Indian Accounting Research Analyst, Trudence Capital Advisors

Nitin Mangal

Indian Accounting Research Analyst

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

<ul>
<li>Spat between <a href="https://www.smartkarma.com/entities/dish-tv-india-ltd" target="_blank" data-smartkarma-citation="entities:7710:1" rel="noopener">Dish TV India (DITV IN)</a> promoters and one of the largest shareholder <a href="https://www.smartkarma.com/entities/yes-bank-ltd" target="_blank" data-smartkarma-citation="entities:767:1" rel="noopener">Yes Bank (YES IN)</a> is getting interesting day by day.    </li>
<li>Promoter of the company had multiple times tried to block Yes bank from voting in company's annual general meeting that was held on December 30, 2021.</li>
<li>Bombay high court decision on ownership of stake by Yes bank will be crucial.</li>
</ul>


Spat between Dish TV India (DITV IN) promoters and one of the largest shareholder Yes Bank (YES IN) is getting interesting day by day.    
Promoter of the company had multiple times tried to block Yes bank from voting in company's annual general meeting that was held on December 30, 2021.
Bombay high court decision on ownership of stake by Yes bank will be crucial.


Dish TV: Promoters Repetitive Attempts to Block Yes Bank

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Mixed Bottom-line: State Bank of India (SBIN.IN) [SBI] reported FY 2Q22 results of INR 76.3 bn, improving INR 11.2 bn (17.3%) linked quarter. In fairness, this was a strange quarter, as the provision cut of INR 98.6 bn (98.1%) was unjustified – and not aligned with reality, enabling results to appear far better than they actually were. Effectively cutting loss provisions to zero when NPL coverage is abysmal in order to offset frontloaded pension costs is far from a prudent banking practice; and*Reserve Challenge Should Lead To Capital Raise: Surprisingly, we found that net new NPLs increased just INR 41.7 bn or 10.8% on an annualized basis, which is a far cry from the INR 193.2 bn or 65.9% annualized posted at FY 4Q21. Given the capital and remaining credit challenges, SBI must be better prepared to take additional losses. By our calculation, we find that SBI’s reserves are short INR 841 tn – over two years of pre-tax results or nearly 18% of SBI’s market-cap.

*Mixed Bottom-line: State Bank of India (SBIN.IN) [SBI] reported FY 2Q22 results of INR 76.3 bn, improving INR 11.2 bn (17.3%) linked quarter. In fairness, this was a strange quarter, as the provision cut of INR 98.6 bn (98.1%) was unjustified – and not aligned with reality, enabling results to appear far better than they actually were. Effectively cutting loss provisions to zero when NPL coverage is abysmal in order to offset frontloaded pension costs is far from a prudent banking practice; and*Reserve Challenge Should Lead To Capital Raise: Surprisingly, we found that net new NPLs increased just INR 41.7 bn or 10.8% on an annualized basis, which is a far cry from the INR 193.2 bn or 65.9% annualized posted at FY 4Q21. Given the capital and remaining credit challenges, SBI must be better prepared to take additional losses. By our calculation, we find that SBI’s reserves are short INR 841 tn – over two years of pre-tax results or nearly 18% of SBI’s market-cap.

State Bank of India – Not A Prudent Move

Specialist in Indian Banking and Economic Research

Hemindra Hazari

Even though <a href="https://www.smartkarma.com/entities/axis-bank-ltd" target="_blank" data-smartkarma-citation="entities:768:1" rel="noopener">Axis Bank Ltd (AXSB IN)</a> reported an impressive growth in net profit, higher than that of its peers, the stock market penalised the bank, as the growth of its business, top line and profit before provisions was lower than that of its peers. The stock market traditionally favours both top and bottom line growth, and in Axis Bank’s case the market believed that the poor business growth is a symptom of a deeper problem in the bank’s business model.Some analysts have highlighted Axis Bank’s poor business indicators in the 2QFY2022 as compared with those of its peers, and their reading-between-the-lines is that it may be an undisclosed or even undiagnosed problem. It is also possible that Axis Bank 2QFY2022 was an off quarter, where the management took its eye off the ball, and that performance may rebound and match that of its peers in 2HFY2022. However, another, more ominous, explanation could be that staff morale may be the cause of the poor performance.This analyst was the first to <a href="https://hemindrahazari.com/2021/05/26/why-are-axis-banks-directors-mum-about-the-extraordinary-staff-churn/" target="_blank" rel="noopener">highlight</a> Axis Bank’s high and worsening attrition from FY2018 to FY2020, when it peaked at 36.8% for the overall bank and an alarming 69.2% for the sales category (this category has the maximum number of staff which sources new business). In FY2021, Axis Bank reported a trend reversal, a significant improvement in attrition to 23.8% (sales attrition at 49.7%); the improvement was also seen in other private sector banks. It is possible that the work-from-home regime in FY2021 resulted in less stressful daily physical meetings, and relaxation in achieving sales targets, on account of the lock-down. With 2QFY2022 gradually returning to normal, the pressures on the staff may have resumed to a point where attrition may have increased and morale plummeted, impacting the top line performance of Axis Bank.Attrition can be a lead indicator for future performance, and analysts have been concerned with the steady senior level <a href="https://economictimes.indiatimes.com/markets/stocks/news/two-senior-executives-quit-axis-bank-for-piramal-nbfc/articleshow/75546095.cms" target="_blank" rel="noopener">exits</a> since Amitabh Chaudhry took charge as Chief Executive Officer on January 1, 2019. The latest <a href="https://www.bseindia.com/xml-data/corpfiling/AttachHis/299d20f1-8fa4-45d5-90f5-e4aed0484c6e.pdf" target="_blank" rel="noopener">resignation</a>  was of Rajesh Dahiya, executive director and in-charge of human resources since June 2010. But what was largely unreported was the plight of the bulk of the Axis Bank staff, which was ignored by analysts. This despite the fact that the bank had comprehensive disclosures on the issue which painted a sorry picture of human resource management since FY2018. Staff discontent may take some time to filter down to impacting overall performance, and we need more quarters to monitor performance to validate this hypothesis.The Axis Bank board of directors need to urgently enquire into the reasons for the poor business and revenue performance in 2QFY2022 and the stock market penalising the share price may provide the appropriate push to the board to investigate the matter and come out with remedial measures.

Even though Axis Bank Ltd (AXSB IN) reported an impressive growth in net profit, higher than that of its peers, the stock market penalised the bank, as the growth of its business, top line and profit before provisions was lower than that of its peers. The stock market traditionally favours both top and bottom line growth, and in Axis Bank’s case the market believed that the poor business growth is a symptom of a deeper problem in the bank’s business model.Some analysts have highlighted Axis Bank’s poor business indicators in the 2QFY2022 as compared with those of its peers, and their reading-between-the-lines is that it may be an undisclosed or even undiagnosed problem. It is also possible that Axis Bank 2QFY2022 was an off quarter, where the management took its eye off the ball, and that performance may rebound and match that of its peers in 2HFY2022. However, another, more ominous, explanation could be that staff morale may be the cause of the poor performance.This analyst was the first to highlight Axis Bank’s high and worsening attrition from FY2018 to FY2020, when it peaked at 36.8% for the overall bank and an alarming 69.2% for the sales category (this category has the maximum number of staff which sources new business). In FY2021, Axis Bank reported a trend reversal, a significant improvement in attrition to 23.8% (sales attrition at 49.7%); the improvement was also seen in other private sector banks. It is possible that the work-from-home regime in FY2021 resulted in less stressful daily physical meetings, and relaxation in achieving sales targets, on account of the lock-down. With 2QFY2022 gradually returning to normal, the pressures on the staff may have resumed to a point where attrition may have increased and morale plummeted, impacting the top line performance of Axis Bank.Attrition can be a lead indicator for future performance, and analysts have been concerned with the steady senior level exits since Amitabh Chaudhry took charge as Chief Executive Officer on January 1, 2019. The latest resignation  was of Rajesh Dahiya, executive director and in-charge of human resources since June 2010. But what was largely unreported was the plight of the bulk of the Axis Bank staff, which was ignored by analysts. This despite the fact that the bank had comprehensive disclosures on the issue which painted a sorry picture of human resource management since FY2018. Staff discontent may take some time to filter down to impacting overall performance, and we need more quarters to monitor performance to validate this hypothesis.The Axis Bank board of directors need to urgently enquire into the reasons for the poor business and revenue performance in 2QFY2022 and the stock market penalising the share price may provide the appropriate push to the board to investigate the matter and come out with remedial measures.

Axis Bank: Toxic Workplaces Don’t Bring In More Business

Forensic Accounting

In past two years, Indian market has witnessed many fights between promoters and shareholders, of which one of the most famous is Essel group companies. We have already highlighted issues with <a href="https://www.smartkarma.com/entities/zee-entertainment-enterprises" target="_blank" data-smartkarma-citation="entities:19466:1" rel="noopener">Zee Entertainment Enterprises (Z IN)</a> in our insight <a href="https://www.smartkarma.com/insights/zee-sony-merger-a-cloudy-sky" target="_blank" data-smartkarma-citation="insights:58128" rel="noopener">ZEE-Sony Merger: A Cloudy Sky?</a>. Another erstwhile Essel group company <a href="https://www.smartkarma.com/entities/dish-tv-india-ltd" target="_blank" data-smartkarma-citation="entities:7710:1" rel="noopener">Dish Tv India (DITV IN)</a> in which one of the shareholder i.e. <a href="https://www.smartkarma.com/entities/yes-bank-ltd" target="_blank" data-smartkarma-citation="entities:767:1" rel="noopener">Yes Bank (YES IN)</a> who owns ~24.8% stake is taking management head-on for creating mess in the financial statement and sought conducting extra-ordinary general meeting (EGM) for the removal of chairman &amp; managing director Mr. Jawahar Lal Goel, relative of promoter Mr. Subash Chandra. However, later on October 13, 2021 board of Dish TV has denied request of Yes bank for conducting EGM and called the action of Yes bank as violation of various acts.In this insight we are providing analysis of Dish TV F21 annual report and highlighting the issues in the financial statements.

In past two years, Indian market has witnessed many fights between promoters and shareholders, of which one of the most famous is Essel group companies. We have already highlighted issues with Zee Entertainment Enterprises (Z IN) in our insight ZEE-Sony Merger: A Cloudy Sky?. Another erstwhile Essel group company Dish Tv India (DITV IN) in which one of the shareholder i.e. Yes Bank (YES IN) who owns ~24.8% stake is taking management head-on for creating mess in the financial statement and sought conducting extra-ordinary general meeting (EGM) for the removal of chairman &amp; managing director Mr. Jawahar Lal Goel, relative of promoter Mr. Subash Chandra. However, later on October 13, 2021 board of Dish TV has denied request of Yes bank for conducting EGM and called the action of Yes bank as violation of various acts.In this insight we are providing analysis of Dish TV F21 annual report and highlighting the issues in the financial statements.

*Not Fooling Anyone: HDFC Bank (HDFCB.IN) [HDFCB] released a nonsensical set of FY 2Q22 earnings results, despite exhibiting that the bottom-line improved INR 11.0 bn (14.3%) linked quarter. On an operating basis, core results aggregated INR 81.6 bn, up INR 10.3 bn (14.5%) over the period. Puzzling is the INR 75.1 bn (28.5%) increase in problem loans, and the INR 9.1 bn (18.8%) decline in loss provisions during FY 2Q22; and *Credit Disaster Continues:We calculate that net new NPLs actually increased a whopping INR 114.1 bn or 43.2%. By our calculation, reserves are massively short by nearly INR 371.3 bn or over year (and growing) of core operating results – despite the massive under-providing against credit this quarter which suggests that the provision shortfall is closer to two years of results.

*Not Fooling Anyone: HDFC Bank (HDFCB.IN) [HDFCB] released a nonsensical set of FY 2Q22 earnings results, despite exhibiting that the bottom-line improved INR 11.0 bn (14.3%) linked quarter. On an operating basis, core results aggregated INR 81.6 bn, up INR 10.3 bn (14.5%) over the period. Puzzling is the INR 75.1 bn (28.5%) increase in problem loans, and the INR 9.1 bn (18.8%) decline in loss provisions during FY 2Q22; and *Credit Disaster Continues:We calculate that net new NPLs actually increased a whopping INR 114.1 bn or 43.2%. By our calculation, reserves are massively short by nearly INR 371.3 bn or over year (and growing) of core operating results – despite the massive under-providing against credit this quarter which suggests that the provision shortfall is closer to two years of results.  

India

YES BANK Limited provides banking services. The Bank offers deposits, personal loans, e-banking, trade finance, corporate, and business banking services. YES BANK serves the food and agribusiness, life sciences, healthcare, biotechnology, telecommunications, media, information technology, and infrastructure development industries in India.

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Yes Bank (YES IN)

Dish TV: Promoters Repetitive Attempts to Block Yes Bank

Dish TV promoter failed four times to get restraining order against Yes bank for casting its vote in AGM and Bombay high court will be crucial for...

Nitin Mangal

State Bank of India – Not A Prudent Move

SBI: SBI reported a QOQ FY 2Q22 results increase of 17.3%. A provision cut of 98% was unjustified, only serving to offset frontloaded pension...

Thomas J. Monaco

Axis Bank: Toxic Workplaces Don’t Bring In More Business

2QFY2022 may have been an aberration, but if staff have become unresponsive to the management’s directives to push business growth, Axis has a ...

Hemindra Hazari

Dish TV: What Lies Underneath

In this insight we are providing analysis of F21 annual report and highlighting the issues in the financial statements of Dish TV, erstwhile Essel...

Nitin Mangal

HDFC Bank – Extending & Pretending

HDFC BANK: HDFCB released a nonsensical set of FY 2Q22 operating basis, which exhibited improvement of 14.5% QOQ. Puzzling is the 28.5% increase in...

Thomas J. Monaco

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