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Core interest income, operating profit and net profit in-line with our
estimates supported by stable margin and asset quality
In Q3 FY12, Karur Vysya Bank’s (KVB) net interest income (NII) grew
11.4% YoY to ` 2.3bn, slightly lesser than our estimates of ` 2.4bn. KVB’s
margin remains stable at 3.06% against 3.03% in Q2FY12. KVB’s operating
profit was at ` 1.89bn compared to our estimates of ` 1.93bn. Net profit
grew 10.3% YoY to ` 1.25bn (Dolat est: ` 1.21bn, Consensus est: ` 1.22bn).
The bank’s core operation remains marginally better, contained liability
cost aided margin and it maintained its consistency in fee income growth.
Asset quality remained healthy with flat gross NPAs at 1.45% and
reasonably high PCR at 80%. The bank’s asset quality remains under
control and management is confident of maintaining gross NPA at current
level of ` 3bn by the end-march’12. Overall result is in-line with stable
margin and asset quality.
We expect KVB’s total business to grow by 31% CAGR on the back of
30.4% growth in deposits mobilization and 31.9% expansion in credit book.
We estimate margin to drift down by 30bps to 2.86% in FY12 and
subsequently by 12bps to 2.74% in FY13. In FY12-13, the bank would
report RoAA and RoAE in a range of 1.3%-1.5% and around 18-20%
respectively.
We revise upward our FY12 and FY13 earnings estimates by 11% and 9%
respectively considering higher business growth and improvement in margin
and asset quality. We increase our target price by 5% to ` 434 at 1.8x
adjusted book value (ABV) FY13 and reiterate the stock rating as
Accumulate.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Core interest income, operating profit and net profit in-line with our
estimates supported by stable margin and asset quality
In Q3 FY12, Karur Vysya Bank’s (KVB) net interest income (NII) grew
11.4% YoY to ` 2.3bn, slightly lesser than our estimates of ` 2.4bn. KVB’s
margin remains stable at 3.06% against 3.03% in Q2FY12. KVB’s operating
profit was at ` 1.89bn compared to our estimates of ` 1.93bn. Net profit
grew 10.3% YoY to ` 1.25bn (Dolat est: ` 1.21bn, Consensus est: ` 1.22bn).
The bank’s core operation remains marginally better, contained liability
cost aided margin and it maintained its consistency in fee income growth.
Asset quality remained healthy with flat gross NPAs at 1.45% and
reasonably high PCR at 80%. The bank’s asset quality remains under
control and management is confident of maintaining gross NPA at current
level of ` 3bn by the end-march’12. Overall result is in-line with stable
margin and asset quality.
We expect KVB’s total business to grow by 31% CAGR on the back of
30.4% growth in deposits mobilization and 31.9% expansion in credit book.
We estimate margin to drift down by 30bps to 2.86% in FY12 and
subsequently by 12bps to 2.74% in FY13. In FY12-13, the bank would
report RoAA and RoAE in a range of 1.3%-1.5% and around 18-20%
respectively.
We revise upward our FY12 and FY13 earnings estimates by 11% and 9%
respectively considering higher business growth and improvement in margin
and asset quality. We increase our target price by 5% to ` 434 at 1.8x
adjusted book value (ABV) FY13 and reiterate the stock rating as
Accumulate.
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