Allahabad Bank (ALBK)|Q2FY15 Result Update | Mixed set of number… maintain Sell with target price of Rs 87-:: IndiaNivesh

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Allahabad bank reported mixed set of number for Q2FY15 as Net interest income
was lower by 2% from our expectation at Rs 15 bn while Operating profit was
ahead of expectation at Rs 11.6 bn led by higher than expected non interest income
of Rs 5.2 bn. NII was impacted by Rs 440 mn due to one large account slippage of
Rs 7.5 bn. However adjusted for same, it would have been inline with expectation.
Net profit was significantly lower than expectation at Rs 1.4 bn, led by higher tax
expense of Rs 2.9 bn vs Rs 1.4 bn in Q2FY14. Asset quality improved with decline
of Rs 12 / 34 bps qoq decline in Gross / Net NPAs led by higher write offs (Rs 5.96
bn vs Rs 4.2 bn in Q1FY15). Fresh slippages came in at Rs 13 bn vs Rs 12.4 bn in
Q1FY15, Fresh Restructuring was at Rs 14 bn vs Rs 12.7 bn in Q1FY15. Maintain
sell on the stock with target price of Rs 87, valuing at 0.7x FY16E ABV.
Result highlights:
Advances growth largely driven by MSME / Agri:
ALBK’s Loan growth continues to remain lower than industry at 7% yoy to Rs 1431
bn. Agriculture loan book grew by 30% yoy to Rs 246 bn and MSME loan book grew
by 19% yoy to Rs 241 bn. Retail loan growth was lower at 11% yoy to Rs 205 bn. As
per management, loan growth is likely to remain at 10% for FY15E with more focus
on retail lending

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