External broker reports(aggregated public sources), Motilal Oswal Financial Services Limited

Motilal Oswal

External broker reports(aggregated public sources)

Motilal Oswal Financial Services Limited

Motilal Oswal Financial Services Limited is an Indian diversified financial services firm offering a range of financial products and services. 

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Equity Bottom-Up

IndoStar Capital Finance / Equity Bottom-Up

<ul><li>Motilal Oswal's research report onIndostar Capital Finance Indostar reported a 4QFY24 PAT of INR353m, which rose 109% QoQ (PQ: INR169m).</li><li>NII grew 11% YoY to INR1.2b.</li><li>Opex, in 4QFY24, jumped 110% YoY to INR1.4b.</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.

Motilal Oswal's research report onIndostar Capital Finance Indostar reported a 4QFY24 PAT of INR353m, which rose 109% QoQ (PQ: INR169m).NII grew 11% YoY to INR1.2b.Opex, in 4QFY24, jumped 110% YoY to INR1.4b.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.

Indostar Capital Finance  - Turnaround in Motion; Access to Liabilities a Key Monitorable

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Pertamina Geothermal Energy / Equity Capital Markets

<ul>
<li>Pertamina Geothermal Energy (PGE) is looking to raise around US$650m in its upcoming Indonesia IPO. PGE is an Indonesian state owned power producer which utilizes geothermal energy to produce electricity.</li>
<li>PGE currently manages 13 Geothermal Working Areas with a total capacity of 1,877 MW, of which 672 MW is owned by it, while 1,205 MW is via joint operations.</li>
<li>In this note, we talk about the company's financial performance and other issues, based on its recent filings. </li>
</ul>


Pertamina Geothermal Energy (PGE) is looking to raise around US$650m in its upcoming Indonesia IPO. PGE is an Indonesian state owned power producer which utilizes geothermal energy to produce electricity.
PGE currently manages 13 Geothermal Working Areas with a total capacity of 1,877 MW, of which 672 MW is owned by it, while 1,205 MW is via joint operations.
In this note, we talk about the company's financial performance and other issues, based on its recent filings. 


Pertamina Geothermal Energy IPO - Somewhat like an Energy Explorer. Somewhat like a Power Producer

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

*Positive Operating Jaws Return: Muthoot Finance (MUTH.IN) [Muthoot] reported FY 3Q21 bottom-line results of INR 9.8 bn, increasing INR 716 mn (7.8%) linked quarter. Results were even better when we exclude gains on the gold mark-up, as Muthoot’s core operating result improved INR 969 mn or 11.3%. Results were driven by positive operating jaws, despite the INR 478 mn or 469% linked quarter increase loss provisions which tracked the break in credit; and*Gold Pricing Could Impact Credit: While robustness gold prices augur well for Muthoot, we are concerned about a reversal in gold pricing which could hinder loan growth and credit quality. We note that net new NPLs amounted to INR 661mn during the quarter, which intimates that the annualized growth rate for Stage 3 loans remains elevated at 44.7% - in line with most of the Indian financial sector. While we agree that the backing of the gold loans has likely amongst the strongest collateral, losses will mount during this international risk-on period or when gold prices reverse. It is for these reasons that we believe reserve cover has fallen short to the tune of INR 2.8 bn – about 25% of FY 3Q21 PBT which isn’t bad relatively speaking.

*Positive Operating Jaws Return: Muthoot Finance (MUTH.IN) [Muthoot] reported FY 3Q21 bottom-line results of INR 9.8 bn, increasing INR 716 mn (7.8%) linked quarter. Results were even better when we exclude gains on the gold mark-up, as Muthoot’s core operating result improved INR 969 mn or 11.3%. Results were driven by positive operating jaws, despite the INR 478 mn or 469% linked quarter increase loss provisions which tracked the break in credit; and*Gold Pricing Could Impact Credit: While robustness gold prices augur well for Muthoot, we are concerned about a reversal in gold pricing which could hinder loan growth and credit quality. We note that net new NPLs amounted to INR 661mn during the quarter, which intimates that the annualized growth rate for Stage 3 loans remains elevated at 44.7% - in line with most of the Indian financial sector. While we agree that the backing of the gold loans has likely amongst the strongest collateral, losses will mount during this international risk-on period or when gold prices reverse. It is for these reasons that we believe reserve cover has fallen short to the tune of INR 2.8 bn – about 25% of FY 3Q21 PBT which isn’t bad relatively speaking.  

*Weakened Results: Kotak Mahindra Bank (KMB.IN) [KMB] reported FY 3Q21 results of INR 18.5 bn, declining INR 3.3 bn (15.2%) linked quarter. Results were challenged by two factors: a) an INR 2.3 bn (62.5%) increase in loss provisions which still appears light given the continued and accelerated breakdown in credit quality; and b) an INR 1.9 bn (9.2%) increase in costs led by a 14.0% increase in other operating expenses; and*Credit Risks Substantially Increasing: While KMB’s metrics were not nearly as ugly as Yes Bank’s (YES.IN), KMB’s credit break is tracking the financial sector - which is not exhibiting any sign of recovery. By our calculation, we find that both net new NPLs and impaired loans increased excessively with annualized growth rates of 122.8% and 143.2%, respectively. Given the worsening of KMB’s credit metrics and current weak reserve cover, we find that reserves at FY 3Q21 fall short by INR 78 bn - about three quarter of stated PBT.

*Weakened Results: Kotak Mahindra Bank (KMB.IN) [KMB] reported FY 3Q21 results of INR 18.5 bn, declining INR 3.3 bn (15.2%) linked quarter. Results were challenged by two factors: a) an INR 2.3 bn (62.5%) increase in loss provisions which still appears light given the continued and accelerated breakdown in credit quality; and b) an INR 1.9 bn (9.2%) increase in costs led by a 14.0% increase in other operating expenses; and*Credit Risks Substantially Increasing: While KMB’s metrics were not nearly as ugly as Yes Bank’s (YES.IN), KMB’s credit break is tracking the financial sector - which is not exhibiting any sign of recovery. By our calculation, we find that both net new NPLs and impaired loans increased excessively with annualized growth rates of 122.8% and 143.2%, respectively. Given the worsening of KMB’s credit metrics and current weak reserve cover, we find that reserves at FY 3Q21 fall short by INR 78 bn - about three quarter of stated PBT.

Kotak Mahindra Bank – Credit Falling Off Of A Cliff

*Absolutely No Reason To Report Profitability With This Balance Sheet: State Bank of India’s (SBIN.IN) [SBI] 30%-owned Yes Bank (YES.IN) [Yes] reported FY 3Q21 results of INR 1.6 bn, increasing INR 213 mn (16.5%) linked quarter.  However, when we exclude Yes’ interest recovery  of INR 5.4 bn during the period, core operating results amounted to a loss of INR 3.8 mn; and*Time To Sound The Alarm:  Even at such an elevated level of bad loans, Yes’ net new problem loan and net new NPL growth amounts to INR 115.1 bn and INR 22.8 bn, respectively, for annualized growth rates of 99.5% and 26%.By our calculation, reserves need to be buttressed  INR 863 bn or 234% of FY 3Q21 stated capital levels – or nearly 100 quarters of PBT based on the current period.   Yes’ Board approval to raise INR 100 bn in new equity seems futile given current capital needs. It’s probably fair to say that Yes is in more trouble today than it was when SBI stepped in for the rescue.

*Absolutely No Reason To Report Profitability With This Balance Sheet: State Bank of India’s (SBIN.IN) [SBI] 30%-owned Yes Bank (YES.IN) [Yes] reported FY 3Q21 results of INR 1.6 bn, increasing INR 213 mn (16.5%) linked quarter.  However, when we exclude Yes’ interest recovery  of INR 5.4 bn during the period, core operating results amounted to a loss of INR 3.8 mn; and*Time To Sound The Alarm:  Even at such an elevated level of bad loans, Yes’ net new problem loan and net new NPL growth amounts to INR 115.1 bn and INR 22.8 bn, respectively, for annualized growth rates of 99.5% and 26%.By our calculation, reserves need to be buttressed  INR 863 bn or 234% of FY 3Q21 stated capital levels – or nearly 100 quarters of PBT based on the current period.   Yes’ Board approval to raise INR 100 bn in new equity seems futile given current capital needs. It’s probably fair to say that Yes is in more trouble today than it was when SBI stepped in for the rescue. 

India

IndoStar Capital Finance is a Non-Banking Financial Company (NBFC) specializing in retail lending solutions across India. The company focuses on providing financing for commercial vehicles, construction equipment, farm equipment, cars/MUVs, and small and medium enterprise (SME) loans. Headquartered in Mumbai, India, the company was founded in 2009.

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IndoStar Capital Finance (INDOSTAR IN)

Indostar Capital Finance - Turnaround in Motion; Access to Liabilities a Key Monitorable

Motilal Oswal's research report onIndostar Capital Finance Indostar reported a 4QFY24 PAT of INR353m, which rose 109% QoQ (PQ: INR169m).

Motilal Oswal

Pertamina Geothermal Energy IPO - Somewhat like an Energy Explorer. Somewhat like a Power Producer

Pertamina Geothermal Energy (PGE) is looking to raise around US$650m in its upcoming Indonesia IPO. PGE is an state owned power producer which...

Sumeet Singh

Muthoot Finance – Relatively Good

MUTHOOT FINANCE: Muthoot reported a FY 3Q21 7.8% linked quarter results increase. Results were driven by positive operating jaws although...

Thomas J. Monaco

Kotak Mahindra Bank – Credit Falling Off Of A Cliff

KOTAK MAHINDRA BANK: KMB reported FY 3Q21 linked quarter results decline of 15.2%, driven primarily by a 62.5% increase in provisions which still...

Thomas J. Monaco

State Bank of India – On The Hook

STATE BANK OF INDIA: Yes Bank reported FY 3Q21 core operating losses INR 3.8 mn. Net new problem loan annualized growth rate of 99.5% and reserve...

Thomas J. Monaco

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