Share Market Highlights 22 April 2025: Financials fuel market rally; Nifty, Sensex log 6th straight gain

Kotak on Dr Agarwal

Initiate Add with TP of Rs 425

Setting its sights on profitable growth

Expect RoIC to improve to ~12% in FY28E

Expect robust 23%/27% EBITDA/EPS CAGRs over FY24-28E

Competition: Dr Agarwal has an early-mover advantage over organized peers

M&A strategy: Acquisitions have been a key growth enabler for Dr Agarwal

UBS on FMCG

Ready for a rebound; Goldilocks in the making

Earnings look set to recover in FY26 – see 13% growth – after a weak FY25

Potential income stimulus – lower taxes and the upcoming Eighth Pay Commission over the next three years

This could spur a demand revival in many categories and an extended earnings growth phase

Valuations have corrected significantly, as much as 35% since October

Think the sector offers defensiveness in a market that may continue to have low risk tolerance

Prefer DMART and Trent as income stimulus plays, given their resilient value retail model

As turnaround stories, favour HUL and Godrej Consumer, five-year laggards with portfolio issues on the mend

View Colgate and Britannia as at an inflection point with earnings growth revival likely by next year

See appealing value in ITC after a correction on tax fears

Least prefer Asian Paints as a disruption cycle brings uncertainty and Dabur for portfolio issues

Jubilant has priced in a SSSG rebound

GS on Consumer Sector

See a few catalysts which could trigger a gradual revival in consumption growth in FY26

Preferred stocks 

GCPL, Tata Consumer/Marico within consumer staples

Titan/Trent (market share led growth)

Pidilite (non-core biz expansion) 

MS on Steel

Govt. has imposed a 12% safeguard duty ad valorem on non-alloy & alloy flat steel products on a provisional basis for a period of 200 days effective today

Govt. has also introduced threshold prices at & above which this duty is not applicable

This is a +ve development &removes multiple months of overhang around safeguard duty imposition

May see some positive stock reaction near-term, but suggest it to be used to trim positioning in steel names

Domestic HRC prices are currently at 18% premium vs. import parity levels & even after imposition of safeguard duty, domestic steel prices trade at 5% premium vs. import parity, making no case for domestic steel prices uplift.

CLSA on Chola Investment & Fin

Downgrade to Hold, TP Rs 1600

Stock now trades at 4x PB (FY27), a mere 9% discount to the market leader, Bajaj Finance.

In the past, it has rarely traded at such elevated multiples, & only in scenarios where its AUM growth was 30-40%.

Today, growth is in mid-20s & expect a 18-20% Cagr over next 2 yrs

While Chola is favourably poised to benefit from a rate cut cycle, an extra 25bp rate cut only improves its NIM by 7-8bp & EPS by c.2%

CLSA on RBI LCR Guidelines

Another boost to liquidity

New LCR guidelines positive for liquidity

RBI has increased run-off rates for deposits

Increase is only 2.5 ppts Vs 5 ppts suggested in the draft circular.

RBI expects the new guidelines to result in a 6 ppt improvement in the system-wide LCR

Initial estimates – increases system-wide liquidity available for redeployment by Rs 2.5 lakh crore

PAT impact of this move is modest, it would be seen as sentimentally positive

MS on RBI LCR Guidelines

View RBI LCR guidelines as a material positive unlike the draft

This should help improve system LCR by 6 percentage points (ppts)

Banks that have higher shares of trust deposits will likely be key beneficiaries

6 ppts would help the banking system accelerate loan growth by 1-2% and/or improve margins by 2-4 bps on implementation in the next year

Although the guidelines are effective April 1, 2026, we expect some benefit to percolate in FY26 earnings as well

Macquarie on RBI LCR Guidelines

Liquidity bonanza continues

RBI expects a 600bps improvement in the LCR ratios for the banking system from 3Q24 LCR levels.

We believe this is encouraging and will provide strong support to the credit cycle.

Back of the envelope calculations indicate a ~Rs2.5-Rs3tn increase in liquidity deployable

This would imply a 140-160 bps potential increase in credit growth for the banking system

Best picks on these relaxation: SHFL, M&M Financial, AB Capital and in banks it will be HDFC Bank and Axis Bank

CITI on RBI LCR Guidelines

RBI has issued final LCR guidelines :

i) Assigning additional 2.5% (vs 5% in draft circular) run-off factor on retail deposits enabled with internet/mobile banking (IMB);

ii) Treating unsecured wholesale funding by non-financial small businesses as retail deposits;

iii) Assigning run-off factor of 40% (vs 100% currently) on funding from non-financial entities including trusts/corporates (17.8% of deposits);

iv) Valuing level 1 HQLA (G-Sec) at <market value, adjusted for applicable haircut. Additional 2.5% run-off factor on IMB-enabled retail deposits (assumed at 80%), will adversely impact LCR by 6%-8% (higher for FB/SBI at 10%).

This will be more than offset by 60% lower run-off factor on non-financial corporate funding and banks with higher wholesale funding (AU Bank / Axis Bank / RBL Bank) to benefit the most.

Net impact will improve banking-system LCR by 6% (liquidity cushion of Rs3.5tn estimating system-wide HQLA at Rs55-60tn).

This will ease liquidity pressure on banks and open room for further deposit rate cuts.

Jefferies on RBI LCR Guidelines

RBI Has Eased LCR Norms Vs Original & Draft With Lower Run-off On Deposits From 100% To 40%

Lower Run-off On Digital Deposit Vs First Draft (Nil Currently)

Val Of G-Secs Is Being Tightened

Per RBI, These Will Release 6% Of Liquidity From Apr 1, 2026

Equating To Rs3-3.5 Lk Cr Vs Rs6-7 Lk Cr Of Consumption Per Last Draft

Benefits For Banks May Vary; PSUs, Old & Large Pvt Bks May Gain More

HSBC on RBI LCR Guidelines

Final LCR Guidelines Are Substantially Positive For All Banks

Final LCR Guidelines Positive For Especially Those With Higher Outflow Rates

This Could Release Rs2.2 Lk Cr In Balance Sheet Liquidity Across Banks

Add To Loan/Deposit Growth & Be NIM Accretive

These Guidelines Also Indicate That Regulatory Environment Should Be Quite Benign Going Forward

IIFL on RBI LCR Guidelines

LCR relaxation to boost banks’ PAT by 1-4%

The RBI’s final LCR guidelines (to be implemented from April-26) should boost banks’ LCR by 6ppt, loan growth by 1.5ppt and PAT by 1-4% as against the feared LCR and profitability hit under the draft circular.

Four proposed changes are: (1) Haircut on HQLA, (2) Increase in the run-off rate for retail deposits with digital facilities by 2.5ppt, (3) Reduction in the run-off rate for nonfinancial entities by 60ppt, and (3) Include deposits pledged to avail credit in the outflows.

We estimate proforma LCR to improve by 2-25 ppt (ex ICICI) for the banks under our coverage.

The banks with higher proportion of TASC and other non-financial operational deposits should benefit relatively more – Federal, RBL, Kotak, HDFC and BOB.

Given the rise in proforma LCR and assuming a threshold of 120%, we estimate banks’ NIM to expand

by 1-18 bps and PAT benefit of 1-4%, as the banks should likely deploy excess LCR to higher yielding assets.