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Union Bank of India - Q4FY13 and FY13 result :: Microsec Research

Dear Sir/Madam,

Union Bank of India announced its Q4FY13 and FY13 result.

The Bank’s total income increased by 12.80% QoQ and 8.47% YoY to INR2854.95 crores, driven by 4.65% and 36.89% QoQ growth in its Net Interest Income (NII) and Other Income (OI) respectively. Whereas, Profit After Tax (PAT) increased by 161.04% QoQ and 2.09% YoY to INR789.38 crores. Bank has decreased its provision by 23.54% QoQ to INR655.53 crores, which lead to improve its bottom line.

Union Bank of India - Q4FY13 and FY13 result :: Microsec Research

Dear Sir/Madam,

Union Bank of India announced its Q4FY13 and FY13 result.

The Bank’s total income increased by 12.80% QoQ and 8.47% YoY to INR2854.95 crores, driven by 4.65% and 36.89% QoQ growth in its Net Interest Income (NII) and Other Income (OI) respectively. Whereas, Profit After Tax (PAT) increased by 161.04% QoQ and 2.09% YoY to INR789.38 crores. Bank has decreased its provision by 23.54% QoQ to INR655.53 crores, which lead to improve its bottom line.

Five stocks that you can buy now despite current global crisis ::ET

It's no longer news. India Inc is facing a crisis, grappling as it is both the domestic and global issues. Even as it weathers the international macro headwinds, such as the Eurozone sovereign debt crisis and impending recession in the US, the situation at home is worsening. Despite the country's GDP growth rate plunging to a 9-year low, the government is stuck with policy paralysis and refuses to take urgent remedial measures.

Meanwhile, the weakening rupee is not only damaging the sentiment, but also causing inflation and, therefore, the RBI has not cut interest rates as fast as expected by the business community.

To make matters worse, it seems the Indian economy is set to endure a bad monsoon too this year. With the consumer price inflation already in double digits, a bad monsoon is the last thing it can afford.

Given the confluence of problems, it is inevitable that these are reflected in corporate profits. As is evident from the chart, the consensus Sensex EPS estimate for financial year 2012-13 is coming down continuously.

With 2011-12 behind us and brokerages' focus shifting to the EPS estimates of 2012-13, the fall in its value is also accelerating. The current value of Rs 1,274 is significantly lower than Rs 1,300 three months ago, and Rs 1,500 two years ago.

Buy United Bank of India :: 2QFY2012 Result Update :: Angel Broking

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For 2QFY2012, United Bank registered 13.7% yoy growth in its net profit to
`125cr, above our estimates due to higher non-interest income than
estimated by us. We recommend a Buy rating on the stock.
Chunky slippages witnessed during 2QFY2012; NIM improves sequentially: For
2QFY2012, the bank’s advances grew by 3.2% qoq to `54,304cr, while deposits
declined by 1.5% qoq to `78,244cr. Savings deposit growth grew by 2.4% qoq;
however, current deposits declined by 5.8% qoq, leading to a dip of 37bp in
CASA ratio to 39.9% (40.2% as of 1QFY2012). During the quarter, with rising
cost of deposits for the system as a whole, the bank’s cost of deposits increased
by 25bp qoq to 6.6%. However, the bank was able to increase its yield on
advances by 54bp qoq, leading to a sequential expansion of 14bp in reported
NIM. Non-interest income declined by 4.6% qoq (up 6.9% yoy) to `162cr, mainly
due to a sequential 29.0% decline in treasury income to `47cr. Income from
recoveries was also poor, declining by 19.1% qoq to `16cr. The bank switched
over accounts worth `5lakhs and below to system-based NPA recognition in
2QFY2012. Management indicated that the switchover did not have any material
impact on the asset quality and higher slippages witnessed during the quarter
were due to three large corporate accounts (~`314cr out of total `621cr
slippages), which became non-performing during 2QFY2012. Consequently,
gross NPA ratio and net NPA ratio deteriorated to 3.5% and 2.2% in 2QFY2012
from 2.9% and 1.7% in 1QFY2012, respectively.
Outlook and valuation: UBI has a favorable deposit franchise, as reflected in its
strong CASA ratio of 39.9% as of 2QFY2012. At the CMP, the stock is trading at
P/ABV multiple of 0.6x FY2013E P/ABV. We have assigned a target FY2013E
P/ABV multiple of 0.7x and, hence, we recommend a Buy rating on the stock with
a target price of `82.

United Bank of India Downgrade to HOLD :Emkay,

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United Bank of India

Downgrade to HOLD

HOLD

n     UNTDB’s NII (Rs6.2bn) marginally ahead of expectations. Net profit at Rs1.25bn was dragged by higher NPA provisions and tax outflow. Slippages at Rs6.2bn was a key -ve

n     Deposits were up 1.5% qoq; CASA ratio remains strong at ~40% levels. NIM expansion was aided by improvement in LDR and broad based loan growth

n     … however, with net NPL/networth at high 27%, tier-I CAR, adjusted for same, will fall to sub-7%. Resultant, growth rate is set to moderate. Factoring 16% loan CAGR over FY11-13E

n     Lowered our FY12/FY13 earnings estimates by 18%/21% by factoring in relatively higher credit cost, growth moderation and margin compression. Downgrade to HOLD with tp of Rs73

United Bank of India - B/s contraction leads to lower profits :Emkay

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United Bank of India

B/s contraction leads to lower profits

ACCUMULATE

CMP: Rs90                                        Target Price: Rs110

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n     UNTDB’s Q1FY12 NII at Rs5.7bn and net profit at Rs1.3bn came in lower than estimates driven by 1.7% qoq contraction in advances and 11bps contraction in NIMs

n     QoQ contraction in balance sheet - Loan book declined 1.7% qoq; with 1% qoq fall in deposits. LDR still kept stable at 68.2% despite being low

n     Asset quality worsens; Slippages at Rs3.9bn (annualized 3%) However, UNTDB expects to upgrade accounts worth Rs3bn over H2CY11. PCR at 70.2% declined 190bps qoq

n     At CMP stock trades at 0.9x FY12 ABV and 0.7x FY13 ABV. We maintain our ACCUMULATE rating on the stock with price target of Rs110

Union Bank of India — Downgrade to U/P on near term headwinds

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Union Bank of India — Downgrade to U/P on
near term headwinds
Country Overview
Cut UBI to Underperform and PO to Rs295
We are downgrading UBI to Underperform (from Neutral) owing to near term
asset quality headwinds. We est. slippages to be at
Rs30bn in FY11), with the majority of these to be front loaded. Further, margins to
be also lower than est. resulting in weak 1QFY12 earnings. We cut FY12/13
earnings by ~4/6% to capture higher provisions and lower margins. Hence, PO
cut to Rs295 as stock unlikely to re-rate (beyond 1.4x; ROE <19%) till headwinds
subside.
NPL slippages may rise sharply qoq; 1QFY12 earnings flat
We think slippages during the 1QFY12 may see a very sharp rise (+50% qoq)
owing to a few large a/cs becoming NPL’s and due to shift of the smaller loans to
the on-line NPL recognition system. Moreover, with margins also likely to be
down qoq, we reckon 1QFY12 earnings may be flat yoy.
Earnings growth at +21/24% for FY12/13, but off a low base
While UBI’s earnings growth to be at +20% for FY12, it is off a low base (flat yoy
in FY11). While we est. loan growth of +20%, margins are to remain under
pressure (est. ~20bps yoy decline). Growth driven by low opex growth. Credit
costs at ~80bps. We prefer PNB or smaller govt. banks (OBC/ Indian Bank) that
offer a better risk return.

United Bank of India- Results inline with expectations- ACCUMULATE:: Emkay

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United Bank of India

Results inline with expectations

ACCUMULATE

CMP: Rs 99                                       Target Price: Rs 110

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n     UNTDB’s Q4FY11 results inline with expectation with net profit at Rs1.4bn and NII at Rs5.7bn. The NII growth driven by 26.7% growth in advances, albeit NIM’s contracted by 5bps

n     Pension liability revised downwards to Rs3.7bn (including Rs1bn for retired) vs Rs5.5bn stated earlier

n     The bank reported higher slippages of Rs3.3bn during the quarter as against slippages of Rs6.5bn for 9MFY11, resulting in higher slippage rate of 2.4% (annualized) for the quarter

n     At the CMP, the stock is quoting at 1.0x FY12E and 0.8x FY13E ABV. We maintain Accumulate rating with TP of Rs110

United Bank of India - Healthy set of 4Q results:: Credit Suisse

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United Bank of India ---------------------------------------------------------Maintain OUTPERFORM
Healthy set of 4Q results


Anish Tawakley / Research Analyst / 91 22 6777 3747 / anish.tawakley@credit-suisse.com
● UBI’s 4Q operating performance was strong, although net profit
was lower than estimates due to higher pension provisions
(provided in excess of requirements) partly offset by a lower tax
rate.
● Loan growth for FY11 was healthy at 26% YoY (6% QoQ) and
LDR was stable at 69% (lowest among peers). NIMs held up well
at 3.1% (down only 7 bp QoQ) and CASA share remained high at
41%. Management expects to grow at 20%+ in FY12 and maintain
3% NIMs.
● While slippages were higher in the fourth quarter (similar to peers)
at 2.6% (1.7% in 3Q) leading to 0.9% credit costs, net slippages
were stable at 0.7%. Overall asset quality continued to be
comfortable with 2.5% gross NPLs (down 42 bp QoQ) and 72%
coverage.
● We marginally increase our target price to Rs136 (at 1.0x FY12E
book value) from Rs129. Given the robust deposit franchise, low
LDRs (69%), 74% operating profit CAGR over FY11E-13E
(FY12E-13E RoAs of 0.8-0.9%) and trading at 0.8x FY12E book,
UBI is among our preferred picks in the sector (potential upside of
24% from the current level).

BUY United Bank Of India Ltd- HSBC

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United bank of India is a mid size public sector bank having a prominent presence in north east region of the country. Today
the Bank is 100% CBS enabled with more than 1600 branches and offices and is having a Total business of more than 1 lac
crore. UBI played a significant role in the spread of banking services in different parts of the country, more particularly in
Eastern and North-Eastern India. UBI has sponsored 4 Regional Rural Banks (RRB) one each in West Bengal, Assam, Manipur
and Tripura. These four RRBs together have over 1000 branches. The bank has market cap of 32,418mn as on date with 84%
shares are held by the Government of India. Currently bank is trading at 1.0x P/Book FY10 numbers which is mostly in line
with other mid size public sector banks however quite cheaper compared to other large cap banks.
The prices of this mid cap banking stock were finding strong resistance
around 98 and on 3rd of this month prices finally broke free of the
resistance zone. Since then they have been consistently trading above
the earlier supply area which now should act as very strong demand area
(according Role Reversal Technique of Technical Analysis). The volume on
the breakout was very good and the stock seems to have completed a
classical Inverted Head and Shoulder pattern with 98 as the neckline
area. In light of improving technical evidences traders can look to buy
around initiation price of 103 and also on dips around 98 for an upside
potential of 10-12 percent. Traders are advised to retain a stop of 95 on
long positions.

Buy United Bank of India, -Eden of the east; target Rs129; Credit Suisse

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United Bank of India
(UBOI.BO / UNTDB IN)
INITIATION
Eden of the east
■ Initiate with an OUTPERFORM. We initiate coverage on United Bank of India
(UBI) with an OUTPERFORM and a target price of Rs129 (37% potential upside).
■ Beneficiary of accelerating growth in eastern India. Improving
infrastructure and governance is boosting growth in eastern Indian states
that until now have been relatively less developed. UBI, a governmentowned
bank, has strong presence in eastern India that houses 68% of its
1,568 branches. On the back of this branch network, UBI enjoys a strong
liability franchise and has consistently maintained a 40%-plus share of lowcost
deposits. While its deposit base has been strong, the bank has
operated at relatively low loan-deposit ratios (LDR) that have dampened
ROAs (average RoAs of 0.5% between FY05 and FY10). With economic
growth in the region picking up, we believe the bank is now well positioned
for acceleration in growth.

United Bank of India Results inline; slippages surprise positively :: Emkay

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United Bank of India

Results inline; slippages surprise positively

HOLD

CMP: Rs 141                                       Target Price: Rs 150

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n     UNTDB’s Q2FY11 earnings were in line with our estimates with NII at Rs5.3bn and PAT at Rs1.1bn

n     Other income growth strong at 26%qoq to Rs1.5bn; the bank has used robust other income for provisions

n     The slippages have surprised positively at Rs2bn (Rs2.5bn in Q1FY11, our exp – Rs2.5bn). The NPAs have remained largely stable during the quarter. PCR at 50%, 71.8% as per RBI norm

n     Valuations not unreasonable at 1.7x FY11E/1.3x FY12E ABV. We downgrade to HOLD with TP of Rs150, 1.4x FY12E ABV; 15% discount to our valuations for mid-tier PSU banks

Emkay: Research Views: Oct 26th 2010

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n        Research Views

Voltas Q2FY11E Result Estimates

Post strong performance in Q1FY11, expect Voltas to report subdued performance during the quarter. This is primarily attributed to low order inflow in 9MFY10.

n    Expect revenue growth to be lower at 9% YoY to Rs12 bn – due to mere 7% YoY growth in EMP division. EPS and UCP division growth to be healthy at 17% and 20% YoY respectively.

n    Expect EBITDA to decline by 10% YoY to Rs1.1 bn due to 200 bps YoY drop in EBITDA margins to 9.5%.

n    APAT growth to be muted at 6% YoY – primarily due to lower tax incidence.

Management outlook on international order inflows will be tracked closely.

TRF Q2FY11E Result Estimates

Standalone estimates:

n    We expect TRF to report healthy performance in Q2FY11E led by robust order backlog at Rs20 bn.

n    Expect revenues to grow by 23% YoY to Rs1.6 bn – led by Products (+20% yoy to Rs1258 mn) and Projects (+12% yoy to Rs580 mn).

n    Expect EBITDA growth at 20% YoY to Rs193 mn with 30 bps YoY drop in margins to 11.8%.

n    Expect APAT growth at 22% YoY to Rs108 mn.

Consolidated estimates

n    We expect TRF’s auto components business to continue to report strong on yoy basis – but flat growth on qoq basis during the quarter.

n    We expect revenues of Rs2.6 bn (+39% YoY), EBITDA at Rs214 mn (+45% YoY) and APAT at Rs97 mn(-3% YoY).

We will keenly await Management guidance & outlook on automotive business – The management expected to share guidance on the automotive components business for the first time with investors.

Elecon acquires business in gears & gearboxes for EV of Rs1.3 bn

Elecon Engineering (EEL) has acquired certain Europe based businesses for gears and gearboxes from David Brown Gear Systems for a total enterprise value of Rs1.3 bn (GBP 18.4 mn). EEL has made the acquisitions through its 100% subsidiary (step-down) Elecon USA Transmission Ltd. The details of the acquisitions are as follows:

We await further details on the acquisition to judge the impact on revenues and earnings. EEL has debt of Rs5.2 bn (as on Mar’10) with a DER of 1.5X.

At CMP the stock is trading at 13.8X FY11E and 10.1X FY12E earnings of Rs6.9 and Rs9.4 per share respectively. We have a BUY rating on the stock.

Bharat Bijlee Q2FY11E Result Estimates (Results on 27th Oct)

Healthy volume growth across segments - transformers, projects and motors to drive revenue growth of 13% yoy. The EBITDA margins are expected to remain flat yoy at 12.2% (20bps decline). PAT is expected to grow 4% YoY to Rs129mn (up 121% qoq). Key things to watch - (1) performance of motors business, (2) order inflows and realizations trend in transformers, (3) pick up in projects business and (4) overall margins.  

United Phosphorus (Conso) Q2FY11 Results Expectations - Net Sales Rs 13.1 bn, APAT Rs 1.5 bn

United Phosphorus is expected to declare their results today i.e. October 26th, 2010.

We estimate global recovery in demand and improved weather conditions to reflect by way of 13% YoY growth in revenues to Rs 13.1 bn. We expect India and North America to grow by 20% each followed by 15% growth in Rest of the World while Europe is likely to remain weak with 5% decline in revenues. EBITDA margins are expected to expand by 250 bps YoY to 19.5% leading to a 30% growth in EBITDA to Rs 2.6 bn. We estimate APAT at Rs 1.5 bn, +12% YoY with an EPS of Rs 3.4. Previous year PAT is adjusted for forex loss of Rs 300 mn loss. The company reported profit of the Rs 1 bn last year.

Deepak Fertilisers Q2FY11 Results Expectation : Net Sales Rs 3.9 bn, PAT Rs 469 mn

Deepak Fertilisers is expected to report their Q2FY11 results today i.e. October 26th, 2010.

Higher sale volumes for complex fertilisers are likely to result in 16% YoY increase in fertiliser revenues to Rs 1.7 bn. Chemical revenues are expected to increase by 7% to Rs 2.24 bn. Consequently, overall revenues are expected to increase by 10% YoY to Rs 3.9 bn. We estimate fertiliser and chemical segment margins to increase by 300 bps each to 8% and 30% respectively resulting in 250 bps expansion in overall margins to 22.8% and a consequent 23% increase in EBITDA to Rs 886 mn. We estimate APAT of Rs 469 mn, +29% YoY resulting in AEPS of Rs 5.3 as against Rs 4.1 in Q2FY10.

United Bank Of India Q2FY11 results in line with expectations; slippages surpirse positively

n    UNTDB’s Q2FY11 earnings were in line with our estimates with NII at Rs5.3bn and PAT at Rs1.1bn

n    Other income growth strong at 26%qoq to Rs1.5bn; The bank has used robust other income for provisions/write offs.

n    The slippages have surprised positively at Rs2bn (Rs2.5bn in Q1FY11, our exp – Rs2.5bn). The NPAs have remained largely stable during the quarter. PCR at 50%, 71.7% as per RBI norm

n    Valuations at 1.7x FY11E/1.3x FY12E ABV. We will review our rating and TP. However, retain our positive bias

NII grew inline with estimates…

UNTDB NII for Q2FY11 grew by 48% yoy to Rs5.3bn inline with expectations. The NII growth was driven by 13% yoy (3.7% qoq) growth in advances and stable NIMs at 2.7%.

Titan Q210 Performance Is Ahead Of Estimates...

n    Revenue growth  of 33.9% yoy to Rs15.4 bn - Ahead Of Estimates

n    Ebidta growth at 60.5% yoy to Rs1.7 bn - Ahead Of Estimates

n    APAT growth of 64.6% yoy to Rs1.3 bn - Ahead Of Estimates

n    At Segment Level

n    Watches grew by 19.7% yoy to Rs3.5 bn and Ebit grew by 169% yoy to Rs763 mn

n    Jewellery grew by 36.7% yoy to Rs11.2 bn and Ebit grew by 365% yoy to Rs998 mn 

n    Other grew by 80.6% yoy to Rs560 mn and Ebit loss reduced to Rs47 mn

n    Current earnings estimates at Rs93/Share and Rs121/Share for FY11E and FY12E respectively. Probability of 10% earnings upgrade to FY11E and FY12E earnings.

n        Research Update Included

Dr Reddy's Lab Q2FY11 Result Update; Higher traction from FY12 onwards; Accumulate; Target: Rs1763

n    Muted performance in US and decline in PSAI segment impacted top line performance in Q2FY11; significant ramp-up in niche products to drive sales from H2FY11 onwards

n    Branded formulation markets of India and CIS reported strong traction

n    361 bps YoY expansion in EBITDA margins at 18.6% and 33% growth in recurring PAT led by 592bps expansion in gross margins and lower tax provisioning

n    Revise base business earnings for FY11E, FY12E and introduce NPV for limited competition opportunities; Maintain Accumulate with a revised price target of Rs1763

Emkaynomics Economy Update; October 08, 2010; Fortnightly round up of key banking and economic indicators

n    The growth in the non food credit has moved upwards to 20.1% for the week ended Oct. 8, 2010 and deposit mobilization inched up to 15.1%

n    The CD ratio has moved marginally downwards to 72.4% for the week ended Oct. 8, 2010

n    Money supply growth has increased to 15.9% and the money multiplier has grown to 5.12

n    Call money rates as on Oct. 25, 2010 have risen by 86bps from last fortnight to 6.4%, with a brief move to 6.66% last week

n    The spread between call money and reverse repo rates has widened as on Oct. 25, 2010 and stands at 140 bps

n    Excess liquidity is absent in the system and stood at `-18.5 bn.  The repo balances stood at ~ `236 bn. and reverse repo at ~ `11 bn. for the week ended Oct. 8, 2010

n    The spread between the long and short end OIS has eased and stand at 30bps as opposed to 58 bps last fortnight

Bajaj Auto Q2FY11 Result Update; Volume upgrade continues, raise TP to Rs 1,710; Accumulate

n    EBIDTA at Rs 9.1bn (5% above est.) due to higher than expected topline (Rs 43.4bn vs est. Rs 41.3bn). APAT at Rs 6.9bn (6.5% above est.)

n    FY11 export target raised to 1.15mn units (our est. 1.2mn units). 70% of FY12 current exports est. are hedged. Price hike in Oct’10 only for dom. market

n    Upgrade FY11E/FY12E vol. by 2.1% /3.2% to 3.9mn/ 4.7mn units. Upgrade FY11E/FY12E EPS by 4.0%/5.1% to Rs 87.1/Rs 110.3 . 20%+ margins are sustainable subject to product mix

n    Upgrade TP by 4.9% to Rs 1,710 (15.5x FY12 EPS). Maintain ACCUMULATE rating.

Ashok Leyland Q2FY11 Result Update; Mixed Bag, Maintain HOLD; Target: Rs 76

n    EBIDTA at Rs 3.1bn was in line with our est. despite lower than expected net sales. Margins at 11.3% were above our est. of 10.8%. APAT at Rs 1.7bn marginally below est.

n    Hike prices by 3%/6% for BSII/BSIII vehicles over the 4% hike taken in H1FY11. Currently, it has inventory of ~9000 units

n    Raises FY11 volume guidance to 95000 units (our est. is 92692 units). Upgrade FY11E EPS by 4.2% to Rs 5.2, retain FY12E EPS at Rs 6.4.

n    Retain our TP of Rs 76 and our HOLD rating. M&HCV demand momentum to peak out, expect concerns with volume growth for FY12 from 3Q/4Q FY11

TVS Motor Q2FY11 Result Update; In line, lower rating to REDUCE; Target: Rs 72

n    EBIDTA margin at 6.7 below est. of 6.9%, despite higher net sales (Rs 16.2 bn against est. of Rs15.8bn) due to higher staff cost and other exp. APAT at Rs 549mn against est. of 526mn.

n    Scooter/Mopeds/3-Wheelers continue to drive volumes, motorcycle sales continue to disappoint. Export traction to remain strong, expect average run rate of ~20k unit’s pm.

n    Upgrade FY11E/FY12E volumes by 6.4%/8.5% to 2.0/2.3 units due to higher scooters/mopeds/exports sales. Upgrade FY11E/FY12E standalone EPS by 4.5%/7.4% to Rs 4.1/Rs6.0

n    Upgrade TP to Rs 72 (up 7.5%) - 12x FY12 standalone EPS. Downgrade rating to REDUCE

Torrent Pharma Q2FY11 Result Update; On Track; Maintain Buy; Target: Rs650

n    Revenue growth is above our estimates on account of 22% increase in domestic formulations and higher than expected growth in the international business

n    EBITDA margins declined (as estimated) on account of 468bps contraction in gross margins, higher employee cost and other expenses

n    Higher than expected rise in depreciation and interest impacted PAT (Rs762mn vs. est. of Rs817mn)

n    Maintain earnings and Buy rating with a target price of Rs650

Hindustan Unilever Q2FY11 Result Update; No Catalysts, Downgrade to REDUCE; Target: Rs 275

n    HUL reported spectacular volume growth of 14% in Q211, back of 11% in Q111 and Q410

n    Q211 performance stood marginally ahead of expectation – revenue growth 9.7% yoy to Rs42.8 bn and APAT decline of 5.2% yoy to Rs5.2 bn

n    Q211 performance for key segments on expected lines, except personal products that recorded 330 bps yoy and 180 bps qoq reduction in EBIT margins

n    Absence of strong earnings upgrade catalysts and recent stock performance – downgrade HUL from ‘HOLD’ to ‘REDUCE’ with revised target price of Rs275/Share