Yes Bank delivered stellar results in the fourth quarter ended March 2018. The company reported a 29% growth in PAT at Rs.1179 crore, sharply better than street estimates. This was led by a 31% growth in net interest income (NII). The two highlights of the quarter were the NPA levels and the MSME book. The gross NPA came down sharply from 1.72% to 1.28% while the net NPAs fell from 0.93% to 0.64%. During the quarter, Yes Bank crossed the Rs.2 trillion asset mark with durable growth from corporate segment, retail and MSME segments. Advances grew by 53% led by 99% growth in retail advances.
The CBI has booked former Aircel director, Siva Sankaran, in a Rs.600 crore loan fraud. Siva had defaulted on the loans from IDBI. Apart from the former director or Aircel, senior officials of IDBI Bank who were part of this deal were also being searched and questioned by the CBI. The CBI has now started chasing defaulting promoters and also the bankers who have lent to them and this trend has got accentuated after the PNB and ICICI Bank cases. It may be recollected that Aircel had filed for bankruptcy after the proposed deal with RCOM had broken off.
Even as Bharti Airtel witnessed a sharp fall in its ARPUs, the real attention was focused on the towers deal with Indus Towers. The merger of Bharti Infratel with Indus Towers will create India’s largest operator of telecom towers. This is probably the first signal that the Bharti Mittal Group intends to fight to the finish in the battle for voice and data with Reliance Jio. The market is now down to just 3 players in the telecom space consisting of Bharti Airtel, Idea-Vodafone and Reliance Jio. In fact, Bharti Airtel is also open to sharing control equally with Vodafone in the Towers business.
In an interesting twist to the global oil market, Citi expects that the US could become the world’s largest exporter of oil in the coming year. Even as OPEC continues to curb production, the US shale output has been seeing a sharp upward move. US exports of oil at 8.3 million barrels per day are short of Saudi Arabia’s 9.3 million bpd but well ahead of Russia’s 7.4 million bpd. This could have large scale implications for the global oil prices. However, a lot will still depend on how the demand for oil picks up in the coming year and whether a global revival actually leads to higher crude oil demand.
CLSA has identified housing recovery, rural consumption and food services as the big themes for the stock markets in the coming year. CLSA believes that these could be the best themes to invest over the next 12 months. The first play of housing recovery is likely to benefit the real estate developers and the housing finance companies in terms of investment themes. Secondly, CLSA believes that the higher MSP and the big ticket rural spending by the government will be instrumental in pushing rural demand in a big way. The bet here is on consumer staples with a rural bias and on automobiles with a strong rural flavour. In the food services business, CLSA is positive on the quick service industry. This segment of fast foods and take-aways is likely to be a high demand and high margin business this year.
With the recent cracks in the INR, analysts have been rushing to downgrade their targets for the rupee. While rising oil prices are partially responsible for weak sentiments, the widening trade deficit is also the reason the rupee has been weakening consistently. Most of the currency desks are betting that the INR could actually weaken beyond the low of 68.89/$ touched in late 2016. Ironically, at that time most banks were predicting levels of 72/$ but the rupee recovered almost 10% from these levels. A weaker rupee will be instrumental in boosting exports and rectifying the trade deficit.
