multispecialty hospitals under the ILS Hospital brand in eastern India, has filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India for an initial public offering.

The IPO consists of a fresh issue of shares aggregating to Rs 17.5 crore and an offer for sale of almost three crore shares shares by its investor and promoter, according to the draft red herring prospectus (DRHP).

BanyanTree Growth Capital, a private equity fund, plans to sell up to 2.6 crore shares and GPT Sons Pvt Ltd, the promoter entity, will offload up to 38lakh shares. GPT Sons holds a 67.34% stake in GPT Healthcare and BanyanTree owns 32.64%. BanyanTree plans to sell its entire stake.

As per market sources, the total IPO size could be between Rs 450 crore and Rs 500 crore.

GPT Healthcare plans to use the proceeds from the fresh issue to buy medical equipment amounting to Rs 13.2 crore over the next two years, besides for general corporate purposes.

Dam Capital Advisors Ltd and SBI Capital Market Ltd are the book running lead managers to the IPO.

GPT Healthcare’s business

The company was founded by Dwarika Prasad Tantia and Dr Om Tantia, who has more than four decades of experience as a surgeon and is a specialist in the field of laparoscopic surgery.

It started as an eight-bed hospital at Salt Lake, Kolkata in 2000. It now operates three hospitals under the ILS Hospital brand in West Bengal and one in Tripura with a total capacity of 556 beds.

The hospital chain operates 35 specialties and super-specialties such as internal medicine, diabetology, gastroenterology, orthopaedics and joint replacements, interventional cardiology, neurology, neurosurgery, paediatrics and neonatology.

The company intends to grow the urology, neurology, interventional cardiology and oncology specialties. It also plans to expand its network of hospitals into markets in eastern India and adjacent regions via greenfield and brownfield projects.

GPT Healthcare focuses on developing an asset-light model. It has recently signed an MoU and long-term lease agreement for a hospital with 140 beds in Ranchi at an estimated investment of Rs 50 crore. The Ranchi Hospital is expected to commence operations in 2025. Other locations it is considering to expand are Lucknow, Varanasi, Patna, Guwahati, Cuttack and Raipur.

GPT Healthcare’s financials

The company’s total income increased 15.2% from Rs 216.08 crore in 2019-20 to Rs 248.86 crore in 2020-21, primarily due to growth in income from hospital services, income from pharmacy sales and non-operating income.

Its net profit doubled to Rs 21.09 crore for 2020-21 from Rs 10.96 crore the year before.

The company’s EBITDA margin was 22.14% for 2020-21 compared with 18.53% in 2019-20.

Its net operating profit margin was 8.69%, higher than listed hospital chains such as Apollo Hospitals Enterprise Ltd, Narayana Health Ltd, Max Healthcare Institute Ltd, Fortis Healthcare Ltd and Shalby Ltd, according to a CRISIL report.

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Indian Exchanges Report: Equities remain stable, Derivatives soared and Commodities dragged

by 5paisa Research Team 18/10/2021

Year 2020 and Year 2021 has seemed to prove to be a blockbuster for the Indian Exchanges so far. Let’s look at some data points that support the case.
The volumes significantly increased across all segments in September ’21. Equity Cash segment ADTV (average daily turnover value) grew up by 23% for NSE and 93% for BSE respectively on Y-o-Y basis while BSE was down by 1% and NSE down by 11% on Q-o-Q basis.


While Cash segment has some stability, the Equity Derivatives segment number roared loud. The ADTV of NSE’s total equity derivative stood at Rs. 69trn in Sept’21 vs Rs. 57trn in Aug’21, up by ~21%. NSE Options ADTV grew up by ~20% to Rs. 67trn and Futures grew up by ~13% to Rs. 1.2trn. While party was at NSE, it was a grimmer picture for BSE with Options ADTV declining sharply by 46% to Rs. 1.6trn.


Along with Equity Derivatives, the Currency Derivatives outperformed too and had highest volumes in past 5 months. NSE currency derivatives ADTV grew up by 31% to Rs. 709bn while BSE currency derivatives ADTV grew by 30% to Rs. 253bn on YoY basis. While on MoM basis the figures stood at 32% for NSE and 5.7% for BSE. NSE’s market share stood at ~74% while BSE’s stood at ~26% in September 2021.
On mutual fund platforms front, number of orders processed on the BSE mutual fund platform grew by 111% to 15.1mn while on the NSE mutual fund platform grew by 89% to 2.97mn.


The Commodity segment faced the heat with ADTV in Sept’21 was dramatically down by 25% YoY and up by merely 2% MoM at Rs. 256bn. Even the soaring prices of Natural Gas and Crude, the ADTV was range bound between Rs. 250-260bn since March’21. The MoM 2% increase was due to higher volumes in Gold trades and Natural Gas prices. However, Gold was also the reason behind the dramatic 25% YoY decline as Gold ADTV dropped by 50% YoY on basis of lower traded volumes. 


Overall, MCX ADTV was down by 32% on YoY basis and by 9% MoM basis. MCX commodity Options segments cheered along with MCX Options ADTV stood at Rs. 76bn in Sept’21 vs 60bn in Aug’21. The increased in ADTV was mainly led by Options volume in Crude and Gold. In MCX index futures universe, Bullion ADTV grew up by 9% and Metal Indices ADTV grew up 21% MoM basis in Sept’21
Upon monthly performance check, CDSL has been given a “REDUCE” Rating, BSE “HOLD” rating and MCX “BUY” Rating.

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