Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
C a p i t a l i n f u s i o n : b o o k v a l u e a c c r e t i v e …
Syndicate Bank has announced GoI’s capital infusion of | 633 crore to
boost the Tier I capital of the bank. This would be by way of preferential
allotment of equity. Going forward, we estimate 16% CAGR in balance
sheet to guide 26% CAGR in PAT over FY11-13E to | 1645 crore.
Capital infusion to support business growth, more capital required
In our industry report, “Further sell-offs, an opportunity to accumulate”,
we had outlined a scenario that banks like Syndicate Bank will attract
capital infusion. On similar lines, on March 19, the bank did announce
allotment of 5.13 crore shares to GoI at | 123 (| 113 towards share
premium). This will support our thesis of 17% CAGR in business mix over
FY11-13E to | 332543 crore. The bank would require further capital due to
higher leverage cited by us, since the growth is getting stretched in
FY13E. On account of higher GoI holding (66% prior to this dilution), we
do not rule out fund raising from secondary markets by way of FPO.
Incorporating FY13E
We expect slippages from restructured assets (overhang on asset quality)
to peak out in FY12E. We expect GNPA@ 2.1%, NNPA@0.9%, NIM @3%
and better operating matrix to bode well for the bank.
V a l u a t i o n
The bank has recently adopted the policy of quality and profitable growth,
which is working well for the bank. The bank has stopped growing
business at negative spreads. This has resulted in an improvement in the
NIM and RoE. We were concerned over the asset quality of the bank since
we expected higher slippage from their restructured portfolio. However,
so far the bank has reported slippages of 8% (one of the lowest among
PSB). We would be closely watching the movement in asset quality in the
coming quarters and have built in higher credit cost to that extent. We
have valued the bank at 1.2x FY13E ABV (applying single stage Gordon
growth valuation model) and recommend BUY on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
C a p i t a l i n f u s i o n : b o o k v a l u e a c c r e t i v e …
Syndicate Bank has announced GoI’s capital infusion of | 633 crore to
boost the Tier I capital of the bank. This would be by way of preferential
allotment of equity. Going forward, we estimate 16% CAGR in balance
sheet to guide 26% CAGR in PAT over FY11-13E to | 1645 crore.
Capital infusion to support business growth, more capital required
In our industry report, “Further sell-offs, an opportunity to accumulate”,
we had outlined a scenario that banks like Syndicate Bank will attract
capital infusion. On similar lines, on March 19, the bank did announce
allotment of 5.13 crore shares to GoI at | 123 (| 113 towards share
premium). This will support our thesis of 17% CAGR in business mix over
FY11-13E to | 332543 crore. The bank would require further capital due to
higher leverage cited by us, since the growth is getting stretched in
FY13E. On account of higher GoI holding (66% prior to this dilution), we
do not rule out fund raising from secondary markets by way of FPO.
Incorporating FY13E
We expect slippages from restructured assets (overhang on asset quality)
to peak out in FY12E. We expect GNPA@ 2.1%, NNPA@0.9%, NIM @3%
and better operating matrix to bode well for the bank.
V a l u a t i o n
The bank has recently adopted the policy of quality and profitable growth,
which is working well for the bank. The bank has stopped growing
business at negative spreads. This has resulted in an improvement in the
NIM and RoE. We were concerned over the asset quality of the bank since
we expected higher slippage from their restructured portfolio. However,
so far the bank has reported slippages of 8% (one of the lowest among
PSB). We would be closely watching the movement in asset quality in the
coming quarters and have built in higher credit cost to that extent. We
have valued the bank at 1.2x FY13E ABV (applying single stage Gordon
growth valuation model) and recommend BUY on the stock.
No comments:
Post a Comment