External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

Equity Bottom-Up

We initiate coverage on DCB Bank (DCB) with a BUY recommendation and a Target Price of Rs 115/share implying an upside of 24% from CMP.<div class="content-highlight">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.</div>

We initiate coverage on DCB Bank (DCB) with a BUY recommendation and a Target Price of Rs 115/share implying an upside of 24% from CMP.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.

Specialist in Indian Banking and Economic Research

Hemindra Hazari

The Reserve Bank of India (RBI)’s decision to grant a 1-year <a href="https://ir.rblbank.com/pdfs/regulatory/ReappointmentofMDCEOMrVishwavirAhujaFinal2021.pdf" target="_blank" rel="noopener">extension</a> to  Vishwavir Ahuja, Chief Executive Officer (CEO), <a href="https://www.smartkarma.com/entities/rbl-bank-ltd" target="_blank" data-smartkarma-citation="entities:22856:1" rel="noopener">RBL Bank Ltd (RBK IN)</a> is similar to the 1-year extensions it provided to <a href="https://www.dcbbank.com/pdfs/BSENSEReAppointmentOfMDANDCEOApril2021.pdf" target="_blank" rel="noopener">Murali Natarajan</a>, CEO, <a href="https://www.smartkarma.com/entities/dcb-bank-ltd" target="_blank" data-smartkarma-citation="entities:1557:1" rel="noopener">Dcb Bank Ltd (DCBB IN)</a> and <a href="https://www.bseindia.com/xml-data/corpfiling/AttachHis/d8768272-3bd1-4d07-808b-43b725fcdc69.pdf" target="_blank" rel="noopener">Shyam Srinivasan</a>, CEO <a href="https://www.smartkarma.com/entities/federal-bank-ltd" target="_blank" data-smartkarma-citation="entities:11784:1" rel="noopener">Federal Bank (FB IN)</a>. In recent times, Udak Kotak, CEO-founder, <a href="https://www.smartkarma.com/entities/kotak-mahindra-bank-ltd" target="_blank" data-smartkarma-citation="entities:126:1" rel="noopener">Kotak Mahindra Bank (KMB IN)</a>(KMB) enjoys the unique distinction of getting a <a href="https://www.bseindia.com/xml-data/corpfiling/AttachLive/d5faa2b3-1886-42a9-af9d-960ff207a4ce.pdf" target="_blank" rel="noopener">3-year</a>  extension by the regulator, despite having been a CEO for over 15 years, contradicting RBI’s <a href="https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12078&amp;Mode=0" target="_blank" rel="noopener">policy</a>  regarding the maximum tenure for bank CEOs.There are three issues raised by RBI’s conduct. Firstly, the decision to favour Uday Kotak and KMB is plainly <a href="https://thewire.in/banking/uday-kotak-ceo-kotak-mahindra-bank-rbi" target="_blank" rel="noopener">partisan</a>, undermining the credibility of the banking regulator. Secondly, by granting three private bank CEOs only a 1-year extension, is the regulator indicating to the banks its displeasure with the existing CEOs and the need to find a replacement in the course of the year? Although the RBI granted Shyam Srinivasan a second 1-year extension last year, the Federal Bank board of directors has <a href="https://economictimes.indiatimes.com/industry/banking/finance/federal-bank-board-seeks-another-3-year-term-for-ceo/articleshow/81639243.cms?from=mdr" target="_blank" rel="noopener">sought</a>  a 3-year extension when his term ends on September 29, 2021, indicating that the bank has chosen not to read the regulator’s tea leaves – or that the RBI did not give any such indication to the bank to look for a successor. If the RBI were to approve a further term to Shyam Srinivasan, it would raise questions about the regulator’s competence; what was the justification for repeated 1-year extensions? Thirdly, RBI’s policy of renewing CEOs with 1-year tenures unnecessarily introduces uncertainty in a bank’s future strategy: the existing CEO and the bank can plan for only one year, as the RBI may insist on a replacement at the end of the year.   Such short-term planning, especially in the current environment of economic stress, can be disruptive to the bank and its stakeholders, and it is unfortunate that it is being caused by the regulator’s decision to approve only 1-year extensions, without any explanation to the public.The capital market plays an important role for private banks, and the regulator must either be more transparent in explaining its decisions or it should reconsider its policy of granting 1-year extensions even when the candidates are conforming to the regulator’s norms of age and tenure for the CEOs. It is tragic that the RBI’s credibility as an impartial regulator has reached a nadir. Latest developments -- the favoured treatment it has meted to Uday Kotak, and its inability to comprehend the significance of its decision to renew CEO tenures for only  one year -- take its credibility even lower.

The Reserve Bank of India (RBI)’s decision to grant a 1-year extension to  Vishwavir Ahuja, Chief Executive Officer (CEO), RBL Bank Ltd (RBK IN) is similar to the 1-year extensions it provided to Murali Natarajan, CEO, Dcb Bank Ltd (DCBB IN) and Shyam Srinivasan, CEO Federal Bank (FB IN). In recent times, Udak Kotak, CEO-founder, Kotak Mahindra Bank (KMB IN)(KMB) enjoys the unique distinction of getting a 3-year  extension by the regulator, despite having been a CEO for over 15 years, contradicting RBI’s policy  regarding the maximum tenure for bank CEOs.There are three issues raised by RBI’s conduct. Firstly, the decision to favour Uday Kotak and KMB is plainly partisan, undermining the credibility of the banking regulator. Secondly, by granting three private bank CEOs only a 1-year extension, is the regulator indicating to the banks its displeasure with the existing CEOs and the need to find a replacement in the course of the year? Although the RBI granted Shyam Srinivasan a second 1-year extension last year, the Federal Bank board of directors has sought  a 3-year extension when his term ends on September 29, 2021, indicating that the bank has chosen not to read the regulator’s tea leaves – or that the RBI did not give any such indication to the bank to look for a successor. If the RBI were to approve a further term to Shyam Srinivasan, it would raise questions about the regulator’s competence; what was the justification for repeated 1-year extensions? Thirdly, RBI’s policy of renewing CEOs with 1-year tenures unnecessarily introduces uncertainty in a bank’s future strategy: the existing CEO and the bank can plan for only one year, as the RBI may insist on a replacement at the end of the year.   Such short-term planning, especially in the current environment of economic stress, can be disruptive to the bank and its stakeholders, and it is unfortunate that it is being caused by the regulator’s decision to approve only 1-year extensions, without any explanation to the public.The capital market plays an important role for private banks, and the regulator must either be more transparent in explaining its decisions or it should reconsider its policy of granting 1-year extensions even when the candidates are conforming to the regulator’s norms of age and tenure for the CEOs. It is tragic that the RBI’s credibility as an impartial regulator has reached a nadir. Latest developments -- the favoured treatment it has meted to Uday Kotak, and its inability to comprehend the significance of its decision to renew CEO tenures for only  one year -- take its credibility even lower.

RBI’s 1-Year Extensions to Bank CEOs: Creating Uncertainty and Short-Termism

Alpha-Centric ESG Research

Kyle Rudden

"Social" has been a third-wheel ESG pillar for a long time. Not that it matters any less, and there is plenty of evidence that strong Social-pillar ESG performance can do a lot of  good for a stock price. Rather, it's that the Social pillar stuff is more ethereal, harder to wrap one's head around. And, let's face it, the Social ESG pillar is a little more rosewater than crude oil.It is amazing how a global pandemic changes things. Whether it is ESG's social or Corporate Social Responsibility's (CSR) "social," socially-responsibility – as well as social irresponsibility or inaction – by corporations are front-and-center. In prior reports I assessed corporate coronavirus responses from an ESG perspective. In doing so, I something became increasingly (and painfully) obvious:Company responses are very diverse (as they should be), making comparative analysis difficult.For society, comparisons aren't necessarily relevant. A patient receiving better medical care due to a generous contribution from Company A probably doesn't care that Company B – same sector but the other side of the world – gave a larger contribution to its local hospital. For investors, however, comparisons kind of matter. After all, what's the value of a stand-alone P/E multiple?Rather than go insane trying to standardise and normalise everything – e.g., the economic value of donated masks or cost of retrofitting manufacturing lines to produce ventilators – I decided to look at coronavirus-related corporate philanthropy as a comparative metric. It is universal, quantifiable, and decidedly much easier to measure and value than, say, vats of hand sanitiser.This takes a data-driven look at coronavirus-related corporate social responsibility and specifically  philanthropy by listed companies in Asia Pacific countries. APAC first because Asian companies are doing a lot of giving, and nearly all of that inspirational cross-border humanitarian aid – including to the U.S., despite a certain orange-haired xenophobe in a white house.

"Social" has been a third-wheel ESG pillar for a long time. Not that it matters any less, and there is plenty of evidence that strong Social-pillar ESG performance can do a lot of  good for a stock price. Rather, it's that the Social pillar stuff is more ethereal, harder to wrap one's head around. And, let's face it, the Social ESG pillar is a little more rosewater than crude oil.It is amazing how a global pandemic changes things. Whether it is ESG's social or Corporate Social Responsibility's (CSR) "social," socially-responsibility – as well as social irresponsibility or inaction – by corporations are front-and-center. In prior reports I assessed corporate coronavirus responses from an ESG perspective. In doing so, I something became increasingly (and painfully) obvious:Company responses are very diverse (as they should be), making comparative analysis difficult.For society, comparisons aren't necessarily relevant. A patient receiving better medical care due to a generous contribution from Company A probably doesn't care that Company B – same sector but the other side of the world – gave a larger contribution to its local hospital. For investors, however, comparisons kind of matter. After all, what's the value of a stand-alone P/E multiple?Rather than go insane trying to standardise and normalise everything – e.g., the economic value of donated masks or cost of retrofitting manufacturing lines to produce ventilators – I decided to look at coronavirus-related corporate philanthropy as a comparative metric. It is universal, quantifiable, and decidedly much easier to measure and value than, say, vats of hand sanitiser.This takes a data-driven look at coronavirus-related corporate social responsibility and specifically  philanthropy by listed companies in Asia Pacific countries. APAC first because Asian companies are doing a lot of giving, and nearly all of that inspirational cross-border humanitarian aid – including to the U.S., despite a certain orange-haired xenophobe in a white house.

COVID-19 and ESG: Tencent, Alibaba Lead in Coronavirus Aid for Asia Pacific Region

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Shanghai Stock Exchange Composite Index / Technical Analysis

The MSCI EM index continues to develop positively from a price perspective and we expect higher prices ahead. China remains leadership -- overweight. At the same time we recommend selectivity in new purchases considering many Chinese equities are extended. In this report we highlight a number of attractive stocks from Chines markets as well as opportunities within Greece, South Africa, India, and Taiwan.

The MSCI EM index continues to develop positively from a price perspective and we expect higher prices ahead. China remains leadership -- overweight. At the same time we recommend selectivity in new purchases considering many Chinese equities are extended. In this report we highlight a number of attractive stocks from Chines markets as well as opportunities within Greece, South Africa, India, and Taiwan.

EM Equity Strategy: Remain Overweight China

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

As new data from India's banks are released, we look to Pillar 3 disclosure and bad loan distribution, in particular. It is also interesting to see with new 3Q19 data, where bad loans are rising the most. Of the India banks that have announced their latest results, <a href="https://www.smartkarma.com/entities/558" target="_blank" data-smartkarma-citation="entities:558:1">HDFC Bank (HDFCB IN)</a> shows some of the highest bad loan growth. Of the five banks with results out thus far, HDFC Bank shows the 2nd highest rate of growth in non-performing loans (NPLs) YoY at 32%. Peers with growth rates below are at 12-26%. We continue to believe that HDFC Bank is at higher risk than most believe, at least due to its far higher loan growth in recent years – years marked by economic malaise in India.

As new data from India's banks are released, we look to Pillar 3 disclosure and bad loan distribution, in particular. It is also interesting to see with new 3Q19 data, where bad loans are rising the most. Of the India banks that have announced their latest results, HDFC Bank (HDFCB IN) shows some of the highest bad loan growth. Of the five banks with results out thus far, HDFC Bank shows the 2nd highest rate of growth in non-performing loans (NPLs) YoY at 32%. Peers with growth rates below are at 12-26%. We continue to believe that HDFC Bank is at higher risk than most believe, at least due to its far higher loan growth in recent years – years marked by economic malaise in India.

India Banks – NPL Growth Higher at HDFC than Most Others

India

DCB Bank Limited is a full service commercial bank. The Bank offers consumer banking, commercial banking, and treasury operations.

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DCB Bank Ltd (DCBB IN)

DCB Bank: Valuations Attractive

We initiate coverage on DCB Bank (DCB) with a BUY recommendation and a Target Price of Rs 115/share implying an upside of 24% from CMP

Axis Direct

RBI’s 1-Year Extensions to Bank CEOs: Creating Uncertainty and Short-Termism

The favoured treatment RBI has meted to Uday Kotak, and its inability to comprehend the significance of its decision to renew CEO tenures for only ...

Hemindra Hazari

COVID-19 and ESG: Tencent, Alibaba Lead in Coronavirus Aid for Asia Pacific Region

"Social" has been a third-wheel ESG pillar for a long time. Not that it matters any less, and there is plenty of evidence that strong Social-pillar...

Kyle Rudden

EM Equity Strategy: Remain Overweight China

The MSCI EM index continues to develop positively from a price perspective and we expect higher prices ahead. China remains leadership --...

Vermilion Research

India Banks – NPL Growth Higher at HDFC than Most Others

As new data from India's banks are released, we look to Pillar 3 disclosure and bad loan distribution, in particular. It is also interesting to see...

Daniel Tabbush

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