Tale of the Tape 

Howdy folks and welcome back to the Daily Rip!

Nifty and Sensex gained half a percent each. Index heavyweights ICICI Bank and HDFC Bank fought hard to keep them in the green even as RIL tanked over 3% (its worst single day fall in since April 4). Broader markets traded mixed as Midcaps advanced (+0.6%) while Smallcaps ended flat. It was a mixed-bag kinda day for sectors. Banks (+1.2%) and Metal (+1%) stocks were in high demand. Meanwhile, PSU Banks (-0.6%) and FMCG (-0.5%) witnessed selling pressure.

Today’s issue covers the banking sector’s performance in Q1, RIL’s disappointing results, trending charts and more.

Check out the NSE500 heatmap:

Market
The Banks Have Spoken

Coming into Q1, India’s banking sector was a big question mark. We know loan growth was slowing, asset quality was worsening and net interest margins would be temporarily squeezed due to the RBI’s rate cuts. But we’ve gotten a pretty mixed picture so far, with some clear winners and losers. Here’s the ranking list: 

1) Leaders of the pack: ICICI continues to kill it. Its margins barely fell and its gross NPA was flat QoQ at 1.67%. Its bottomline was boosted by non-core income, but it remains the gold standard. PS - Jefferies sees a +21% upside from current levels. Next up, HDFC isn’t far behind. The bank had a solid quarter with decent NII growth. Its asset quality was stable, but its provisions jumped +5x. FYI - the lender says these aren't linked to actual bad loans but are a "countercyclical buffer”. Its PAT was also aided by one-off gains from the HDB Financial IPO. 

3) Middle of the pack: A bunch of small PSU banks have had a meh Q1 show. Nothing alarming, but nothing great either. This includes Yes Bank, Union Bank, Central Bank etc

4) Stinkers: Axis Bank had an awful Q1, with its provisions nearly doubling and its net profit falling -4% YoY. This follows several quarters of so-so results, which explains why the stock is down -14% over the last year. PS - special shoutouts to RBL Bank (whose net profit fell -46% YoY) and AU Small Finance Bank which cracked -5% due to asset quality concerns.

Big Picture: Things don’t look too great right now, but experts predict a stronger H2-2025. Margins should normalize after RBI rate cuts are passed on to customers. This in turn should boost credit growth. On the NPA front, we’re probably looking at pain for some lenders for another 2-3 quarters, but as the Q1 results show, this problem isn’t industry-wide!

Stocktwits Specials
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