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Canara Bank: Fresh slippages plugged

Canara Bank reported decline in profits due to higher mark-to-market (MTM) provision on available for sale (AFS) portfolio along with subdued growth in operating income. The bank provided Rs1.3 billion for MTM loss on investment portfolio and write back of Rs 4.2 billion in first quarter 2015-16. Higher provision was primarily due to higher holding in AFS portfolio where there were adverse movements in bond yields. Further NPA provision also increased due to higher write-off during the quarter. Business growth remained subdued on sequential quarter basis reflected in decline in loan book and slight decrease in deposits. However, fresh slippages improved sequentially surprising us on positive side. Amidst the challenging interest rates and macroeconomic regime Canara Bank has been delivering reasonable operating and asset quality performance. Most negatives are priced in. Hence we continue to recommend BUY. Reliance Securities


Motherson Sumi : Downside risks to ramp up of production

Motherson Sumi’s results were seven per cent lower than estimates due to shrinking profit margins. Management attributed this to adverse currency rate in exports and drop in commodity costs. The two subsidiaries of the company recorded healthy revenue surge however, their margins failed to improve. We attribute this to start up cost of new plants. We expect margin to improve in ensuing quarters. We have lowered our earnings estimates for the current year and we see further down side risks to our estimates if ramp up of new plant is lower in the subsidiaries. (SMR and SMP). Demand is also growing slower than expected. Edelweiss Securities


Bharti Infratel: Strong operating profits

Bharti Infratel constructed 2,523 new towers in 2015 versus 1,285 in 2014. The co-location of towers improved as well as the tenancy ratio. The company recorded strong operating performance due to energy margin expansion. We remain positive on the tower infrastructure space given the elevated capex spends by telecom operators to expand 3G capacity, 4G LTE roll-out and incremental tenancies from R-Jio that would drive growth going forward. Higher capex spends by telecom operators provide increased visibility in tenancy growth for the company. We have raised our long term tenancy assumptions. We maintain our BUY recommendation on the stock. Emkay Global

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