Tuesday, 2 August 2016

{LONGTERMINVESTORS} GS ON FINANCIALS

GS ON FINANCIALS
* Upgrade Yes Bank to buy from neutral, raise target to `1484 from `970
* Upgrade HDFC Bank to buy from neutral, raise target to `1477 from `1175
* Downgrade IDFC to neutral from buy, cut target to `53 from `57
* Reiterate Sell on PNB, raise target to `86 from `73
* Reiterate Sell on BOB, raise target to `142 from `129
* India's banking sector is at infection point after deep asset quality cycle over last 7 years 
* New NPLs likely peaked but provision coverage yet to catch up
* Believe SOEs may continue to report losses, implying min capital requirement of 70% of Mcap
* Believe pvt banks could triple market share gains in credit over FY16-21E
* See retail, working capital and SME lending as key drivers of systemic credit growth
* Expect pvt banks to retain pricing power, with significantly increased share of industry profit pool

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CA Mihir Desai

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