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Why whistleblower 2.0 is a body blow to Infosys
Infosys, once the poster boy of corporate governance in India, is for the second time in two years at the receiving end after whistleblowers alleged fudging of numbers. A large section of the analyst community and the Infosys management have tried to play down the event. One supposedly level-headed reaction was that investors should allow the ‘dust to settle’ and wait for the findings of the audit committee to be revealed before reacting to the letter. But if what the letter says is true and the findings reveal wrongdoing, it would be too late to take a call as everybody would rush for the exits. An exit call by analysts then would be shutting the barn door after the horse has bolted. Read more.
Early Q2 results flag continuing asset quality pressures at banks
For some time it seemed that banks had recognised all the stressed assets in their books and the focus will turn to resolution. Even the Reserve Bank of India (RBI) in its June 2019 Financial Stability Report had predicted that the gross non-performing assets ratio of scheduled commercial banks may decline from 9.3 percent in March 2019 to 9 percent by March 2020. But that theory has been shot to bits by the continuing NBFC crisis and a deepening economic slowdown. Asset quality red flags are popping up in the September-quarter earnings announcements of lenders. Read more.
Renewable energy needs a renewed thrust
Green power, it seems, is low on charge for the moment. Two rating agencies, in their recent reports, have issued wake-up calls for the renewable energy sector that, not so long back, had been growing at a robust pace. While Crisil has expressed doubt about the country meeting its ambitious capacity target of 175 gigawatts (GW) of renewable energy by 2022, another rating agency ICRA has revised the rating or outlook for nearly one-third of its rated portfolio of wind and solar power. The two rating agencies have cited regulatory uncertainty, tariff caps and liquidity concerns as the main reasons for their negative observations. What gives? Read more.
Kotak Mahindra Bank: Asset quality takes away sheen, buy on weakness
Kotak Mahindra Bank (Kotak Bank) reported a steady September quarter with most parameters on expected lines except for asset quality that wasn’t as pristine as it used to be in the past. With a relentless drive to garner low-cost sustainable liabilities and focus on risk-adjusted returns, we believe Kotak Bank is still one of the best placed to manage the current downturn. However, the stock has been a huge outperformer and its valuation at 4.6X FY20e book leaves little room for error. While this top-class financial conglomerate remains a must-own in any core portfolio for investors, our in-house research team expects the stock to correct/consolidate in the near term. Read more.
Bajaj Finance Q2 shows off its strengths, is it the right time to invest?
Bajaj Finance (BFL), one of the largest retail lending NBFCs, posted yet another quarter of solid performance with net profit rising by 63 percent year-on-year (YoY) on robust loan growth, better margins, controlled expenses and lower taxes in the second quarter of FY20. The business performance of Bajaj Finance continues to be strong despite macro headwinds such as slowing growth, tight liquidity and rising competition. It is precisely this ability to outperform even under such difficult conditions that makes the stock expensive. Click here to read more of our in-house research team’s note.
Picks from our technical analysts
JSW Steel: JSW Steel is in bearish trend, but for the past few days, it is trading sideways. Our chartist is assuming that it will continue a bearish or sideways trend and will remain between 200 and 250. Click here for an options trading strategy.
Nifty: Nifty is in corrective mode and breadth indicators are suggesting short-term exhaustion. Price action of put options is offering a trade opportunity. Read more.
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Updated Date: Oct 24, 2019 09:18:46 IST