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31 July 2013
albeit
credit
Rating : Buy
Target Price : INR 65 Upside : 38% CMP : INR 47 (as on 29 July 2013) Key data
Bloomberg /Reuters Code Current /Dil. Shares O/S (mn) Mkt Cap (INRbn/US$mn) Daily Vol. (3M NSE Avg.) Face Value (INR) 1 US$= INR 59.3
Source: Bloomberg ; * As on 29 July 2013
The bank reported good set of numbers with NII growth of 36%, PPoP growth of 42%, PBT growth of 46% and PAT growth of 22%. Both credit and deposits grew by 1% sequentially and ~20% YoY. Management attributed major part of credit growth to be coming from the robust branch expansion incurred over the last two years. With management intentions to not to increase further gold loan share in the portfolio (at 23% of credit currently), credit growth could get weaker going ahead. Low slippages support profitability, coverage levels rise Annualized slippages at 1.2% were encouraging though fewer writeoffs led gross NPA to increase sequentially by 12 bps even as net NPA remained flat QoQ. Provision coverage increased by 500 bps sequentially to 50%. With upgradations of another INR 0.5 bn in the restructured book this quarter and marginal additions, the restructured portfolio fell down to 1.42% of the book. Valuations attractive With a high retail deposit base (less than 5% bulk share), a low CD ratio, marginal consortium lending (less than 1%), healthy asset mix (no infra exposures), low AFS book at 12% of investments, and strong return ratios (19% ROE and 1.5% ROA), we feel the bank is relatively well placed given the recent developments and macro worries. Nonetheless, weak credit growth given the macro environment shall push the managements long term targets for the bank a little further in our view, leading us marginally lower expected multiples to 1.4 FY15 P/ABV implying a price of INR 65 per share. The stock currently trades at 1 FY15 P/ABV.
Q2FY13 Q3FY13 Q4FY13 Q1FY14 0.0 30.1 19.0 50.9 0.0 30.8 18.5 50.7 0.0 29.6 18.6 51.7 0.0 29.5 19.3 51.2
Key Financials
Y/E Mar (INR mn) FY11 FY12 FY13 FY14E FY15E NII 4,200 4,998 6,241 7,617 9,536 YoY (%) 51.0 19.0 24.9 22.1 25.2 PPoP 3,610 4,271 5,235 6,517 8,128 YoY (%) 41.1 18.3 22.6 24.5 24.7 PAT 2,151 2,803 3,221 3,775 4,777 YoY (%) 40.8 30.4 14.9 17.2 26.6 Fully DEPS 5.3 6.9 6.8 6.6 7.9 YoY (%) 32.8 29.7 (1.1) (3.4) 20.1 ROAE (%) 23.5 24.9 22.3 19.2 18.5 ROAA (%) 1.6 1.7 1.6 1.5 1.5 P/E (x) 8.4 6.6 6.9 7.2 6.0 P/ABV (x) 1.9 1.5 1.4 1.3 1.0
FY12 4,998 2,071 7,070 (2,799) 4,271 (838) 3,433 (630) 2,803 FY12 12,431 163,408 18.2 3,487 4,181 183,506 11,361 121,375 45,862 977 3,932 183,506 FY12 6.9 1.0 29.1 1.7 24.9 6.6 1.5 2.2 13.0 10.6 8.0 3.40 1,235 1.01 540 0.45 56.3 1.55 11.69 12.57 39.6 1.91 0.2 0.78 74.3
FY13 6,241 2,736 8,977 (3,742) 5,235 (1,204) 4,031 (810) 3,221 FY13 16,407 203,048 16.7 4,767 5,549 229,771 17,705 152,461 52,668 1,413 5,525 229,770 FY13 6.8 1.0 32.6 1.6 22.3 6.9 1.4 2.1 13.2 10.9 8.4 3.35 1,731 1.13 964 0.63 44.3 1.83 13.27 13.98 41.7 1.86 0.2 0.88 75.1
FY14E 7,617 3,429 11,047 (4,529) 6,517 (1,615) 4,903 (1,128) 3,775 FY14E 22,863 255,840 20.0 6,076 6,104 290,883 20,347 190,576 71,635 1,695 6,629 290,883 FY14E 6.6 1.0 37.6 1.5 19.2 7.2 1.3 2.1 12.3 10.2 7.7 3.33 2,335 1.22 1,237 0.65 47.0 1.80 14.61 15.36 41.0 1.74 0.2 0.94 74.5
(5,648) 8,128 (1,842) 6,286 (1,509) 4,777 FY15E 28,860 322,358 20.0 6,119 6,714 364,052 23,677
Asset quality
1.5 1.2 0.9 (%) 0.6 0.3 0.0 FY12 FY13 FY14E FY15E Net NPA (LHS) Gross NPA (LHS) Slippages (RHS) 1.55 1.83 1.80 1.80 1.9 1.8 1.7 1.6 1.5 1.4
240,125 90,260 2,034 7,955 364,052 FY15E 7.9 1.1 47.6 1.5 18.5 6.0 1.0 2.3 12.0 10.0 7.5 3.32 2,678 1.11 1,337 0.56 50.1 1.80 14.73 15.44 41.0 1.72 0.2 0.86 74.5
1QFY13 4,153 882 7 5,042 3,663 1,379 68 401 158 627 382 483 865 1,141 1,073 178 964 896 225 739 1.81
2QFY13 4,386 918 12 5,315 3,822 1,493 82 413 150 645 287 568 855 1,283 1,201 279 1,004 922 200 804 1.96
3QFY12 4,614 933 9 5,556 3,921 1,634 109 435 115 659 451 529 980 1,313 1,204 311 1,002 893 150 852 2.08
4QFY13 4,969 991 14 5,974 4,241 1,733 95 478 233 806 389 653 1,042 1,497 1,402 437 1,060 965 235 825 1.74
1QFY14 5,178 1,025 37 6,240 4,366 1,874 148 523 167 838 455 641 1,096 1,616 1,468 205 1,410 1,262 508 903 1.90
%YoY 24.7 16.3 406.1 23.8 19.2 35.8 117.6 30.4 5.9 33.7 19.1 32.8 26.8 41.5 36.7 15.6 46.3 40.9 125.6 22.2 5.2
%QoQ 4.2 3.5 158.3 4.4 2.9 8.1 55.8 9.4 (28.1) 4.1 17.2 5.2 7.9 4.7 (53.0) 33.1 30.8 116.0 9.5 9.5
Banking
3
(1.9)
Coverage History
70 65 60 55 50 45 40 35 Dec-11 Aug-11 Aug-12 Dec-12 Feb-12 Feb-13 Oct-11 Jun-11 Apr-12 Jun-12 Oct-12 Apr-13 Jun-13 1 2 3 4 6
Not Covered
Covered
Date 1 2 3 4 5 6 7
Rating
05-Mar-2012 Buy 21-May-2012 Buy 03-Aug-2012 Buy 05-Nov-2012 Buy 11-Feb-2013 Accumulate 22-May-2013 Buy 29-Jul-2013 Buy
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