Month: August 2021

This Is A Stock To Buy That Can Yield 50% Returns, Says India’s Top Brokerage

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Buy Greaves Cotton for a price target of Rs 194

Current market price Rs 129.55
Target price Rs 194
Gains 49.88%

The brokerage sees a rally in the stock to levels of 194, from the current market price of around Rs 130. According to Sharekhan, Greaves Cotton reported weak performance in Q1FY22, marred by lockdown restrictions due to the second wave of COVID-19.

Standalone and consolidated net revenues declined 53.1% q-o-q and 56% q-o-q to Rs 214.4 crore and Rs 229 crore respectively in Q1FY22. The drop in revenue was due to lockdown restrictions. The 3W segments was down 72% q-o-q, while Ampere sales was impacted due to 8 weeks COVID led factory lockdown in Coimbatore. The consolidated gross margin improved 10 bps q-o-q to 28.6% in Q1FY22.

Rationale for buying the stock

Rationale for buying the stock

According to Sharekhan, the company’s management says it is witnessing strong recovery from July 2021 onwards. We expect Greaves Cotton to clock a 24% revenue CAGR during FY2021-23E also see a sharp rise in margins, leading to a 245% earnings CAGR,” the broking firm has said.

“Greaves has ramped up its e-mobility business at a much faster pace than we had anticipated earlier. Recently, Ampere has acquired a strategic stake in L5 e-3W manufacturer, MLR Auto, to operate as a full range last mile electric vehicle company with mass mobility solutions in both E-2W & E-3W segment. We believe Greaves Cotton is well positioned to benefit from the government’s push towards fast adoption of electrical vehicles.

We continue to maintain our positive stance on Greaves because of its timely investments in the e-mobility business. Greaves acquired Ampere in 2018 and now holds an 81.2% stake. Through its subsidiary Ampere, Greaves is setting up a EV mega site manufacturing facility at Ranipet, with a proposed investment plan of Rs. 700 crore to build capacity of producing one million e-2Ws in a phased manner over a period of 10 years,” the brokerage has said.

“In addition to its new venture in e-2W business, the company has incubated multi-businesses in-house, which includes non-auto engines, e-rick, mega/smart gensets, Greaves care (retail services arm), and multi-brand spares divisions. In our view, the refocus strategy has played well for the company, as Greaves Cotton has managed to display a strong quarterly revenue run-rate despite lacklustre sales in 3W engines with Q1FY22, being an exception,” the brokerage has said.

Sharekhan says that it maintains a buy on the stock Greaves Cotton Limited with an unchanged price target of Rs. 194, owing to positive business outlook for mobility business.

Disclaimer

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only and is picked from the brokerage report of Sharekhan. Be careful while investing as the Sensex has now crossed 55,500 points. Investors can invest small amounts and avoid putting lumpsum.



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3 Pharma Stocks To Buy As Suggested By Sharekhan For Double Digit Growth

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Buy Lupin with target price of Rs 1,400

Lupin is a renowned pharmaceutical company with a presence in nearly every market in the world. Sharekhan is positive on Lupin, recommending a buy rating and a target price of Rs 1400 in a research report.

According to the brokerage, in the short term, price erosion is projected to have an impact on the US business, but 2HFy2022 is expected to see a significant improvement due to the ramp up in Albuterol and Brovana. Launches in FY23 with high potential and limited competition provide the company even more room to grow.

“Lupin’s Q1FY22 operating results marginally missed estimates and so we have tweaked our earnings estimates for FY22E/FY23E. Given the robust growth outlook and the long term growth levers intact, and improving return ratios, we retain Buy on Lupin with an unchanged PT of Rs. 1,400.

Lupin’s domestic formulations business has a strong growth outlook and is expected to stage growth in the high teens for FY2022 backed by a chronic-heavy presence and growth in the overall business. The US business on the other hand is witnessing price erosion, which is expected to lead to a subdued Q2,” the brokerage has said.

Buy Cadila Healthcare with target of Rs 720

Buy Cadila Healthcare with target of Rs 720

Cadila Healthcare is a bullish stock, with Sharekhan recommending a buy rating and a target price of Rs 720 in its research report.

According to Sharekhan, the Indian business grew by 42.8 percent, with the human health business growing by a remarkable 63.6 percent. Cadila expects the DCGI to approve its COVID-19 vaccine ZyCoV-D for emergency use within the next two weeks.

“Strong growth prospects and earnings visibility, a sturdy balance sheet, healthy return ratios and multiple growth triggers are key positives for Cadila. We retain our Buy recommendation on the stock with unchanged PT of Rs. 720.

Cadila is developing a strong portfolio to treat the COVID-19 virus and this includes vaccines as well as drugs. Cadila has already applied with the DCGI seeking an emergency-use approval for its COVID-19 vaccine – ZyCov-D, the brokerage has said in its report.

Buy Aurobindo Pharma with a target of Rs 915

Buy Aurobindo Pharma with a target of Rs 915

Sharekhan is strong on Aurobindo Pharma, recommending a buy rating and a target price of Rs 915 in a research report.

“At CMP, the stock is trading at a valuation of 12.4x and 10.8x its FY22E and FY23E EPS, which is attractive. A possible de-merger of the injectables business could provide value

unlocking opportunities. Hence we retain our Buy recommendation on the stock with a revised

PT of Rs. 915, the brokerage has said.

According to Sharekhan, multiple challenges have surfaced, particularly for Aurobindo’s US business, such as increased price erosion and a build-up of stocks across channels. At least in the short term, these headwinds are projected to put downward pressure on US revenues.

Disclaimer

Disclaimer

Investing in stocks has the risk of financial loss. As a result, investors must proceed with prudence. Any losses incurred as a result of decisions based on the article are not the responsibility of Greynium Information Technologies, the author, or the brokerage houses. The preceding content is provided for informative purposes only and was taken from Sharekhan’s brokerage report. Due to the fact that the Sensex has now crossed 55,500 points, investors should exercise caution. Investors can invest little amounts rather than putting down a large chunk of money.



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RBI committee suggests measures to strengthen the Urban co-operative banks, BFSI News, ET BFSI

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Larger urban co-operative banks may be allowed to issue stock exchange tradable instruments to shore up capital and allow them to function as an universal bank according to the recommendations of an Expert Committee on Primary (Urban) Co-operative Banks which also suggests more enabling regulations giving their role in enhancing financial inclusion.

The committee headed by former deputy governor N S Vishwanathan, suggesting a four tiered structure based on the size of deposits recommends setting up of an Umbrella Organisation with a minimum capital of Rs 300 crore to help smaller co-operative to acquire scale and help with capital and liquidity support whenever needed.

In the long run, the umbrella organisation -UO- may take up the role of a Self-Regulatory Organization (SRO) for smaller UCBs where the organisation could run an independent audit/inspection and supervisory division. Once the UO stabilizes, it may explore the possibilities of converting into universal bank and offer value-added services on behalf of its member banks. An UCB could get an incentive of lower capital requirement if it is a member of the UO

The committee also seeks to address capital raising constraints of larger UCBs banks by facilitating issue of tradable securities . It suggests that RBI declare certain securities issued by UCBs eligible to be covered under the Securities Contract Regulation Act to facilitate their listing and trading in a recognised stock exchange may be made. ” Till such time, the RBI may consider allowing banks in Tier 3 and 4, having the necessary technology and wherewithal, to issue shares at premium to persons residing in their areas of operation subject to certain conditions” the RBI report said. This is significant in the context of the recent collapse of PMC Bank where its capital was almost wiped out.

The Committee felt that a liberal regulatory approach may be adopted for UCBs that meet a certain minimum level of capital and reserves (net worth) and CRAR requirements.

A Tier-4 UCB with a deposit base of over Rs 10,000 crore which meets both the entry point capital and CRAR requirements applicable to universal bank may be allowed to function on the lines of a universal bank if RBI is satisfied that it meets the financial requirements and has a fit and proper Board and CEO.

Given that UCBs have the potential of driving financial inclusion and credit delivery to those with limited means, the committee felt that regulatory policies can now be more enabling.

At the same time, there were divergent views on allowing the UCBs to convert into joint stock companies. One view was that conversion of UCBs into banking companies is against the co-operative principles as the retained earnings in co-operative structure cannot be distributed.

A contrary view was that voluntary conversion after a well-informed decision taken by the General Body of the UCB in a democratic manner should not be barred by regulation, particularly where the underlying legislation is not restrictive on the use of retained earnings.



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Groww, Upstox, Motilal Oswal to be hit by Sebi’s latest rules on digital gold sale, BFSI News, ET BFSI

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The National Stock Exchange (NSE) has instructed all members, including stockbrokers and wealth managers, to wind down the sale of digital gold on their platforms by September 10.

This came after capital markets regulator, the Securities and Exchange Board of India (Sebi), flagged such sales as a breach of the Securities Contracts (Regulation) Rules (SCRR), 1957.

The move, ahead of the crucial festive season months when Indian consumers typically become active purchasers, has hit the country’s nascent yet burgeoning digital gold industry.

Investors are worried over its future as well as its legitimacy in the eyes of financial sector regulators, Sebi as well as the Reserve Bank of India.

Sebi’s concerns may have stemmed from potential use of client funds by brokers to buy digital gold which it views as a non-broking business, according to a review of documents and discussions with multiple industry sources.

The lack of regulatory oversight on companies that sell and store physical gold corresponding to the virtual assets being allocated to the end-consumer, is also cause for concern.

“…It has, however, come to the notice of SEBI/Exchange that certain members are providing a platform to their clients for buying and selling of digital gold. SEBI vide a letter dated August 3 has informed the Exchange that the said activity is in contravention of Rule 8 (3) (f) of SCRR, and members should refrain from undertaking any such activities,” a circular issued by NSE on August 10 showed.

According to a source, similar notices have been issued by all leading exchanges in India in recent weeks. ET could not independently verify this.

New age fintech brokers such as Upstox, Groww, Paytm Money as well as traditional brokers such as HDFC Securities and Motilal Oswal offer customers an option to “invest” in digital gold.

These companies have been given time till September 10 to discontinue the product as well as inform consumers about the move, as per the circular, which ET has reviewed.

Uptsox, Groww, NSE and Sebi did not respond to ET’s emails. Spokespersons for Paytm Money and HDFC Securities declined to comment.

The sale of digital gold in India, although a new concept, is “nothing but facilitating the purchase and sale of physical gold through a digital medium, and the ability to hold it digitally,” said Kishore Narne, head of commodities and currencies at Motilal Oswal.

“We understand Sebi’s concerns as it doesn’t fall under its scope of regulation, they have asked all Sebi-regulated entities to refrain from offering such products, and we are honouring it,” Narne said, adding that customers already holding digital gold would not be impacted by the new rules.

The NSE move comes as a jolt to fintech startups that have been building business models around facilitating purchase and sale of gold virtually in partnership with metal and gold firms – Augmont Gold Ltd, MMTC-PAMP India and Digital Gold India.

The business model involves customers being allowed to buy gold for as low as one rupee, as a digital asset. The gold companies then store an equivalent amount of gold in their lockers – against a virtual certificate of purchase.

These companies, though not under the purview of any financial sector regulator, are said to have a self-regulatory audit and diligence mechanism.

The NSE circular is only applicable to members of the NSE, said Renisha Chainani, Head of Research, Augmont Gold.

“This circular has been issued pursuant to some clarifications put by the regulator, Sebi, on NSE members for offering digital gold. All such partners shall work within the framework and guidelines prescribed by Sebi from time to time,” said Chainani.

MMTC and Digital Gold India did not comment.

Non-broking platforms such as PhonePe and Google Pay among others also offer digital gold to customers and are unlikely to be affected by this development.

India’s digital gold market is worth about Rs 5,000 crore annually, according to industry insiders.

The number of users with over Rs 100 balance in digital gold could be in the range of 5-6 million, said Deepak Abbot, the cofounder of Indiagold, a gold loan fintech.

“This could be an early indication that the regulator is looking to come up with regulations for the industry. Currently, these transactions are not under the purview of either Sebi or RBI,” said Abbot.

A senior stock exchange official told ET that brokers cannot offer such unregulated products through their Sebi-registered entity or platform.

“All the listed products are settlement guaranteed and carry a different risk profile. If an investor loses money due to such digital gold, neither the regulator nor the exchanges can be held responsible,” the executive said. “Hence, our action is limited to the extent that you cannot use Sebi-licensed platforms to sell such products.”

A leading securities lawyer who represents the interests of several brokerages said digital gold typically falls in a regulatory grey zone currently and unless Sebi comes out with a set of regulations, brokers cannot sell the products.

“The problem seems to be that some of the fintech players offer digital gold on the same page right next to where they sell mutual funds or listed shares,” the lawyer said. “However, there is no bar on these fintech firms to create a separate legal entity and set up a different page to sell digital gold.”



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RIL cuts term SOFR deal with JP Morgan, heralds a new era, BFSI News, ET BFSI

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Reliance Industries has cut a trade-financing deal with Wall Street bank JP Morgan using the Term SOFR (Secured Overnight Financing Rate), heralding a new era in loan-pricing benchmarks as the hitherto popular reference frame LIBOR is phased out after decades of international duty.

LIBOR is being replaced in phases by alternative rates for all loans and derivative deals starting January next year.

The financing deal was sealed at the bank’s overseas branch, likely in Singapore, and it involved discounting a Letter of Credit (LC). The amount involved was about $50 million.

Reliance is said to have obtained an LC from an Indian bank for procuring raw materials from the global market, three market sources familiar with the matter told ET. This LC will be discounted at a rate determined by SOFR Term rate with maturity running between two and three months.

“The financing will be provided by JP Morgan at the SOFR Term Rate,” said one of the persons cited above.

The SOFR Term rate, with a three-month maturity, yields 0.05043 percent.

Officials at Reliance and JP Morgan did not comment on the matter untill publication of this report.

“With a transition away from the LIBOR benchmark now inevitable, Indian users will have to start getting familiar with alternative reference benchmarks such as SOFR,” said Ananth Narayan, associate professor at the SP JAIN Institute of Management. “Larger corporates and banks leading the way in this transition is actually a good sign.”

CME group, the world’s largest derivative exchange, got the approval from the Alternative Reference Rates Committee (ARRC) to launch SOFR Term rates end-July.

“We…have been delivering robust, forward-looking SOFR term rates to the industry, based on our deep and liquid underlying CME SOFR futures market, since September 2020,” said Sean Tully, CME Group Global Head of Financial and OTC Products, in a statement.

SOFR is a benchmark rate administered by the Federal Reserve Bank of New York, which has been selected to replace dollar-denominated LIBOR. SOFR is reportedly based on overnight transactions in the US Treasury repo market.

Nearly two months ago, India’s central bank warned banks and financial institutions against structuring deals linked to LIBOR.

In its bi-monthly monetary policy RBI relaxed norms to facilitate the financial industry’s migration to alternative reference rates instead of LIBOR. It directed banks and borrowers to work a smooth transition.



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HDFC Bank will issue 3 lakh cards a month, regain lost ground, BFSI News, ET BFSI

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HDFC Bank on Monday unveiled its plans to regain the market share it lost in credit cards during an eight-month ban on new issues. The bank said that it will issue three lakh cards a month — its monthly run rate before the ban — for the next two to three quarters, following which it will scale up to five lakh cards a month.

Outlining the plans, the bank’s group head for payments & consumer finance, digital banking and IT, Parag Rao, said, “In the next three to four quarters, we will regain all our lost market share. The bank has lost close to 2% as rivals like ICICI Bank, Axis Bank and SBI Card swooped in to fill the demand.

According to Rao, the fourpronged strategy would be to tweak the products, sell more cards to its six-crore customer base, add more partners like fintech companies, telecom, hospitality and pharma companies. It has also revamped the digital process to allow more do-it-yourself features to customers on the bank’s app.

Rao said that despite the embargo from the RBI, the bank managed to scale up spend volumes by 60% year-on-year during the first quarter. “Our card spend is on an average one and a half times that of the industry,” said Rao. He said in the eight months the bank has been busy analysing industry trends and customer behaviour and now planned to put them to work.



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2 Stocks To Buy As Recommended By Sharekhan for Long-Term Investors

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Buy Indigo Paints for a price target of Rs 3305

The brokerage sees a rally in the stocks to levels of Rs 3,305 from the current market price of Rs 2,547.

According to Sharekhan Indigo Paints Limited (IPL) is an emerging player, which has created a niche for itself in the highly competitive paints industry by launching differentiated products, creating brand equity through one prominent brand ‘Indigo’ and follow bottoms-up approach to expand its distribution in the domestic market. It has market share of 2% but has strong potential to improve it in the coming years.

“Gross margins are highest among peers at 48% led by Indigo’s locational advantage and healthy mix of revenues from differentiated products. With a differentiated product portfolio and bottom-up approach, Indigo Paints is emerging as one of India’s fastest growing paints companies. Revenues and PAT clocked a CAGR of 22% and 71% over FY2018-21,” the brokerage has said.

According to the firm, better working capital management has kept net working capital cycle low at 13-14 days.

“We initiate coverage on Indigo Paints with a Buy and assign a target price of Rs. 3,305. Differentiated business model, excellent return profile and strong structural growth outlook will keep valuation at a premium of 60x/44x its FY2023/24E earnings versus peers,” Sharekhan has said.

Buy Sundram Fasteners, Says Sharekhan

Buy Sundram Fasteners, Says Sharekhan

Sharekhan has set a target price of Rs 994 on the stock of Sundram Fasteners as against the current market price of Rs 754.

According to Sharekhan the company displayed strong performance in Q1FY2022, beating street expectations, led by robust operational performance, despite tough environment. Export and non-automotive segments remain the top focus areas for the management to de-risk business from cyclicality.

“We expect Sundram Fasteners earnings CAGR to improve by 32.3% during FY2021E-FY2023E, driven by a 26% revenue CAGR during FY2021E-FY2023E and a 20 bps improvement in EBITDA margin to 18.4% in FY2023E from 18.2% in FY2021, with ROCE progressing to 22.6% in FY2023E,” the brokerage has said.

“We continue to retain our Buy rating on Sundram Fasteners Limited with an unchanged price target of Rs 994, led by the company’s strong performance outpacing the automobile industry’s growth through diversifying client and product portfolios, benefiting from its established client relationships, and prudent capital allocation,” Sharekhan has said.

“The company has a strong long-term revenue visibility, given its strong relationships with original equipment manufacturers (OEMs), both in India and globally. We retain our Buy rating on the stock,” the brokerage has added.

Shares in Sundram Fasteners last closed at Rs 754.90.

Disclaimer

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only and is picked from the brokerage report of Sharekhan. Be careful while investing as the Sensex has now crossed 55,500 points. Investors can invest small amounts and avoid putting lumpsum.



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M&M ties up with SBI for small CV financing, BFSI News, ET BFSI

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New Delhi: Mahindra & Mahindra (M&M), one of the top commercial vehicle manufacturers in India, on Monday inked a Memorandum of Understanding (MoU) with the State Bank of India (SBI) to offer financial assistance for the purchase of M&M’s range of small commercial vehicles and PickUps. SBI’s Contactless Lending Platform technology will further ensure uniformity, transparency and a reduced turnaround time in the loan approval process, the automaker said in a release.

Amit Sagar, business head – SCV, automotive division, M&M, said, “Our financing scheme is not just unique, but also very pertinent, given SBI’s reach and trust across the length and breadth of the country. This scheme will provide the desired impetus and confidence to our SCV and PickUp customers and help them prosper.”

The collaboration with SBI will allow M&M’s small commercial vehicle customers to avail of loan in a contactless manner with only 59 minutes loan approval process. This will help customers own a superior product with EMI as low as INR 6666 (for a loan amount of 3.45 lakh) and a lower interest rate of 11.5%, the company said.

It also gives flexibility of extended tenure up to six years including a one-month moratorium period also. The customers can opt for a higher loan amount with up to 85% on-road funding. There is no requirement of any third-party guarantor, M&M added.

Along with MSME, small road transport operators and the first-time-buyers of small commercial vehicles can also take benefit from this breakthrough M&M vehicle financing scheme with SBI, the automaker highlighted.

M&M recently launched the SUPRO Profittruck range which is developed on the SUPRO platform. The SUPRO Profittruck range comes in both diesel as well as CNG fuel options. The Jeeto brand launched in 2015,has thus far gone home to 2 lakh customers. In sub 2-tonne load category, it comes with multi fuel options of Diesel, CNG & Gasoline and in two different deck sizes providing an array of options to customers.

Mahindra Bolero PickUp range has been the market leader for over two decades with more than 16 lakh customers, claims the company. Mahindra Bolero PickUp has a wide range of vehicles – Single cabin, Double cabin, AC, 4WD and CNG options along with multiple payload and cargo sizes suiting the customer requirements.



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Rana Kapoor files recall application against court’s order allowing ED to question him, BFSI News, ET BFSI

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A special court here has permitted the Enforcement Directorate (ED) to question arrested banker Rana Kapoor in a money laundering case.

The said case pertains to a loan taken by Oyster Buildwell Pvt Ltd, a holding company of Avantha Realty Limited from Yes Bank Ltd )YBL), and its alleged misappropriation between 2017 and 2019.

The ED had registered a money laundering case based on the predicate offence registered by the Central Bureau of Investigation (CBI) against Kapoor, his wife Bindu Kapoor and promoter of Avantha group, Gautam Thapar for “illegal gratification in lieu of favours extended in connection with official work”. The agency has pegged the loss caused to the bank at Rs.466.51 crores.

While on August 20, the court allowed the federal agency plea to interrogate Kapoor between August 25 and August 27at the Taloja Central Prison, the promoter of Yes Bank Ltd Monday filed an application to recall the order on the ground of not being heard,

Advocate Vijay Agarwal along with Advocate Ayush Jindal appeared for Kapoor, in the said matter. “..in view of the fact that the accused had not been afforded an opportunity to be heard which is directly in contravention with his fundamental rights and as principles of Natural Justice were not obeyed,” Kapoor’s counsels contested.

They also pleaded that Kapoor be interrogated only under audio-visual surveillance and in the presence of his legal representatives.

The ED has contested the application. The court has adjourned the matter for arguments.



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HDFC Bank outlines aggressive play in credit cards to regain lost mkt share in a year, BFSI News, ET BFSI

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Mumbai, Aug 23 (PTI) HDFC Bank on Monday said it aims to regain the two per cent market share in the credit card market it ceded to rivals during a recent ban, within a year by aggressively tapping into its existing depositor base. The bank will also focus on forging new partnerships to sell more cards and will not deviate from its conservative approach on taking credit risks as it goes aggressive in the market, its group head for payments and consumer finance, digital banking and IT, Parag Rao, told reporters.

On August 17, RBI lifted the ban on HDFC Bank which had prevented it from issuing new credit cards from December 2020. However, the restrictions on launching new digital initiatives are yet to be lifted. Its smaller rivals, including ICICI Bank and SBI Card, have utilised the opportunity created by HDFC Bank’s absence to narrow the gap with the market leader in the last eight months.

Going forward, HDFC Bank has set specific milestones for itself, which will include ramping up monthly card issuances to the November 2020 level of 3 lakh in up to three months, and going up further two 5 lakh a month in another two quarters, Rao said.

In the next three-four quarters, HDFC Bank is targeting to regain all the lost market share, he added.

When asked about the restrictions on digital launches, Rao said the bank continues to engage with RBI on compliance with remedial objectives. It has closed the short term milestones, is in the final laps on the medium term ones and work is in progress on the long term ones, Rao said, adding that it is waiting to hear from RBI.

HDFC Bank’s outstanding credit cards has declined to 1.48 crore as of June 2021 from 1.53 crore in November 2020 as a result of the ban. The same for ICICI Bank increased to 1.10 crore from 97 lakh, and SBI Card had its number increase to 1.20 crore in June 2021 from 1.12 crore in November 2020.

Rao said while the bank lost market share by number of active cards, it has been able to retain its share by overall spending courtesy specific initiatives to prod customers.

He said overall spends on the credit card portfolio have increased 60 per cent in the April-June quarter as against the year-ago period while the Earnest Monthly Instalment (EMI) option on high value purchases has seen an 80 per cent increase, and the bank is 1.5 times ahead of competition on spends.

When asked about the credit quality, Rao declined to comment on the specifics on the portfolio but asserted that it will not be softening on its conservative stance on extending credit. The bank will make use of more digital and data analytics products while extending credit, he said.

The bank expects a bulk of the new cards to come from existing customers who have deposits with the bank, Rao said, adding that it has 6 crore customers at present.

Serving the existing customers helps from a quality perspective as the bank has a better understanding of the customers, he said, adding that it already has a significant amount of customers with pre-approved credit cards who have not been contacted in the last eight months.

Moreover, customer insights are also pointing to higher affinity to cards with lower credit limits, he said. The bank will start serving such segments as well.

Apart from its own customers, the bank will depend on partnerships and tie-ups with other players, including fintech players, payment companies and corporates to engage new clients. The partnership with Paytm announced earlier in the day is the first such initiative, he noted.

In a statement, the bank said it has 20 such initiatives planned over the next 6-9 months, which will also include co-branded offerings with companies in the pharma, travel, fast moving consumer goods, hospitality, telecom and fintech space.

As it engages more with partners, the ratio of new to bank customers in the incremental credit card customers will increase to 25 per cent of the overall from the present 20 per cent, Rao said.

“The last few months have been spent in readying ourselves for the future. When the restrictions from the regulator were in place, we utilised the time to chalk out a new strategy. With our new offerings as well as our existing suite of cards, we are confident of meeting the needs of our customers and ‘come back with a bang’,” he said.

The bank scrip closed 0.60 per cent higher at Rs 1,523.50 a piece on the BSE on Monday as against gains of 0.41 per cent on the benchmark.



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