most of the brokerage houses continue to sing paeans for ICICI Bank

At a time when most of the brokerage houses continue to sing paeans for ICICI Bank, there is a lone voice of dissent in the form of Gautam Chugani of Alliance Bernstein. In fact, Bernstein has a price of target of Rs.220 on ICICI Bank which is nearly 25% lower from current market levels. Chugani believes that the tail risk of the PNB fiasco on ICICI Bank and Axis Bank could be much larger than anticipated. Chugani also believes that when all private sector banks have NPAs of fewer than 2%, Axis and ICICI Bank having such high NPAs is unacceptable. ICICI Bank is already identified as TBTF by the RBI.

Bandhan Bank listed at a substantial premium of 33% above its issue price of Rs.375. While the demand book for Bandhan Bank may not have been to flattering, the premium listing underlines that there is appetite for quality private banks in India. After all, in the last 14 years only 3 private banks have actually got listed in the market viz. Yes Bank, RBL Bank and now Bandhan Bank. Bandhan Bank was originally conceived as an MFI but later received a universal banking license from the RBI in 2015. Its loan portfolio is still dominated by micro loans and small entrepreneur loans.

The SEBI is expected to review a series of key reform measures in its last board meeting of the financial year on 28th March. Among the proposed reforms, SEBI proposes to reduce the gap in algo advantage of institutional players by making quite a few items freely available from the stock exchange. This will reduce the chances of a sticky situation like we saw in the NSE case. Additionally, amendments to rules on mutual funds, angel investors and buyback of shares will also be taken up in the meeting tomorrow. SEBI will also consider additional disclosure requirements for listed IBC companies.

After Ultratech offered Rs.7266 crore for Binani Cements, the NCLT has advised the concerned parties to reach an out-of-court settlement on the Binani Cements acquisition. Binani had sought termination of insolvency proceedings based on the letter of comfort issued by Ultratech that all creditors will be paid off in full. Binani Cements has argued that Dalmia had deliberately beaten the bid down and the value of the cement plant was not considered at market prices nor was the value of its limestone reserves properly valued. Dalmia has filed a petition against the distortion of the NCLT process.

Over the last 3 years most of the downstream oil companies like IOCL, BPCL and HPCL had been typical market outperformers. The reasons were not far to seek. Free pricing of petrol and diesel had assured them healthy margins and lower crude prices were giving them the cushion. Additionally, their refining capacities had come on stream and they were benefiting from improved GRMs and improved inventory valuation. However, the pitch has queered in the last few months. All the three downstream stocks have been gross underperformers in the last 6 months on fears of subsidy sharing if crude prices rise further. Markets are also sceptical of the government’s plans to force cross-sales among hydrocarbon companies as it may end up putting a huge stress on their financial solvency and their balance sheets.

After stable GST collections for 2 months, GST collections for the month of February 2018 again showed a downward trend. At Rs.85,174 crore, the GST collections for February were progressively lower than January and December. The government is heavily betting on the implementation of the e-way bill mechanism which is likely to give a boost to GST revenues and plug leakages. However, the actual tax collections is expected to show a spurt for the month of March when composition dealers file their quarterly returns. This can also be attributed to higher payout of GST refunds.

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