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Result Reviews
Allahabad Bank
For 2QFY2012, Allahabad Bank reported 21.2% yoy growth in its net profit to
`488cr, well ahead of our estimates due to lower-than-expected effective tax rate.
On the PBT level, results were largely in-line with our estimates. NIM surprised
positively in spite of a drop in CD ratio. Slippages rose due to the completion of
switchover to system-based NPA recognition platform.
NIM surprises positively; slippages rise on switchover: After healthy 5.5% qoq
growth in advances in the seasonally lean first quarter, the bank’s advances came
off by 3.1% qoq (up 16.6% yoy). Deposits growth remained healthy at 6.1% qoq
and 25.0% yoy. Consequently, the bank’s CD ratio dipped by 640bp qoq to
67.4%. CASA deposits growth was moderate at 10.3% (with saving deposits
registering better growth of 15.8% yoy), leading to a sharp 409bp yoy reduction in
calculated share of CASA to 30.6%. Despite the fall in CASA proportion and a
lower CD ratio, the bank managed to expand its reported NIM by 28bp qoq to
3.7% on the back of a sharp 98bp qoq surge in yield on advances (partly due to
faster growth in the high-yielding SME segment’s advances and conscious
reduction in the share of short-term loans in the loan book) vis-à-vis just an 11bp
qoq increase in cost of deposits. Slippages for the quarter rose as the bank
completed the migration to system-based NPA recognition platform. Annualized
slippage ratio increased to 2.2% from 0.6% registered in 1QFY2012.
Management attributed around half of the slippages arising to the switchover
exercise. Overall asset quality was within manageable levels, with gross and net
NPAs rising by 6.9% qoq and 12.8% qoq, respectively. Provision coverage ratio,
including technical write-offs, was stable sequentially at 79.6%.
We had turned Neutral on the stock in our last result update on concerns over
asset quality; since then the stock has fallen by 26%. The bank has a reasonably
healthy retail deposits base, especially in the eastern hinterland. Going forward,
the prospects of technically incremental slippages are lower on completion of the
switchover. At the CMP, the stock is trading at attractive valuations of 0.8x FY201E
ABV. The stock rating is currently under review.
Andhra Bank
For 2QFY2012, Andhra Bank registered 4.3% yoy growth to `316cr, slightly above
our estimates due to higher net interest income and lower tax expenses than
estimated by us. Reported NIM increased marginally by 5bp sequentially, leading
to a 21.4% yoy increase in net interest income to `951cr. The bank switched over
accounts worth `25lakhs and below to system-based NPA recognition during
2QFY2012, due to which asset quality weakened significantly. As of 2QFY2012,
gross NPA ratio stood at 2.7% (1.6% in 1QFY2012) and net NPA ratio stood at
1.5% (0.5% in 1QFY2012).
The bank shrunk its loan portfolio during 2QFY2012, with advances declining by
2.8% qoq (up 21.5% yoy). However, deposits increased by healthy 3.9% qoq
(20.2% yoy). CASA ratio witnessed a 168bp sequential fall to 26.2%.
At the CMP, the stock is trading at 0.8x FY2013 ABV. Currently, we have a Neutral
recommendation on the stock.
Taj GVK
Taj GVK reported weak numbers for 2QFY2012. The company’s top line declined
by 1.8% yoy to `58.4cr (`59.5cr). EBITDA also declined in tandem with the top
line, down 1.6% yoy to `18.8cr (`19.1cr). OPM remained flat yoy at 32.1%. PAT
dipped sharply by 42.0% yoy to `4.3cr (`7.4cr), largely on the back of higher tax
provision during the quarter. Tax provision as a percentage of PBT stood at 62.0%
in 2QFY2012 vs. 34.2% in 2QFY2011. We have a Buy rating on the stock.
We may revise our estimates and target price post management’s concall today.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Result Reviews
Allahabad Bank
For 2QFY2012, Allahabad Bank reported 21.2% yoy growth in its net profit to
`488cr, well ahead of our estimates due to lower-than-expected effective tax rate.
On the PBT level, results were largely in-line with our estimates. NIM surprised
positively in spite of a drop in CD ratio. Slippages rose due to the completion of
switchover to system-based NPA recognition platform.
NIM surprises positively; slippages rise on switchover: After healthy 5.5% qoq
growth in advances in the seasonally lean first quarter, the bank’s advances came
off by 3.1% qoq (up 16.6% yoy). Deposits growth remained healthy at 6.1% qoq
and 25.0% yoy. Consequently, the bank’s CD ratio dipped by 640bp qoq to
67.4%. CASA deposits growth was moderate at 10.3% (with saving deposits
registering better growth of 15.8% yoy), leading to a sharp 409bp yoy reduction in
calculated share of CASA to 30.6%. Despite the fall in CASA proportion and a
lower CD ratio, the bank managed to expand its reported NIM by 28bp qoq to
3.7% on the back of a sharp 98bp qoq surge in yield on advances (partly due to
faster growth in the high-yielding SME segment’s advances and conscious
reduction in the share of short-term loans in the loan book) vis-à-vis just an 11bp
qoq increase in cost of deposits. Slippages for the quarter rose as the bank
completed the migration to system-based NPA recognition platform. Annualized
slippage ratio increased to 2.2% from 0.6% registered in 1QFY2012.
Management attributed around half of the slippages arising to the switchover
exercise. Overall asset quality was within manageable levels, with gross and net
NPAs rising by 6.9% qoq and 12.8% qoq, respectively. Provision coverage ratio,
including technical write-offs, was stable sequentially at 79.6%.
We had turned Neutral on the stock in our last result update on concerns over
asset quality; since then the stock has fallen by 26%. The bank has a reasonably
healthy retail deposits base, especially in the eastern hinterland. Going forward,
the prospects of technically incremental slippages are lower on completion of the
switchover. At the CMP, the stock is trading at attractive valuations of 0.8x FY201E
ABV. The stock rating is currently under review.
Andhra Bank
For 2QFY2012, Andhra Bank registered 4.3% yoy growth to `316cr, slightly above
our estimates due to higher net interest income and lower tax expenses than
estimated by us. Reported NIM increased marginally by 5bp sequentially, leading
to a 21.4% yoy increase in net interest income to `951cr. The bank switched over
accounts worth `25lakhs and below to system-based NPA recognition during
2QFY2012, due to which asset quality weakened significantly. As of 2QFY2012,
gross NPA ratio stood at 2.7% (1.6% in 1QFY2012) and net NPA ratio stood at
1.5% (0.5% in 1QFY2012).
The bank shrunk its loan portfolio during 2QFY2012, with advances declining by
2.8% qoq (up 21.5% yoy). However, deposits increased by healthy 3.9% qoq
(20.2% yoy). CASA ratio witnessed a 168bp sequential fall to 26.2%.
At the CMP, the stock is trading at 0.8x FY2013 ABV. Currently, we have a Neutral
recommendation on the stock.
Taj GVK
Taj GVK reported weak numbers for 2QFY2012. The company’s top line declined
by 1.8% yoy to `58.4cr (`59.5cr). EBITDA also declined in tandem with the top
line, down 1.6% yoy to `18.8cr (`19.1cr). OPM remained flat yoy at 32.1%. PAT
dipped sharply by 42.0% yoy to `4.3cr (`7.4cr), largely on the back of higher tax
provision during the quarter. Tax provision as a percentage of PBT stood at 62.0%
in 2QFY2012 vs. 34.2% in 2QFY2011. We have a Buy rating on the stock.
We may revise our estimates and target price post management’s concall today.
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