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I n c r e a s e d s t r e s s o n a s s e t q u a l i t y s e e n …
Profits came below estimates at | 1150 crore growing 5.5% YoY (I-direct
estimate: | 1306.7 crore) primarily due to higher provisions of | 946 crore
against | 710 crore in Q2FY12.
Restructuring of telecom infra loans led to restructured assets increasing
by~| 2000 crore to | 16888 crore (outstanding as on December 2011).
Besides these, business growth was strong at 21.4%. Deposits grew 23%
YoY to | 356516 crore while advances rose 18.7% YoY to | 262605 crore
with overseas advances surging 82% YoY. NII was in line with our
expectation at | 3536 crore (our estimate: | 3535 crore), up 10.4% YoY.
NIM declined 7 bps QoQ to 3.88% from 3.95%. Other income increased
11% YoY and 7% QoQ to |954 crore due to fee income and forex income.
ƒ NIM dips to 3.88%, bulk deposits form 24% of deposits...
NIM declined 7 bps QoQ to 3.8% from 3.95%with YoA increasing 5
bps QoQ to 11.97% and CoD inching up 22 bps QoQ to 6.74%. It
was mainly due to 5.9% QoQ term deposits growth leading to CASA
sliding to 36.2% from 37.1%. Share of bulk deposits rose to 24%
from 23.7%. We expect pressure on NIM to remain and estimate
NIM moderating to ~3.5% by FY13E.
ƒ Restructured assets, fresh NPA increase – telecom, aviation sector
There was fresh restructuring of | 2000 crore in Q3FY12 with
~| 1000 crore from telecom infra. Slippages of 10.9% from
restructured assets (RA) totalling | 21526 crore (o/s - | 16888 crore)
has led to increased concern on asset quality. GNPA increased to
| 6442 crore (2.42% from 2.05%) with fresh slippages at | 1683
crore mainly contributed by the aviation and media sector. NNPA
grew by | 900 crore to | 2901 crore (1.11% from 0.84%). We expect
slippages to continue from RA and raise our FY13 GNPA estimate to
2.2% from 1.9% earlier.
V a l u a t i o n
Core business remained strong with margins consistently above 3.5%
and RoA and RoE at 1.1% and ~20%, respectively. Expecting slippages
from restructured assets to continue, we have built in higher credit costs
for FY12E and FY13E and revise PAT by - 4% to grow at 14% CAGR over
FY11-13E. We are revising our target price to | 970 maintaining valuation
multiple at 1.2x FY13E ABV and recommend a HOLD rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
I n c r e a s e d s t r e s s o n a s s e t q u a l i t y s e e n …
Profits came below estimates at | 1150 crore growing 5.5% YoY (I-direct
estimate: | 1306.7 crore) primarily due to higher provisions of | 946 crore
against | 710 crore in Q2FY12.
Restructuring of telecom infra loans led to restructured assets increasing
by~| 2000 crore to | 16888 crore (outstanding as on December 2011).
Besides these, business growth was strong at 21.4%. Deposits grew 23%
YoY to | 356516 crore while advances rose 18.7% YoY to | 262605 crore
with overseas advances surging 82% YoY. NII was in line with our
expectation at | 3536 crore (our estimate: | 3535 crore), up 10.4% YoY.
NIM declined 7 bps QoQ to 3.88% from 3.95%. Other income increased
11% YoY and 7% QoQ to |954 crore due to fee income and forex income.
ƒ NIM dips to 3.88%, bulk deposits form 24% of deposits...
NIM declined 7 bps QoQ to 3.8% from 3.95%with YoA increasing 5
bps QoQ to 11.97% and CoD inching up 22 bps QoQ to 6.74%. It
was mainly due to 5.9% QoQ term deposits growth leading to CASA
sliding to 36.2% from 37.1%. Share of bulk deposits rose to 24%
from 23.7%. We expect pressure on NIM to remain and estimate
NIM moderating to ~3.5% by FY13E.
ƒ Restructured assets, fresh NPA increase – telecom, aviation sector
There was fresh restructuring of | 2000 crore in Q3FY12 with
~| 1000 crore from telecom infra. Slippages of 10.9% from
restructured assets (RA) totalling | 21526 crore (o/s - | 16888 crore)
has led to increased concern on asset quality. GNPA increased to
| 6442 crore (2.42% from 2.05%) with fresh slippages at | 1683
crore mainly contributed by the aviation and media sector. NNPA
grew by | 900 crore to | 2901 crore (1.11% from 0.84%). We expect
slippages to continue from RA and raise our FY13 GNPA estimate to
2.2% from 1.9% earlier.
V a l u a t i o n
Core business remained strong with margins consistently above 3.5%
and RoA and RoE at 1.1% and ~20%, respectively. Expecting slippages
from restructured assets to continue, we have built in higher credit costs
for FY12E and FY13E and revise PAT by - 4% to grow at 14% CAGR over
FY11-13E. We are revising our target price to | 970 maintaining valuation
multiple at 1.2x FY13E ABV and recommend a HOLD rating on the stock.
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