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N I M s u r p r i s e s p o s i t i v e l y , l o a n g r o w t h m o d e r a t e s …
Net profit grew 32% YoY and 5% QoQ to | 338 crore ahead of our
estimated | 299 crore boosted by 15.2% YoY NII growth, lower operating
expenses and reduced tax provisions. NIM surprised by expanding 19
bps QoQ to 3.45% from 3.26%. The cost to income ratio declined to
41.8% from 44.8% in Q2FY12 and 47% in Q1FY12. The effective tax rate
further dipped to 10.8% from 15.9% in Q2FY12 but was same as 10.1% in
Q3FY11 mainly due to MAT liability provisions needed for full year. Asset
quality remained relatively stable QoQ due to w/offs and recoveries.
ƒ Margins rise 19 bps QoQ…
Yield on funds rose to 9.40% from 9.21% while cost of funds rose to
6.24% from 6.1% leading to NIM expansion to 3.45% from 3.26%
sequentially. Even NII growth of 15.2% YoY and 1% QoQ to | 1325
crore was higher than the estimated | 1300 crore. We believe loans
pending for revised base rate repricing have happened in Q3FY12
resulting in yields surging despite lower 15% YoY credit growth.
We expect NIM to stay above 3% for FY12E supported by credit
growth of 16.3% and deposit growth of 17% for FY12E. Non-interest
income increased marginally by 5.6% YoY to | 244 crore.
ƒ GNPA, NNPA decline QoQ, provision coverage at 78.5%…
GNPA declined QoQ to | 2673 crore (2.29%) from | 2721 crore
(2.38%) mainly due to w/offs to the tune of | 110 crore in the
quarter. NNPA also dipped from | 1051 crore (0.86%) to | 992 crore
(0.93%) sequentially. Provisions remained high at | 543 crore vs. our
estimate of | 489 crore. PCR has remained at 78.5%. With risk to
NPAs from power exposure being high, we estimate GNPA at | 2971
crore (2.4%) and NNPA at | 1191 crore (1%) for FY12E.
V a l u a t i o n
The operational performance has improved with NIM >3%, RoA at 0.85%
and RoE at 17.73%. However, the C/D ratio at 81% and leverage (average
assets/average equity) >20x levels still remain high. We maintain our PAT
estimates of | 1612 crore in FY13 with 24% CAGR over FY11-13. The
stock is currently trading at 0.7x FY13E ABV. We are cautiously revising
our target price to | 111 valuing the bank at 0.9x FY13E ABV (1x ABV
earlier) and recommend a BUY rating on it.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
N I M s u r p r i s e s p o s i t i v e l y , l o a n g r o w t h m o d e r a t e s …
Net profit grew 32% YoY and 5% QoQ to | 338 crore ahead of our
estimated | 299 crore boosted by 15.2% YoY NII growth, lower operating
expenses and reduced tax provisions. NIM surprised by expanding 19
bps QoQ to 3.45% from 3.26%. The cost to income ratio declined to
41.8% from 44.8% in Q2FY12 and 47% in Q1FY12. The effective tax rate
further dipped to 10.8% from 15.9% in Q2FY12 but was same as 10.1% in
Q3FY11 mainly due to MAT liability provisions needed for full year. Asset
quality remained relatively stable QoQ due to w/offs and recoveries.
ƒ Margins rise 19 bps QoQ…
Yield on funds rose to 9.40% from 9.21% while cost of funds rose to
6.24% from 6.1% leading to NIM expansion to 3.45% from 3.26%
sequentially. Even NII growth of 15.2% YoY and 1% QoQ to | 1325
crore was higher than the estimated | 1300 crore. We believe loans
pending for revised base rate repricing have happened in Q3FY12
resulting in yields surging despite lower 15% YoY credit growth.
We expect NIM to stay above 3% for FY12E supported by credit
growth of 16.3% and deposit growth of 17% for FY12E. Non-interest
income increased marginally by 5.6% YoY to | 244 crore.
ƒ GNPA, NNPA decline QoQ, provision coverage at 78.5%…
GNPA declined QoQ to | 2673 crore (2.29%) from | 2721 crore
(2.38%) mainly due to w/offs to the tune of | 110 crore in the
quarter. NNPA also dipped from | 1051 crore (0.86%) to | 992 crore
(0.93%) sequentially. Provisions remained high at | 543 crore vs. our
estimate of | 489 crore. PCR has remained at 78.5%. With risk to
NPAs from power exposure being high, we estimate GNPA at | 2971
crore (2.4%) and NNPA at | 1191 crore (1%) for FY12E.
V a l u a t i o n
The operational performance has improved with NIM >3%, RoA at 0.85%
and RoE at 17.73%. However, the C/D ratio at 81% and leverage (average
assets/average equity) >20x levels still remain high. We maintain our PAT
estimates of | 1612 crore in FY13 with 24% CAGR over FY11-13. The
stock is currently trading at 0.7x FY13E ABV. We are cautiously revising
our target price to | 111 valuing the bank at 0.9x FY13E ABV (1x ABV
earlier) and recommend a BUY rating on it.
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