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C o r e o p e r a t i o n s p a i n t a g l o o m y p i c t u r e …
Dhanlaxmi Bank is in deep turmoil faced with stress from all round. It
posted a substantial loss of | 36.9 crore, which is the last thing required
from a bank facing capital shortage. NII posted a lacklustre performance
with 13.7% YoY and 6.5% QoQ de-growth to | 63.5 crore (I direct estimate:
| 70.5 crore). Credit growth is subdued with 22.9% YoY growth and 5.7%
QoQ de-growth to | 9553 crore. Non-interest income growth was short of
expectations at | 26.6 crore with 20.3% YoY and 40.1% QoQ de-growth.
Operating expense has become unmanageable with C/I ratio of 140.5% in
Q3FY12. Asset quality sharply deteriorated with GNPA surging 31.9% QoQ
to | 73.4 crore. GNPA and NNPA ratio for the quarter was 0.8% and 0.4%,
respectively. On account of the dismal all-round show, we have revised our
estimates and the bank is expected to make a loss of | 30.1 crore for FY12E.
We believe the stock will remain volatile but underperform the sector.
Therefore, we are dropping coverage on the stock.
ƒ Net total income unable to even cover operating expense…
Operating expense for Q3FY12 was | 126.6 crore much higher than
net total income of | 90.1 crore. Both NII and non-interest income
growth was subdued. Adverse economic conditions and lack of
capital is hampering business growth. This coupled with NIM pressure
has led to muted NII. Non-interest income took a setback on account
of lower credit disbursements leading to moderate processing fees.
ƒ Asset quality deterioration comes as negative surprise…
Reversal of a downward trend in the GNPA came as a negative
surprise. GNPA surged 31.9% QoQ to | 73.4 crore in Q3FY12. The
corporate sector contributed | 14 crore to the incremental GNPA
addition of | 17.7 crore while retail accounted for the remaining
portion. The corporate sector witnessed slippage of | 22 crore while
upgradation for the quarter was | 7 crore. We estimate GNPA ratio at
0.8% and NNPA ratio at 0.3%, both for FY12E and FY13E.
V a l u a t i o n
The bank has suffered considerably on account of recent labour union
issues. It failed to raise capital last time and even now, there is no clear
guidance. Its CAR stands at 9.9% with Tier I at 8%. Revival of the bank is
likely to take time. Hence, we continue to maintain our view to exit on rally
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
C o r e o p e r a t i o n s p a i n t a g l o o m y p i c t u r e …
Dhanlaxmi Bank is in deep turmoil faced with stress from all round. It
posted a substantial loss of | 36.9 crore, which is the last thing required
from a bank facing capital shortage. NII posted a lacklustre performance
with 13.7% YoY and 6.5% QoQ de-growth to | 63.5 crore (I direct estimate:
| 70.5 crore). Credit growth is subdued with 22.9% YoY growth and 5.7%
QoQ de-growth to | 9553 crore. Non-interest income growth was short of
expectations at | 26.6 crore with 20.3% YoY and 40.1% QoQ de-growth.
Operating expense has become unmanageable with C/I ratio of 140.5% in
Q3FY12. Asset quality sharply deteriorated with GNPA surging 31.9% QoQ
to | 73.4 crore. GNPA and NNPA ratio for the quarter was 0.8% and 0.4%,
respectively. On account of the dismal all-round show, we have revised our
estimates and the bank is expected to make a loss of | 30.1 crore for FY12E.
We believe the stock will remain volatile but underperform the sector.
Therefore, we are dropping coverage on the stock.
ƒ Net total income unable to even cover operating expense…
Operating expense for Q3FY12 was | 126.6 crore much higher than
net total income of | 90.1 crore. Both NII and non-interest income
growth was subdued. Adverse economic conditions and lack of
capital is hampering business growth. This coupled with NIM pressure
has led to muted NII. Non-interest income took a setback on account
of lower credit disbursements leading to moderate processing fees.
ƒ Asset quality deterioration comes as negative surprise…
Reversal of a downward trend in the GNPA came as a negative
surprise. GNPA surged 31.9% QoQ to | 73.4 crore in Q3FY12. The
corporate sector contributed | 14 crore to the incremental GNPA
addition of | 17.7 crore while retail accounted for the remaining
portion. The corporate sector witnessed slippage of | 22 crore while
upgradation for the quarter was | 7 crore. We estimate GNPA ratio at
0.8% and NNPA ratio at 0.3%, both for FY12E and FY13E.
V a l u a t i o n
The bank has suffered considerably on account of recent labour union
issues. It failed to raise capital last time and even now, there is no clear
guidance. Its CAR stands at 9.9% with Tier I at 8%. Revival of the bank is
likely to take time. Hence, we continue to maintain our view to exit on rally
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