CLSA ON RBI CRR: ET NOW
Raises CRR to set liquidity/rates; near-term overhang for NBFCs and banks
Necessitated by significant rise in funds with banks since demonetisation scheme launch
Believe some level of impounding may continue till liquidity stabilises
Could push-up rates; banks will factor this in while making cuts to MCLR/retail-term deposit rates
Will limit gains from easy liquidity in 2HFY17; will add to pressure faced from slower business activity
NBFCs may also face overhang from lower fall funding costs
CS ON RBI CRR: ET NOW
RBI liquidity measure to put further pressure on banks' earnings
Faster growing banks (like Yes, IndusInd) would see relatively larger impact
RBI's intent to drain out excess liquidity will likely push up bond yields
Move will put additional pressure on banks' earnings which were already under pressure
Recommend well capitalised banks; would avoid PSU and Yes Bank
BOFA ON RBI CRR: ET NOW
Absorption of deposits due to this move will take out ~`3.1trn from banking system
Impact due to this is ~`7.5bn for whole system or ~1bp from margin standpoint
Expect yield decline to partially reverse, thereby wiping out potential treasury gains
CRR move, if extended, may make bank rate cuts harder
Prefer to stay with stronger deposit franchise, well capitalized banks (HDFC Bank, Kotak Bank)
prefer to stay with growth oriented and low asset quality issue banks like Yes bank
Within govt banks, would stay with SBI and BOB, as preferred picks
GS ON RBI CRR: ET NOW
CRR requirement moved up to 7% of deposits from 4%, back to levels seen in 2007-08
NIMs under pressure; SOE banks likely to experience most impact
Expect NIMs to drop by an additional 12bps for system, assuming negative 4% spread
Is incrementally negative for system as it would already have an impact on profitability
believe banks will need to revisit their deposit rates aggressively
Banks might need to raise lending rates to offset impact; looks less probable given sluggish demand
JEFFERIES ON RBI CRR: ET NOW
Stay cautious on sector; second-order impacts are keeping the Govt/RBI on their toes
In last 2 weeks, SOE Banks outperformed on back of being recipient of higher deposits share
Move may force banks to scramble for funds to manage ALM, park additional amount as CRR
NIM improvement expectation for the quarter for SOE Banks is at risk now
Over medium to longer term, believe larger banks: ICICIBC, SBIN & HDFCB would be net beneficiaries
NOMURA ON RBI CRR: ET NOW
100% CRR: Small negative but no deal breaker
PSU banks that have rallied in past two weeks, will see some near-term correction
don’t see any reason to turn negative on banks beyond the initial negative reaction
NIM impact will be temporary and that too of just 2bps on FY17 NIMs
G-Sec downtrend could get limited in near term, but provides macro stability
Does not have any bearing on SME/LAP asset quality risk
CLSA ON SPICEJET: ET NOW
maintain sell, fair value at `35
Boost from fuel disappearing, pressures from INR rising
Investors should view SpiceJet’s outlook in context of revenue performance that’s likely to get worse
Cost performance will be hit by double whammy of rising fuel costs and pressures of weak INR
Reiterate that co’s past improvement in profitability driven by fuel cost savings, restructuring
Value SpiceJet at 8.0x EV/EBITDAR; best-case valuation
CS ON L&T: ET NOW
maintain outperform, cut target to `1800 from `1900
highlight that guidance is still in sight but is not in bag
Margin guidance perhaps faces the biggest risk
CSe FY17E build 4% inflow (vs. 15%), 10% revenue growth (12-15% guidance)
CSe FY17E build flat EPC margins vs. 50 bp expansion guidance
Positives: expectation of domestic execution pick up, steady Middle East
Positives: Reducing working capital and attractive valuations
Larsen & Toubro is a CS AxJ Focus List stock
More will update soon!!
