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India Equity Research Reports, IPO and Stock News
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Investment Rationale
§ Healthy CASA proportion to help in rising rate scenario: The bank’s CASA mix which stands at a healthy
33.3%, will help bank to get better margins than peers in the current rising rate scenario. The NIM’s for the
Q3FY11 stood higher at 3.4%.
§ Healthy asset quality: The bank’s asset quality is comfortable with gross and net NPAs at 1.8% and 0.6%
respectively. Moreover slippage rate remain under control at 1.4% (annualised) for FY11.
§ Superior Cost/Income (C/I) ratio: The bank C/I ratio, which reflects the operating efficiency of the bank, is
39.7%, one of the lowest among the peers.
§ Attractive return ratios: The savings on account of lower provisions requirement on account of lower slippages
and improvement in cost structure will help maintain the RoAs at 1.2%, while RoE’s likely to be healthy at 23%
for FY11-12.
Valuations
§ At the CMP, the stock is quoting at 1.3x FY11E ABV and 1.1x FY12E ABV with a likely average RoE of 23% over
FY11-12E
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Investment Rationale
§ Healthy CASA proportion to help in rising rate scenario: The bank’s CASA mix which stands at a healthy
33.3%, will help bank to get better margins than peers in the current rising rate scenario. The NIM’s for the
Q3FY11 stood higher at 3.4%.
§ Healthy asset quality: The bank’s asset quality is comfortable with gross and net NPAs at 1.8% and 0.6%
respectively. Moreover slippage rate remain under control at 1.4% (annualised) for FY11.
§ Superior Cost/Income (C/I) ratio: The bank C/I ratio, which reflects the operating efficiency of the bank, is
39.7%, one of the lowest among the peers.
§ Attractive return ratios: The savings on account of lower provisions requirement on account of lower slippages
and improvement in cost structure will help maintain the RoAs at 1.2%, while RoE’s likely to be healthy at 23%
for FY11-12.
Valuations
§ At the CMP, the stock is quoting at 1.3x FY11E ABV and 1.1x FY12E ABV with a likely average RoE of 23% over
FY11-12E
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