Punjab National Bank: Q2FY18 results first cut – Better than expected performance, asset quality improves marginally
Punjab National Bank has posted a better than expected results as Net Interest Income was up by 3.5% YOY to Rs4015.2 crore while the Net profit increased marginally by 2.0% YOY to Rs560.6 crore and was ahead of our estimates. The advances growth during the quarter stood at 4.2% YOY in-line with industry trends while deposits increased by 10.7% YOY. The asset quality improved on a sequential basis as GNPA ratio during the quarter declined by 35BPS QoQ to 13.31%. We currently have a BUY rating on the stock and would come out with detailed note shortly.
Q2FY18 RESULTS REVIEW (Rs. In crs)
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Trident Q2FY2018 result update – flat revenue due to GST led disruption, but higher input prices affected margins
• Trident Q2FY18 revenue was flat on a YoY basis at Rs. 1154.9 crore due to flat sales in textile business (blip in Bath Linen Volume Sales by 11% Q-o-Q due to uneven vendor procurement cycle and change in product mix) and about 7% drop in paper division’s revenue.
• As spreads widened between spot and forward prices of cotton, yarn prices adjusted itself to the lower forward price, impacting profitability adversely. Thus the gross margins were down by 467 BPS YoY at 46.7% and OPM was down by 346 BPS YoY at 15%.
• Interest cost came in lower by 11% YoY but higher tax rate (32% in Q2FY18 vs 24% in Q2FY17) resulted in 36.4% decline in PAT to Rs. 50.9 crore.
• However, on a positive side, the company’s Bed Linen gained healthy Volume growth of 23% with Sales growth of 30% Q-o-Q and it added new customers in bed linen segment. With presence in around 450 Multi Brand Outlets and e-commerce platforms, the domestic Bed and Bath business revenues grew at a healthy rate of 23.6% YoY to Rs 157 crore in H1FY18. Also the capacity utilization in the paper division has improved to 87% in Q2FY18 from 83% in Q1FY18.
• Q2FY18 should be seen as a one off quarter for Trident as it faced challenges in terms of product pricing in textiles and adverse impat of GST in the domestic business. Going ahead, with increase in capacity utilisation with better product mix and increase in yarn’s captive consumption which will reduce price volatility and improve margins, the company is confident of delivering decent growth. We currently have no recommendation on the stock.
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Lupin: Lupin launches generic Acticlate tablets in US, used to treat infections & as an adjunctive therapy in severe acne – Positive for Lupin
Teva (world’s largest generic formulation company) slumped by 20% as it cut its growth guidance for the third time this year – Negative for Indian generic player (like Lupin, Sun Pharma, Glenmark, Cadila etc) sentimentally as it reflects continued pricing and regulatory pressure on generic companies in US markets
Torrent Pharma: As per media reports, Torrent pharma is in talks with Unichem labs to buy later’s domestic business. Both Torrent pharma and Unichem labs will have board meeting today – Stocks to remain in focus.
Bharat Forge, GNA Axles and Motherson Sumi: North American Class 8 truck orders surges up 161% yoy to 35,700 units (+62% mom). Positive
Maruti Suzuki: Parent Suzuki CEO worried over India’s electric push considering its limited expertise; sentimentally negative however we believe near term impact is minimal as adoption of electric vehicles would be gradual…(details in other news)
Amtek Auto: Bharat Forge interested in acquiring Amtek Auto; sentimentally positive; bidding to start from December and we await further details…(details in other news)
Max Financial Services, Lakshmi Vilas Bank – As per media reports Max Life Insurance has entered into formal negotiations with South India-based Lakshmi Vilas Bank (LVB) to increase its stake in the mid-sized lender to up to 10%.The discussions, though preliminary, are seen as important as a successful conclusion could lead to a higher stake in a niche private sector bank. – Sentimentally positive for Max and LVB .
Ruchi Soya: Devonshire Capital to acquire 51% stake in Ruchi Soya – positive read thru for Ruchi Soya, stock to be in focus…(details in other news)
Colgate Palmolive India: Life Insurance Corporation (LIC) of India has acquired 2.021 per cent stake in FMCG firm Colgate Palmolive India through open market purchase, taking the total holding in the company to 7.04% – stock will be in focus.
Investment & trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance.
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