INSUBCONTINENT EXCLUSIVE:
Keep your eyes and ears open
Chances are, you might just spot some big winners on Dalal Street
And take this, they may be even from the lot that has trailed benchmark indices so far!
Look at Morgan Stanley, which recently added three
underperformers from different sectors to its portfolio
The global brokerage has suddenly taken a fancy to India's biggest lender State Bank of India (SBI), which just about doubled investor
money in the past 10 years even as the benchmark Sensex rallied over 180 per cent during the same period
Leading super-specialty hospital Apollo Hospitals and real estate developer Prestige Estates are the two other favourites of Morgan Stanley
after the latest correction.
For the short-list, the third-largest wealth management firm in the world in terms of total client assets
focussed on stocks that have underperformed the market over the past 12 months whose business fundamentals have been weak with slow earnings
growth and RoEs below the standard deviation from the average
Prospects of these companies are now looking robust in terms of RoE and earnings growth, Morgan Stanley said
recapitalisation move enabled the state-owned banks (SOE) to recognise problematic corporate loans as non-performing loans (NPLs) and
However, loan loss charges are likely to remain high as banks take coverage towards 60 per cent with Ind-AS rolling in from April 1, 2019
Core pre-provision operating profit (PPOP) growth should start picking up from H2FY19 as NPL formation slows and higher rates help margins
The state-owned lender suffered a major loss of Rs 4,876 crore for the first quarter to June, caused by higher provisioning on account of
accumulated non-performing assets (NPAs), or bad loans
In a stock exchange filing, SBI said it earned Rs 2,005.5 crore net profit for the same period of last financial year.
Shares of Prestige
Estates and Apollo Hospital have climbed 9 per cent and 5 per cent, respectively, during the period.
Prestige Estates has a balanced
portfolio of developmental and rental projects, both of which have good scale-up potential
Presence in healthy South Indian cities (Bengaluru, Chennai and Hyderabad), will be complemented by diversification to NCR and MMR markets
malls across major cities to expand its rental income base
In the case of Apollo Hospitals, Morgan Staley believes that valuations seem inexpensive at 15x F20 EV/Ebitda
Operational improvement in the ensuing quarters would be driven by all the three revenue segments, including hospitals, steady growth in
standalone pharmacies and narrowing of AHLL retail losses, for the target to break even in the first half of 2020.
Apollo Hospitals is also
one of the top picks of IDFC Securities
The domestic brokerage firm further said a leadership position, national footprint and multi-pronged healthcare delivery model make Apollo
one of the stronger EM healthcare models
driven by improvement in mature hospital profitability
The new hospital cluster has begun to contribute positively, led by improvement in Navi Mumbai unit
While the ASAP business will sustain growth momentum, reduction in operating losses at the retail health platform too should aid growth in
September 2019 from 36,000 in June.
Asian Paints, ICICI Bank, ITC, MM Financial and UltraTech Cement are other underperformers that made
