Latest news with #EmkayGlobalFinancial
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Business Standard
21-07-2025
- Business
- Business Standard
Emkay Global bets on SMIDs, reduces largecap holding on valuation concerns
Brokerage firm Emkay Global Financial has rejigged its model portfolio while taking a 'cautious' near-term stance on Indian equities. According to the firm, stretched valuations and weak Q1 earnings underway warrant a more prudent approach. The early-bird results for the April–June 2025 quarter (Q1FY26), which consists of samples of 176 companies, showed that Q1FY26 net sales (gross interest income for banks) of early-bird companies grew at their slowest pace in at least 16 quarters. Revenue slowdown, coupled with faster growth in operating expenses like employee costs and overheads, hit the bottom line. The combined profit before tax (PBT), excluding other income, contracted 10.3 per cent year-on-year (Y-o-Y) in Q1FY26, their worst showing since the Covid pandemic. Inclusion of SMIDs Emkay Global Financial has revamped its portfolio by including certain small-and midcap stocks (SMIDs), while reducing holdings in largecaps. The new Emkay Model Portfolio (EMP) will now follow a fixed 40/60 split, allocating 40 per cent to five selected SMID stocks and 60 per cent to large-cap stocks. The SMIDs added include: Bikaji Foods – for its strong execution in one of the brighter areas within the consumer staples sector. Motilal Oswal – has a high-conviction play on capital markets. Shriram Pistons – a rare low P/E stock with rising earnings momentum and improving return ratios. Metropolis Healthcare – seen as a high-growth play with exceptional return ratios. Voltas – stock corrected due to a weak summer, despite being in the midst of a strong growth cycle. Thematic stocks A subsection for thematic stocks has been created by the brokerage in its new model portfolio. Emkay will not trade stocks under this category for short-term trends – the only triggers for exit would be a structural change in fundamentals or better alternatives within the theme. Key changes in this segment include: InterGlobe Aviation (IndiGo) – weight increased to 6 per cent, seen as a long-term beneficiary of India's rising affluence and growing air travel demand. Eternal (Zomato) – weight raised to 8 per cent, as Emkay believes it is best placed to capitalise on the quick commerce boom. Dixon Technologies – allocation increased to 6 per cent, on the back of its exposure to the rapidly localising Indian electronics sector. Sector basket additions Discretionary is brokerage's top sectoral choice with an 'Overweight' stance as it sees a revival in consumption from H2FY26, led by monetary easing, a lower base, and tax cuts. This includes Internet and EMS in addition to Autos and auto ancillaries. The sector accounts for 15 per cent of the portfolio. Healthcare now holds 7.4 per cent of the whole portfolio with the addition of Metropolis. However, this is split across pharma, hospitals, and diagnostics. The brokerage is 'Overweight' on this sector, too. On the contrary, the brokerage has downgraded Technology to 'Underweight', citing stretched valuations and limited upside after the recent rally. Its 'Underweight' stance on staples has been reduced due to the inclusion of Bikaji, though it continues to hold zero exposure to large-cap staples. Meanwhile, Industrials has been moved to 'Overweight', with IndiGo and Voltas representing the sector. Additionally, Emkay has exited Tech Mahindra, Larsen & Toubro (L&T), Power Finance Corporation, Cholamandalam Investment, Tata Motors, and Page Industries.
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Business Standard
21-07-2025
- Business
- Business Standard
AU SFB slips 7% after posting Q1 results; brokerages suggest 'Reduce'
AU Small Finance Bank shares slipped 7.3 per cent, logging an intraday low at ₹736.4 per share on BSE. The selling pressure came after the bank's Q1 numbers came in weak. At 9:34 AM, AU Small Finance Bank shares pared gains and was trading 7.2 per cent lower at ₹737.35 per share on the BSE. In comparison, the BSE Sensex was down 0.2 per cent at 81,653.42. The company's market capitalisation stood at ₹55,197.64 crore. The 52-week high of the stock was at ₹840.95 per share, and the 52-week low of the stock was at ₹479 per share. CATCH STOCK MARKET LATEST UPDATES LIVE Brokerages' view on AU Small Finance Bank Q1 results AU Small Finance Bank reported its June quarter (Q1FY26) results on Saturday. Post Q1, the brokerages have maintained a 'Reduce' rating on the stock owing to weak performance. Emkay Global Financial has maintained a 'Reduce' rating on the stock with a target of ₹725 per share on the backdrop of higher valuations (2.6x FY27E ABV) amid a weak core performance and persistent asset quality stress. It also trimmed the FY26-27E earnings by 2-3 per cent. AU Small Finance Bank reported weak core performance, said Emkay Global in its note, with margins declining sharply by 40 basis points (bps) quarter-on-quarter (Q-o-Q) to 5.4 per cent, although higher treasury gains and surprisingly lower non-staff opex, amid bidding for a Universal Banking license led to a 6 per cent profit after tax (PAT) beat, at ₹580 crore/1.5 per cent return on asset (RoA). Further, the asset under management (AUM) growth moderated to 17.9 per cent year-on-year (Y-o-Y)/1.7 per cent (Q-o-Q), largely due to a sharp decline (23 per cent Y-o-Y/7 per cent Q-o-Q) in Unsecured businesses (MFI and Credit Card). This, along with rising stress in the used HCV/SCV segments, Microfinance Institutions (MFI) and the South-based secured mortgage portfolio, led to a 19 bps increase in gross non-performing asset (GNPA) to 2.5 per cent, as also credit cost, the brokerage noted. Nuvama Institutional Equities has also iterated a 'Reduce' rating on AU Small Finance Bank with a revised target of ₹650 per share from ₹530. According to Nuvama, AU Small Finance reported a soft quarter in Q1FY26 with a miss on net interest margin (NIM) and higher-than-expected delinquencies driven by south-based mortgages and a delayed recovery in MFI. Credit cost on credit cards also remained elevated on a downsized book. How did AU Small Finance Bank perform in Q1? In Q1, the small finance bank posted a 16 per cent growth in net profit to ₹581 crore during the first quarter of this financial year. The Jaipur-based bank had earned a net profit of ₹503 crore in the same quarter of the previous fiscal year. Its total income rose to ₹5,189 crore during the June 2025 quarter from ₹4,278 crore in the same period of FY25. Interest earned by the bank improved to ₹4,378 crore compared to ₹3,769 crore in the June quarter of FY25. Meanwhile, net interest income rose to ₹2,045 crore during the quarter against ₹1,921 crore a year ago.
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Business Standard
14-07-2025
- Business
- Business Standard
Indian equities out of re-rating potential; Emkay decodes what's next
Market outlook: In the first half of calendar year 2025, Indian benchmark indices have rallied up to 10 per cent. This surge, according to Emkay Global Financial, has pushed the valuations out of the 'attractive' territory and has left little room for further re-rating. Most indices (Nifty50/BSE200/Small-and-midcap) are trading in a range between their long-term average (LTA) and above plus one standard deviation (+1sd), with the BSE200 and Midcap indices trading at the highest premium. Drilling deeper, Emkay notes that 34 per cent of its tracked universe—comprising over 500 companies covered by at least five analysts—are currently trading at +1sd above their long-term mean. This is up from 11 per cent in March 2025, though still below the September 2024 peak of 44 per cent. In this context, analysts anticipate a period of consolidation over the next one to two quarters. However, any sharp correction may offer a favourable entry opportunity. Market outlook Stable earnings outlook, but Q1 to remain muted While the overall earnings trajectory appears stable, Q1FY26 is expected to be soft, with most of the weakness already priced in. The Nifty FY26 earnings per share (EPS) saw only a marginal downgrade of 84 basis points (bps) over the past month. Key consensus downgrades were seen in Tata Motors, Bajaj Finance and Shriram Finance, while upgrades were scarce. In the BSE200 category, the EPS was cut by 68 bps between May and June with Adani Green/Tata Motors/REC seeing the sharpest consensus cuts. Overall, Emkay Financial believes, the share of companies seeing upward revisions of over 10 per cent in FY26 EPS has dropped to 23 per cent—down from 27 per cent in the previous quarter. Analysts expect growth sentiment to recover in H2FY26, with potential for earnings upgrades later in the year. Global flows to support, but promoter selling warrants caution In June 2025, the fund flows have been robust with strong inflows from foreign portfolio investors (FPIs) and mutual funds (MFs), as markets rallied from early April. Systematic investment plan (SIP) flows have been heavy into large, Small-and-midcap, and flexicap funds, shifting from thematics/focused funds. While domestic flows have a strong tailwind from falling rates as yields on fixed-income investments fall further, global flows are also expected to be strong with continued pressure and a soft landing in the US and Western economies. While primary market activity deepens breadth and keeps valuations from overheating, elevated promoter offloading will be closely tracked in the coming weeks. Primary market activity has picked up– initial public offers (IPOs) have raised ₹19,900 crore (0.06 per cent of equity market cap) with a strong pipeline. Promoter-selling has also accelerated and surged 336 per cent month-on-month (M-o-M).
