Technicals - Adani Enterprises, LIC Housing, Andhra Bank, NMDC, Jaiprakash Associates, Gruh Finance :: Business Line

Technicals: ABB, Siemens, Opto Circuits, Voltamp Transformers, Aditya Birla Nuvo, Andhra Bank, :: Business Line

Andhra Bank (Rs 87.6): SELL :: Business Line

Andhra Bank: Slippages in corporate loans drive weak performance ::Kotak Sec

Andhra Bank (ANDB)
Banks/Financial Institutions
Slippages in corporate loans drive weak performance. Andhra Bank’s PBT declined
17% yoy on the back of subdued NII growth (4% yoy) and high provisions. Margins
declined 30 bps as costs of deposits remained high. Loan impairment ratios were high
on the back of high slippages from a few corporate exposures, a negative impact of the
skewed loan portfolio of the bank. Earnings growth is likely to remain under pressure
from weak NII growth, high operating and credit costs. Maintain ADD on inexpensive
valuations; better return ratios drive our rating; TP at `110 (`125 earlier).

Technicals- LIC Housing, Cairn, Andhra bank, Colgate, reliance infrastructure, SML ISUZU, Raj TV ::Business Line

Andhra Bank: Downgrade after recent rally:: Kotak Securities PDF Link

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http://www.kotaksecurities.com/pdf/indiadaily/indiadaily15032012.pdf


Andhra Bank (ANDB)
Banks/Financial Institutions
Downgrade after recent rally. We downgrade Andhra Bank to ADD from BUY due to
its recent stock price performance. We believe our earnings estimates broadly capture
the underlying risk in the skewed loan portfolio (towards power). We find valuations
inexpensive at 0.9X book and 6X FY2013E EPS. We expect the bank to deliver RoE of
about 16% and EPS of 4% CAGR over FY2012-14E.

Andhra Bank: An improved performance :: Kotak Securities

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Andhra Bank (ANDB)
Banks/Financial Institutions
An improved performance. Andhra Bank reported a strong quarter with slippages
declining to 2% from 6% in 2QFY12 and gross NPLs declining qoq despite lower writeoffs.
Outstanding restructured loans increased 80 bps qoq to 5% of loans due to one
corporate exposure. We expect credit costs to remain high due to high exposure in the
power portfolio. Attractive valuations, healthy NIMs, strong cost-structures and
conservative credit costs were primary factors behind retention of our BUY rating

Andhra Bank : TP: ` 135 Buy :: Dolat Cap

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Core & operating income in-line with our estimates; higher provisioning
impacts bottomline
We reiterate our positive stance on the stock; improvement in GNPA
and provision coverage levels provides comfort. Lesser than estimated
bottom-line was mainly due to NPV losses on a telecom restructured
loan book
􀁊 In Q3 FY12, Andhra Bank’s net interest income (NII) grew 17% YoY to `
9.8bn — in line with our estimates. Margin remained stable at 3.81% in Q3
FY12 on sequential basis. Net profit de-grew 8.4% YoY to ` 3bn as against
our estimates of ` 3.7bn and consensus estimate of ` 3.1bn.
􀁊 The deviation at net profit level was primarily on account of higher provisioning
on restructured loan book NPV losses and Investment depreciation (` 190mn
as against ` 1mn in Q3 FY11).
􀁊 There was 5.2% decline in gross NPAs on sequential basis; a key positive
surprise in the result. Further, lower NPL provisioning (` 395mn as against
` 1.5bn in Q3 FY11) resulted in decline in credit cost to 22bps in Q3 FY12
as against 130bps in Q2 FY12 and 104bps in Q3 FY11). PCR increased to
66.4% as against 61.7% in Q2 FY12.
􀁊 The quarterly result was broadly in line on core income level, with a positive
surprise on GNPL front — sequential decline in GNPL and stable margins
improved overall performance. The asset quality (particularly on restructuring
front) will be a key parameter to watch out for going ahead. We reduce our
earnings estimates by 3% and 2% for FY12 and FY13 respectively. We cut
the target prices by 9% to ` 135 at 1x adjusted book value (ABV) FY13 and
maintain our Buy rating.

Andhra Bank : 2QFY2012 Result Update: Angel Broking,

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For 2QFY2012, Andhra Bank registered 4.3% yoy growth in its PAT to
`316cr, slightly above our estimate due to higher net interest income and
lower tax expenses than factored in by us. We recommend a Neutral rating
on the stock.
Asset quality deteriorates significantly: The bank’s loan book declined sequentially
by 2.8% to `73,592cr (up 21.5% yoy); however, deposits grew by 3.9% qoq to
`94,435cr (up 20.2% yoy). CASA deposits declined by 2.4% qoq (up by weak
3.4% yoy), leading to CASA ratio dropping sequentially by 169bp (substantial
435bp yoy decline) to 26.1%. The bank’s yield on advances rose by 22bp qoq to
12.5% in 2QFY2012, however further deposit re-pricing during 2QFY2012 led to
cost of deposits increasing by relatively higher 43bp qoq to 7.5%. Consequently,
reported NIM remained flat sequentially at 3.8%. The bank’s asset quality
deteriorated substantially during 2QFY2012, with gross NPA rising by 68.9% qoq
to `1,987cr and net NPA more than trebling to `1,087cr. The bank switched over
accounts worth `25lakhs and above to system-based NPA recognition during the
quarter. Gross NPA ratio as of 2QFY2012 stood at 2.7% (1.6% in 1QFY2012)
and net NPA ratio stood at 1.5% (0.5% in 1QFY2012). Provision coverage ratio
(including technical write-offs) declined sharply to 61.7% in 2QFY2012 from
82.0% in 1QFY2012.
Outlook and valuation: At the CMP, the stock is trading at 0.7x FY2013E ABV
compared to its five-year range of 0.8x–1.4x one-year forward ABV with a
median of 1.1x. Considering the banks hefty exposure to the power sector (more
than 20% of the loan book) and sharp deterioration in asset quality during
2QFY2012, we recommend Neutral on the stock.

Buy ANDHRA BANK ; TARGET PRICE: RS.148 :: Kotak Sec

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ANDHRA BANK
PRICE: RS.119 RECOMMENDATION: BUY
TARGET PRICE: RS.148 FY13 P/E: 4.0X; P/ABV: 0.9X
Q2FY12 results: Core earnings in line but asset quality disappointed.
q NII grew 21.4% in Q2FY12 mainly aided by strong growth in advances
(22.1% YoY) despite 9bps decline in NIM. However, net profit was subdued
(grew by only 4.3% YoY) mainly due to spike in provisions & contingencies
(118% YoY).
q Loan growth came at 22.1% during Q2FY12, mainly supported by strong
growth in MSME and retail segments. However, deposit growth was
relatively moderate at 20.2% during the same period, resulting into 120
bps improvement in C/D ratio to 78.9% at the end of Q2FY12.
q In absolute terms, gross NPA and net NPA spiked 68.9% (QoQ) and
222.1% (QoQ), respectively during Q2FY12, as bank has completed the
full transition to system based NPA recognition system. Its Provision Coverage
Ratio (PCR) has also come down to 61.7% at the end of Q2FY12,
providing little cushion against any future deterioration in the asset
quality.
q We are modeling earnings to grow 14.9% CAGR during FY11-13E, while
return profile is also expected to remain healthy (FY13E - RoA: 1.2%, RoE:
21.9%) during next two years. We are maintaining BUY rating on the
stock with revised TP of Rs.148 (Rs.167 earlier) based on 1.15x of its
FY13E adjusted book value.

Andhra Bank: Balance sheet cleansing : Kotak Sec,

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Andhra Bank (ANDB)
Banks/Financial Institutions
Balance sheet cleansing. Andhra Bank 2QFY12 saw gross NPLs rise 70% qoq as
system migration brought out slippages of 6% during the quarter, primarily from
agriculture, retail and marginally more from SME. The bank’s large corporate portfolio
continues to remain healthy. We reduce our estimates to factor higher provisions but
expect recoveries to improve (including coverage ratio) in the next few quarters. Healthy
NIMs are providing support to higher credit costs. Maintain BUY with a TP of `170
(from `190).

Andhra Bank, ANDB IN,:: HSBC - India Investor Conference Highlights

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Small, but smart
 Expecting to grow loan book at 2% above industry growth.
 Will concentrate on improving market share on pan-India basis. But will not allow NIM compression beyond a point for
gaining market share.
 Current account growth will be moderate while that of savings account will be good.
 Have provided for pension liability on a 3-year basis, rather than 5 years as done by other banks. Pension liability is
around INR600cr.
 May take a hit of 15-20bps on NIM over a period of time, but expects to be better than market.
 Expecting capital infusion of ~INR12bn from the government to take ownership to 58%. Bank does not have concerns on
capital over the next 2-3 years.
 Provide 100% for all loans below INR1lac, so any recovery on these accounts would be used to provide for future losses in
these accounts.
 Expect Insurance JV to break-even in 5 years, normally takes 10 years.
 Working towards having an outlet abroad soon if regulator permits.
Consolidated

Kotak Sec, : Buy Andhra Bank - Sustaining high margins.

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Andhra Bank (ANDB)
Banks/Financial Institutions
Sustaining high margins. Andhra Bank reported a stable quarter; margins remained
high at 3.9%, even as gross NPLs increased by 14% qoq (ratio at 1.3% maintained).
Andhra Bank has used the last few quarters to make high provisions on
pensions/gratuity and we expect incremental requirement to remain low (bank is
amortizing the costs in 3 years). Even as we assume margins to decline, we expect
Andhra Bank to deliver RoEs near 23-24% with about 4% dividend yield. Stock trades
at 1.1X FY2012E PBR. BUY with TP of `190 (`210 earlier).

Q3-FY11 earnings updates on Andhra Bank Ltd. :: Keynote

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Q3-FY11 earnings updates on Andhra Bank Ltd.

Andhra bank has reported strong operating performance in 3QFY11 and much above the market expectations. NII grew 44.2% on yoy basis mainly aided by strong growth in loan book (27.7% yoy) along with sharp improvement in NIM (56 bps yoy). Net profit increased by 20.2% yoy on back of strong core earnings inspite of subdued non-interest income.

Citi: Andhra Bank - Downgrade to Sell: Asset Quality, Funding Key Concerns

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Andhra Bank (ADBK.BO)
Downgrade to Sell: Asset Quality, Funding Key Concerns
 Downgrade to Sell; 3Q11 largely in-line but asset quality is a concern — We
are downgrading Andhra to a Sell (from Buy). While the 3Q11 results were
marginally (3%) below estimates, its asset quality surprised negatively and
coupled with a deteriorating funding mix (CASA down ~200bps qoq) – suggests
there could be more pain going forward, especially on NIMs and credit costs.

buy Andhra Bank -Results ahead of expectations: Emkay

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Andhra Bank

Results ahead of expectations

BUY

CMP: Rs 137                                        Target Price: Rs 165

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n     Andhra Bank’s net profit at Rs3.3bn (up 20% yoy) ahead of expectation with net profit at Rs3.3bn led by better than expected NII at Rs8.4bn, up 44% yoy

n     The balance sheet growth remained healthy with advances growing by 27.7% yoy to Rs656bn driven by healthy growth across the segments

n     The credit cost increased to 0.23% of advances from 0.16% in Q2FY11 as slippage rate continue to remain higher at 0.3% (1.2% annualised)

n     Short maturity of deposits (1.1 years), rising slippages are overhang on the stock. Revise our TP to Rs165 (valuing at 1.3X FY12E and 6% lower ABV). Valuations still attractive at 1.3x/1.0x FY11E/12E ABV

GSK Healthcare 3QCY10 – Strong performance; Buy: Anand Rathi

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GlaxoSmithKline Consumer Healthcare
3QCY10 – Strong performance continues; maintain Buy
 Retain Buy. GSK-CH registered a robust 3QCY10, with yoy
growth of 23.7% in revenue and 30.9% in net profit. We reiterate
Buy as we expect the company to record 27% earnings CAGR
over CY09-11e.

Andhra Bank:Asset quality a disappointment:Motilal Oswal

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Asset quality a disappointment
GNPAs in absolute terms increased by 33% QoQ to Rs7.7b and in percentage terms
GNPA and NNPA increased to 1.28% and 0.49% v/s 1% and 0.3% in 1QFY11, respectively.
Slippages in 2QFY11 were ~Rs2.5b and Rs4b in 1HFY11. The management is guiding for
lower slippages in 2HFY11 and expects recoveries to be strong. We model in slippages of
1.75% for FY11 and credit cost of 60bp (stable YoY).
Despite higher provisions of Rs957m v/s Rs170m in 1QFY11 and Rs428m in 2QFY10,
PCR (excluding technical write-offs) declined to 62% v/s 71% in 1QFY11. However
PCR including technical write-off is healthy at 79%. Outstanding restructured loans were
Rs24.8b (4% of the loan book, in line with the industry average), of which ~9.5% (Rs2.2b)
has slipped into NPA.

Andhra Bank -Operating performance inline ; buy::Emkay

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Andhra Bank

Operating performance inline; Slippages Rise

BUY

CMP: Rs 176                                       Target Price: Rs 210

---

n     NII growth ahead of estimates led by 27% growth in advances and 17bps qoq expansion in NIMs. However net profit slightly below expectations

n     Lower employee expenses partially offset negative impact of lower other income and higher provisioning

n     Asset quality deteriorated as GNPA and NNPA increased 33% and 75% sequentially. Provision cover fell to 61% (70% as per RBI norms) from 70% in Q1FY11

n     Valuations attractive at 1.7x FY11E/1.3x FY12E ABV. We maintain our BUY rating with price target of Rs210

ANDHRA BANK 2QFY11: In-line; Valuations attractive; Buy:: Motilal Oswal

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ANDHRA BANK 2QFY11: In-line; Impressive margins, asset growth; Asset quality disappoints; Valuations attractive; Buy

Andhra Bank’s (ANDB IN, Mkt Cap US$1.9b, CMP Rs175, Buy) 2QFY11 NII grew 52% YoY and 6% QoQ (4% higher than est), but higher NPA provision dragged down PAT growth to 11% YoY (4% higher than est).

Key highlights

-          Deposits grew 5% QoQ and 26% YoY to Rs786b, whereas loans grew 7% QoQ and 27% YoY to Rs610b. CD ratio increased further to 77.6% in 2QFY11 vs 76.5% in 1QFY11.

-          Margins expanded ~19bp QoQ to 3.91% led by strong loan growth and expansion in yield on investment.

-          Slippages in 2QFY11 were ~Rs2.5b (1.8% annualized slippage ratio). GNPAs in absolute terms increased 33% QoQ to Rs7.7b, whereas in % terms GNPA increased to 1.28% v/s 1% in 1QFY11 and 0.83% in 2QFY10. In 1HFY11, slippages stood at Rs4b (annualized slippage ratio of 1.43% vs 0.9% a year ago). Management is guiding for lower slippages in 2HFY11 and expects recoveries to be strong.

-          Non-interest income (excluding treasury) continued to show good traction and grew 25% YoY and 8% QoQ to Rs1.7b in 2QFY11.

-          Employee expense increase sharply by 52% YoY but down 9% QoQ (as bank had provided for one time expenses towards PF arrears). Revised estimated liability for 2nd pension option comes to Rs4.4b (earlier Rs2.1b). The bank has so far provided Rs350m for 2nd pension related option. The bank has estimated a liability of Rs1.4b for gratuity related provision and plans to provide the same in FY11 itself.

-          The stock trades at P/E of 5.4x and P/BV of 1.3x FY12E with an RoE of 25%+ and RoA of ~1.3% in FY11-12.Maintain Buy with a target price of Rs205 (1.5x FY12 BV).