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A l l - r o u n d d i s a p p o i n t i n g s h o w …
Pre-provisioning profit was sub-standard with 27.3% YoY and 18.1% QoQ
de-growth to | 824.3 crore (I direct estimate: | 1054.8 crore).
Consequently, PAT witnessed 9.7% YoY de-growth to | 409.8 crore (I
direct estimate: | 503.6 crore). Tax provisions were low as the bank
benefited from accounting adjustment on deferred tax liability.
Credit growth was in line with estimates at 16.2% YoY growth to | 156217
crore. The management has guided credit growth of 15-16% YoY in
Q4FY12 mainly led by disbursement for priority sector lending target. We
estimate PAT will grow at 9.2% CAGR to | 1968.5 crore, over FY11-13E.
ƒ Below par PPP performance disappoints…
PPP was lower than estimates as the bank disappointed on all fronts
including NII, other income and operational expense. NII growth was
sluggish as NIM dipped 11 bps QoQ to 1.9%. Other income declined
3.4% YoY and 9.9% QoQ to | 431.8 crore due to slowdown in
activity of syndication, advisory & project appraisal. Operating
expense soared due to provision for new pension scheme.
ƒ Asset quality deteriorates but provision in line due to write-back…
GNPA surged 19.3% QoQ to | 4640 crore as incremental slippages
stood at | 1234 crore, of which | 696 crore was on account of a
single aviation company, which slipped from standard restructured
category to NPA. GNPA ratio and NNPA ratio witnessed a sharp
uptick from 2.5% and 1.6% in Q2FY12 to 2.9% and 2%, respectively,
in Q3FY12. Gross restructured assets were | 1389 crore, primarily
on account of a single telecom infra account worth | 770 crore.
NPV hit of ~| 100 crore has been taken as restructuring provision
for the telecom infra account. Provisions of | 406.4 crore were
recorded with NPA provision at | 358 crore and restructured
provision at | 134 crore. Write-back of | 85 crore on investment
provision was made as NCD was converted to quoted equity shares.
V a l u a t i o n
Exposure to stressed sectors may dent profitability on account of higher
provisions and lower NII due to interest income reversal. Return ratios
may get curtailed on account of lower profitability. We value the bank at
0.8x FY13E ABV to | 85 and have halved investment book value to | 13
due to gloomy market conditions. We rate stock as HOLD with TP of | 98.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
A l l - r o u n d d i s a p p o i n t i n g s h o w …
Pre-provisioning profit was sub-standard with 27.3% YoY and 18.1% QoQ
de-growth to | 824.3 crore (I direct estimate: | 1054.8 crore).
Consequently, PAT witnessed 9.7% YoY de-growth to | 409.8 crore (I
direct estimate: | 503.6 crore). Tax provisions were low as the bank
benefited from accounting adjustment on deferred tax liability.
Credit growth was in line with estimates at 16.2% YoY growth to | 156217
crore. The management has guided credit growth of 15-16% YoY in
Q4FY12 mainly led by disbursement for priority sector lending target. We
estimate PAT will grow at 9.2% CAGR to | 1968.5 crore, over FY11-13E.
ƒ Below par PPP performance disappoints…
PPP was lower than estimates as the bank disappointed on all fronts
including NII, other income and operational expense. NII growth was
sluggish as NIM dipped 11 bps QoQ to 1.9%. Other income declined
3.4% YoY and 9.9% QoQ to | 431.8 crore due to slowdown in
activity of syndication, advisory & project appraisal. Operating
expense soared due to provision for new pension scheme.
ƒ Asset quality deteriorates but provision in line due to write-back…
GNPA surged 19.3% QoQ to | 4640 crore as incremental slippages
stood at | 1234 crore, of which | 696 crore was on account of a
single aviation company, which slipped from standard restructured
category to NPA. GNPA ratio and NNPA ratio witnessed a sharp
uptick from 2.5% and 1.6% in Q2FY12 to 2.9% and 2%, respectively,
in Q3FY12. Gross restructured assets were | 1389 crore, primarily
on account of a single telecom infra account worth | 770 crore.
NPV hit of ~| 100 crore has been taken as restructuring provision
for the telecom infra account. Provisions of | 406.4 crore were
recorded with NPA provision at | 358 crore and restructured
provision at | 134 crore. Write-back of | 85 crore on investment
provision was made as NCD was converted to quoted equity shares.
V a l u a t i o n
Exposure to stressed sectors may dent profitability on account of higher
provisions and lower NII due to interest income reversal. Return ratios
may get curtailed on account of lower profitability. We value the bank at
0.8x FY13E ABV to | 85 and have halved investment book value to | 13
due to gloomy market conditions. We rate stock as HOLD with TP of | 98.
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