MIINTDIRECT COMPANY NEWS : CS downgrades Kotak, Indusind post RBI measures Kotak target 618, Indusind target 416 These wholesale-funded entities (Yes, Kotak, BOI, Canara and the NBFCs), banks with high LDRs (IndusInd, Yes) and those with ALM mismatches will be the worst impacted with these moves, as they will be forced to curb asset growth in addition to facing margin pressures. Indian banks’ valuations till now were primarily determined by asset side comfort. With the liability part of the balance sheet also coming into focus, we see downside to stocks of wholesale funded retail lenders like Kotak (95% LDR) and IndusInd (82%) trading at ~3x book, and we downgrade these two to UNDERPERFORM from Neutral (Lower TPs to Rs618 from Rs680 and to Rs416 from Rs465, respectively). The biggest risk from this set of measures would be if the lack of liquidity precipitates the corporate asset quality problems. As liquidity becomes scarce, some of these assets may turn to NPLs on books quicker than expected earlier. We maintain our UNDERWEIGHT stance on the Indian banks sector
Posted on: Tue, 16 Jul 2013 03:55:51 +0000
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