External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

External broker reports(aggregated public sources)

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Thematic (Sector/Industry)

<ul><li>Given the rising competitive intensity for low-cost and granular deposits facing the banking system, loan-deposit ratios at historical highs, and expected rate cuts towards the back-end of FY25, we believe banks are faced with the challenge of quality deposit mobilisation, elevated funding costs (lagged deposit re-pricing) and softer incremental spreads</li><li>As banks and NBFCs navigate the growth-margin trade-off, we argue that the combination of lower growth and lower spreads is likely to keep valuations under check, especially of mid-sized, high-growth franchises</li><li>While we expect system-wide growth to decelerate by 90-100 bps from FY24 levels, we are conservative on incremental spreads across our coverage universe, pencilling in 50bps of rate cuts starting Q4FY25 (blended FY25 NIMs at 12-15bps below FY24)</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Given the rising competitive intensity for low-cost and granular deposits facing the banking system, loan-deposit ratios at historical highs, and expected rate cuts towards the back-end of FY25, we believe banks are faced with the challenge of quality deposit mobilisation, elevated funding costs (lagged deposit re-pricing) and softer incremental spreadsAs banks and NBFCs navigate the growth-margin trade-off, we argue that the combination of lower growth and lower spreads is likely to keep valuations under check, especially of mid-sized, high-growth franchisesWhile we expect system-wide growth to decelerate by 90-100 bps from FY24 levels, we are conservative on incremental spreads across our coverage universe, pencilling in 50bps of rate cuts starting Q4FY25 (blended FY25 NIMs at 12-15bps below FY24)Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Leveraged Financials: The Liquidity Conundrum

<ul><li>Hindustan Unilever: HUL reported 2% UVG with flat value growth as pricing remained negative (passing on softening RM benefits to consumers)</li><li>Mirroring trends of previous quarters, demand recovery remains gradual with the urban market leading growth with premium portfolio sustaining outperformance over the mass portfolio</li><li>Given the benign input cost environment, local competitive intensity remains high</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Hindustan Unilever: HUL reported 2% UVG with flat value growth as pricing remained negative (passing on softening RM benefits to consumers)Mirroring trends of previous quarters, demand recovery remains gradual with the urban market leading growth with premium portfolio sustaining outperformance over the mass portfolioGiven the benign input cost environment, local competitive intensity remains highContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily: Hindustan Unilever, Axis Bank, Indian Hotels

HSIE Results Daily: Hindustan Unilever, Axis Bank,

<ul><li>Q3FY24 earnings season saw an overall in-line performance, with wide divergences across sectors and companies</li><li>Aggregate revenue/PAT grew by 5%/20% YoY and 4%/-4% QoQ across the HSIE coverage (~224 stocks), with their four-year CAGRs at 13%/18%</li><li>There was similar participation by large and midcap categories towards incremental earnings growth as large-cap grew by 20% YoY and midcap grew by 21% YoY</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Q3FY24 earnings season saw an overall in-line performance, with wide divergences across sectors and companiesAggregate revenue/PAT grew by 5%/20% YoY and 4%/-4% QoQ across the HSIE coverage (~224 stocks), with their four-year CAGRs at 13%/18%There was similar participation by large and midcap categories towards incremental earnings growth as large-cap grew by 20% YoY and midcap grew by 21% YoYContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

India Equity Strategy: Input Cost Benefits Drive Earnings Growth, Revenue Contribution Muted

<ul><li>SBI Life Insurance: SBILIFE’s adjusted VNB was flat YoY at INR40.4bn, as the VNB margin clocked in at 28.1% (softer 153bps YoY) on the back of a 500bps higher share of ULIP in the APE mix at 61% (9MFY23: 56%)</li><li>We build in 16% YoY growth in APE for FY24 (below guidance) on account of slower growth in the retail business</li><li>Our high conviction BUY remains anchored on the three powerful and sustainable moats: (a) exclusive access to parent SBI’s massive distribution network (penetration at ~2%), (b) least impacted by IRDAI draft exposure on surrender values on savings product, and (c) the lowest opex ratio among peers (9MFY24: 9.9%)</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

SBI Life Insurance: SBILIFE’s adjusted VNB was flat YoY at INR40.4bn, as the VNB margin clocked in at 28.1% (softer 153bps YoY) on the back of a 500bps higher share of ULIP in the APE mix at 61% (9MFY23: 56%)We build in 16% YoY growth in APE for FY24 (below guidance) on account of slower growth in the retail businessOur high conviction BUY remains anchored on the three powerful and sustainable moats: (a) exclusive access to parent SBI’s massive distribution network (penetration at ~2%), (b) least impacted by IRDAI draft exposure on surrender values on savings product, and (c) the lowest opex ratio among peers (9MFY24: 9.9%)Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily: SBI Life Insurance, Shriram Finance, AU Small Finance Bank

India

AU Small Finance Bank Limited is an Indian scheduled commercial small finance bank. It offers a diverse range of products including savings accounts, current accounts, fixed deposits, loans (vehicle, MSME, housing, personal, gold, agriculture), debit and credit cards, and insurance. The company was founded in 1996 and is headquartered in Jaipur, Rajasthan, India.

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AU Small Finance Bank (AUBANK IN)

Leveraged Financials: The Liquidity Conundrum

Our hypothesis remains anchored around strong retail deposit franchises and declining spreads over the next 12 months, coupled with the...

HDFC Securities

HSIE Results Daily: Hindustan Unilever, Axis Bank, Indian Hotels

Hindustan Unilever: HUL reported 2% UVG with flat value growth as pricing remained negative (passing on softening RM benefits to consumers)

HDFC Securities

HSIE Results Daily: Hindustan Unilever, Axis Bank,

Hindustan Unilever: HUL reported 2% UVG with flat value growth as pricing remained negative (passing on softening RM benefits to consumers)

HDFC Securities

India Equity Strategy: Input Cost Benefits Drive Earnings Growth, Revenue Contribution Muted

Q3FY24 earnings season saw an overall in-line performance, with wide divergences across sectors and companies. Aggregate revenue/PAT grew by 5%/20%...

HDFC Securities

HSIE Results Daily: SBI Life Insurance, Shriram Finance, AU Small Finance Bank

SBILIFE’s adjusted VNB was flat YoY at INR40.4bn, as the VNB margin clocked in at 28.1% (softer 153bps YoY) on the back of a 500bps higher share of...

HDFC Securities

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