Allahabad Bank - Restructuring Piles Up; Margin Recovers; Result Update Q3FY15 ::Edelweiss, report

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Subdued earnings ALBK’s 3Q result ::HDFC Sec, report

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Buy Allahabad Bank :: HDFC sec- technicals

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Allahabad Bank - NIMs Healthy; Slippages Stable Though High :: Edelweiss

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Allahabad Bank (ALBK)|Q2FY15 Result Update | Mixed set of number… maintain Sell with target price of Rs 87-:: IndiaNivesh

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Allahabad Bank -SPA

ALB continued to report dismal set of numbers with net profit plunging by 68.5% YoY in Q4FY13 largely due to 36.7% YoY increase
in provisioning expenses coupled with 18.0% decline in Net Interest Income. Asset quality deteriorated sharply on account of
2.6x surge in fresh slippages to INR 25.9 bn, out of which 3 accounts worth INR 9.4 are expected to be recovered by the next
quarter. The decline in NII was due to 98 bps fall in YoA owing to a base rate cut and interest reversals of INR 1.9 bn on bad loans.
We introduce FY15 estimates and retain our BUY rating on the stock with a revised target of INR 174 (Previous TP 195).
Sharp decline in NIMs
ALB witnessed a sharp sequential decline of 72 bps in NIMs to
2.3% due to a) 98 bps reduction in YoA owing to cut in base rates
from 10.75% to 10.20% in two tranches, and b) interest income
reversals on bad loans to the tune of INR 1.9 bn in Q4FY13.
Consequently, the NII declined by 18.0% YoY to INR 10560 mn in
Q4FY13. We expect NIMs to recover to ~3% levels over the next
couple of years on the back of increased focus on high margin
retail and MSME segments.
Asset quality sharply deteriorated
Asset quality deteriorated sharply with fresh slippages surging
sequentially by 159.7% to INR 25.9 bn in Q4FY13. Consequently
GNPA & NNPA deteriorated sharply increasing by 101 bps & 113
bps to 3.9% & 3.2% respectively. Importantly major portion of
these slippages was bulky in nature with 9 accounts contributing
to ~INR 16 bn out of which 3 accounts worth INR 9.4 are expected
to be recovered in next couple of quarters. We therefore expect
the asset quality to improve going forward with no strong pipeline
of stressed assets and ALB's renewed focus on credit monitoring
and faster recoveries & upgradations.
Restructured book - 11.4% of total advances
Restructured book increased to INR 148.8 bn, accounting for 11.4%
of advances (10.8% of advances in Q3FY13). The bank has
restructured advances of INR 13.9 bn in the last quarter, out of
which major restructuring was done for pharma, iron & steel apart
from other accounts in chemicals, textiles and food processing.
Restructuring pipeline for the current quarter stands at ~INR 5 bn.
Slippages from restructured portfolio to NPA stood at INR 12 bn.

JBF Ind, Allahabad Bank, Reliance Capital, Mahindra Satyam, United Spirits, jindal poly films, :: Business Line

 

Allahabad Bank Buy (Sharp rise in slippages; restructured assets leads to higher provisions) KJMC

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Angel Broking - Allahabad Bank - RU4QFY2012 - Result Updates

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Allahabad Bank - RU4QFY2012

Allahabad Bank Buy (Another stellar performance aided by lower tax rate; sharp rise in other income ):: KJMC

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Allahabad Bank has once again reported strong PAT of Rs 5604.3mn, up 34.8%YoY
which was way ahead of our estimates of Rs 4697.6mn. NII for the quarter grew by
31.3% YoY ahead of our/street estimates while NIMs of the bank was maintained at
3.5%. Higher increase in profits was also supported by sharp increase in other
income by 35.2% to Rs 3484.1mn. ALBK reported slippages to the tune of Rs 5.9bn
while restructured assets stood at Rs 10.5bn. GNPA and NNPA of the bank
increased by 9bps and 10bps to 1.9% and 0.8% respectively.
The stock is currently trading at 0.7x of its FY13E ABV. We value the standalone
business at 0.9x of its FY13E ABV at Rs 217.6 and maintain our buy rating on the
stock with Target Price of Rs 196.
Key Highlights
Lower tax rate boost profits: ALBK has provided lower tax rate of 7.9% since it
has not availed tax benefits earlier on certain items like rural advances,
priority sector advances, MIS, etc. which has helped to boost profits above
our expectation. Also, management has guided in the last concall to avail Rs
3bn of tax benefits which will translate into 21% tax rate for the full year FY12
as compared to 26% in FY11.
Advances grew sequentially; NIMs remain stable: Advances for the quarter grew
4.9% sequentially to Rs 1tn due to strong growth in agri and corporate
advances while deposits for the quarter grew by 2.3% sequentially thereby
improving CD ratio to 69.1%. In addition, NIMs of the bank remained stable
at 3.5%.
Asset quality remains stable, restructured assets rise significantly: Asset quality of
the bank remained stable with Gross NPA and NNPA at 1.8% and 0.7%
respectively. Slippages during the quarter stood at Rs 5.9bn which includes
one big account from footwear industry situated in North of Rs 1.2bn. Major
chunk of slippages was from priority sector lending which constituted 60% of
the slippages. Management has denied having any exposure to Kingfisher or
GTL. The total outstanding restructured advances stood at Rs 38.2bn in
which Rs 2.6bn have slipped into the NPL category. Total restructured
amount during the quarter stood at Rs 10.5bn. No restructuring took place
for the SEBs. However, management has indicated to restructure Rs 6bn of
Rajasthan State Electricity Board in the coming quarter.

Result Update: Petronet LNG Ltd, Divi's Lab, LIC Housing Finance, Allahabad Bank, United Phosphorus, NTPC, Glenmark Pharma: Emkay

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Result Update

Petronet LNG Ltd

Reco: ACCUMULATE

CMP: Rs 164

Target Price: Rs 180

Volume growth continue

·      Results were above our and street estimates at bottom line, mainly due to higher volume growth of 7.3% to 144.9tbtu during the quarter ·      EBIDTA margin declined marginally by 157bps YoY to 7.9% (-40.4bps QoQ), mainly on account of higher input cost and increase in other expenditure ·      Company is planning to setup 3rd LNG terminal at Gangavaram port, Andhra Pradesh, with the total capacity of 5mntpa, While Kochi terminal will start from end of CY12 ·      The recent news on proposed cap on gas marketing margin which is to be decided by PNGRB would keep the stock under pressure until any clarity emerges. Maintain accumulate with TP of Rs.180

Divi’s Lab

Reco: BUY

CMP: Rs 818

Target Price: Rs 927

Subdued quarter, Growth story remains intact - Maintain Buy

·      Divi’s Q3FY12 performance was below expectations with (a) Revenue at Rs4.2bn (up 33% YoY); (b) EBIDTA at Rs1.5bn (up 22% YoY)  & (c) PAT at Rs1.23bn (up 21% YoY) ·      Top-line growth was aided by INR depreciation, which contri-buted 13% to the top-line growth. Capacity utilization at Vizag plant remained flat QoQ, expected to scale up from Q1’13 ·      EBITDA margins at 36.2% were lower than expectations in spite of INR depreciation led by increase in expenses due to commissioning of Vizag plant & higher proportion of API sales ·      Growth story remains intact – Maintain Buy with a target price of Rs927 on the stock (20x FY13 EPS of Rs46.3)

LIC Housing Finance

Reco: HOLD

CMP: Rs 246

Target Price: Rs 250

Unfavorable base and shrinking spread take toll

·      LICHF’s Q3FY12 NII (Rs3.3bn) and APAT (Rs2.5bn) below our expectations. Lower than expected numbers driven by sharper 20bps contraction in NIMs ·      Individual disbursements at 8.4% yoy, due to unfavorable base effect. However, mgmt still confident of 20% growth in disbursement implying 27% yoy growth in Q4FY12 ·      NIMs at 2.3%, down 20bps qoq (est 12bps). Provisions write back (Rs780mn) helps as RPAT grows 45%. However, PCR dips back to 51%. ·      Intended QIP and teaser rate loan provisions, key upside risk to our numbers. Valuations have seen sharp run up to 2.4x/1.9x FY12E/FY13E ABV. Recommend Hold

Allahabad Bank

Reco: ACCUMULATE

CMP: Rs 156

Target Price: Rs 200

Strong performance; aggressive provs add comfort

·      ALBK results ahead of estimates with NII at Rs13.8bn (est Rs12.7bn). Net profit at Rs5.6bn (est Rs5.6bn) further aided by higher trading gains and lower tax rate of 8% ·      Strong NII growth (31.3%yoy) driven by stable NIMs vs our exp of 20bps dip. Advances grew 5% qoq in line with expectations ·      Slippages at Rs5.9bn vs our est of Rs5.5bn. However, fresh restructuring of Rs10.5bn was a –ve surprise. Net stressed asset stand at 4.8% of advances vs 3.8% in Q2FY12 ·      Upgraded FY12E/FY13E numbers by 17.7%/12.2 for largely lower tax rate. Aggressive provisioning policy provides comfort. Remains our top pick amongst mid-size PSU banks

United Phosphorus

Reco: BUY

CMP: Rs 144

Target Price: Rs 200

Bottomline disappoints, downgrade estimates

·      Q3FY12 revenues / EBITDA were above est driven by currency impact however higher tax outgo squeezed APAT at Rs 1.15bn,4% yoy, below est of Rs 1.5bn ·      58%yoy growth in sales is primarily driven by recent acquisitions in Brazil (~25%) and exchange fluctuation (19%) while organic volume growth remains muted at ~6%  ·      Despite higher revenue growth, EBITDA margins remain subdued at 18.1%. Higher tax rates at 33% and losses from Brazilian JV (SIPchem) suppressed PAT growth at mere 4% ·      Downgrade FY12/13 est by 10%/7% to Rs 16 / 19.9 and subsequently downgrade price target to Rs 200 (10xFY13 EPS), however maintain BUY due to attractive valuations

NTPC

Reco: BUY

CMP: Rs 172

Target Price: Rs 204

90%+ PAF structurally coming down; maintain Buy

·      3Q12 PAT of Rs21.3bn is below est. due to higher R&M expenses & under recovery on water charges. Adjusted net profit stood at  Rs21.7bn (assuming PY sales as recurring) ·      Has commissioned 1320MW (Sipat) and commercialized 1,160MW in YTD12. Mgmt has retained its capacity addition target ·      Highlights - (1) PAF of coal plants low at 85.3% and 86.2% for 3Q12 and 9M12 period and (2) Revised PAF and COD assumption, FY12E/FY13E EPS reduced by 3.4%/3.9% ·      Valuations still remain reasonable. Positives to continue (1) COD of another 1160MW, (2) FY12/13 grossing & (3) acquiring distressed plants in medium term. Maintain Buy;

Glenmark Pharma

Reco: HOLD

CMP: Rs 312

Target Price: Rs 360

Margins under pressure – Downgrade to Hold

·      Q3FY12 Results - Revenues at Rs10.3bn (up 38%YoY), b) Adj. EBITDA at Rs1.8bn (up 35% YoY), and c) APAT at Rs1.33bn (up 41% YoY) ·      Revenue growth was driven by 11% in India, 56% in US, 58% in Europe and 48% in Latam ·      Despite INR dep. by 13%, gross margins declined 300bps YoY & 120bps QoQ due to higher growth in Latam, Europe, US where margins are lower and lower growth in high margin India business ·      On account of near term growth pressure in India business & margin pressure overall, we downgrade the stock to Hold with a TP of Rs360 (15x FY13 Base EPS of Rs21+ Adj NPV of Rs47)

A lesson or two in investments :: Business Line

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The Allahabad Bank Executive Director, Mr M R Nayak's Coimbatore visit and engagement thereon with the exporting community was not only perceived to be timely, but fruitful as well.

While bank officials sought suggestion and co-operation from the importers and exporters to grow in business, the participants used the ‘Exporter- Importer Meet' with the bank's Executive Director as a platform to voice their grievances.

Though it seemed no different from the meets that bankers organise from time to time by getting the Chief Executive of the institution meet up with select customers in major cities and town, Allahabad Bank officials used this platform to educate the exporters to hedge.

Around 70 exporters had converged at the Le Meridien here for the interaction.

Mr Nayak highlighted the investment climate, the country's position in import-export trade and urged the gathering to look at investments.

“The investment climate is good and the future belongs to us, for the world's highest remittances are coming here,” he said.

He also pointed out that the interest rate in the country was far better than rates elsewhere.

“We are passing through challenging times, but this tough period will not last for long.”

Responding to Mr Nayak's observation, the President of Tirupur Exporters' Association, Mr A. Sakthivel, reiterated the need for a separate chapter for exports in the RBI's Credit Policy.

He said the packing credit in the country was at least 5-6 per cent higher than Bangladesh and there was therefore a need to lower it.

While recapping the knitwear sector's plight in recent months on account of the sudden and spiralling increase in cotton yarn price, followed by the pollution issue and the consequent closure of the dyeing units in Tirupur, failure of Euro countries such as Greece and Spain, he said, “the US economy is showing signs of improving.

EXPORT FRONT

Once the Free Trade Agreement (FTA) with Europe is through, the country's exports to Europe would double in two-three years.

The prospects look good, but banks would have to reconsider their stance on the NPA norms, help exporters restructure accounts, extend a moratorium on repayment of all term loans and so on, to help the sector recover.”

Allahabad Bank, Consistency personified ::Reliance Capital,

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Consistency personified
We interacted with the management of Allahabad Bank (ALBK) at its analyst meet to
understand the business environment for the bank. Key highlights of the same:
 Asset Quality: The management acknowledged a difficult business environment
due to slowing domestic economy and high interest rates. However, the bank
has practiced prudence in lending to quality borrowers and shying away from
risky businesses. The GNPA & NNPA stood at 1.8% & 0.7% as on 2QFY2012
respectively. The bank is 100% CBS as far as the identification of NPAs is
concerned and remains focused on improving quality of assets in the backdrop
of a challenging business environment. In fact, it has recovered Rs443cr loans
of which Rs355cr were small loans of Rs5lakh and below during 1HFY2012.
The management expects to recover another Rs550cr over H2FY2012. We
expect the slippages to remain low on account of higher recoveries and
anticipate GNPA of 1.8% over FY2012 and FY2013.
 Consistent growth & resilient NIMs: ALBK has rebalanced its loan portfolio by
getting out of certain riskier accounts such as short-term loan business in
2QFY2012. Nonetheless, the loan growth has been consistent and the bank has
guided for loan growth to be 4-5% above systemic growth. Margins have been
resilient as evident in 2QFY2012 on the back of lower cost of funds, high
operating efficiency and asset re-pricing. We expect NIMs to be at ~3.3% in
FY2012 and FY2013.
 Scalability: ALBK has recruited about 7,200 new employees in the last three
years and they are all mainly officers with CA or MBA qualification. The bank
has become young, median age of junior officers is 36, which is expected to
improve the productivity of the bank. Also, the bank is highly focused in scaling
up its branches and ATMs. The management plans to increase the access
points through expanding its branch network to 3,000 branches and 2,000 ATMs
by FY2015. This would give a major boost to its fee income as well. The feebased
income has gone up from Rs213cr to Rs257cr, a growth of 21% in
2QFY2012. ALBK continues to be the largest partner of LIC as far as sale of Life
Insurance policy is concerned. Also, it has over 2 lakh pensioners in its book.
Scaling up of access point would aid fee income growth going forward.
Outlook and Valuation
Total business of ALBK has grown at a CAGR of 22% over the last four years. We
expect ALBK to successfully implement the following broad strategies (a) focus on
core deposit, reducing dependence on bulk deposits; (b) emphasis on CASA deposit
mobilization; (c) maintaining a lean cost structure; (d) maintaining NIMs; (e) reviving
fee-based income; and (f) reinvigorating recovery of NPAs. All these efforts would
yield results and help the bank to strengthen its balance sheet on the one hand by
maintaining moderate level of profitability and overcome the adverse impact of global
slow down on the other. We expect ALBK to outperform the industry and continue to
grow at the same pace of ~22% between FY2011-13E. ALBK is an attractively
valued mid-size public sector bank with above average credit growth, lean cost
structure, high CASA deposits and firm asset quality. Further, lower bulk
dependence, wide branch network and higher coverage ratio makes ALBK
preferable over its peers. At CMP of Rs154, the bank is trading at 0.7x FY2013E
ABV. We maintain our Buy on Allahabad Bank based on 1.0x FY2013E ABV, with a
target price of Rs212, implying an upside of ~40% from the CMP.

Buy ALLAHABAD BANK ; TARGET PRICE: RS.225 :: Kotak Sec

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ALLAHABAD BANK
PRICE: RS.169 RECOMMENDATION: BUY
TARGET PRICE: RS.225 FY13 P/E: 4.0X, P/ABV: 0.8X
Overall Q2FY12 numbers better than our expectations
q Net interest income (NII) grew 36.0% in Q2FY12 on back of 34 bps expansion
in NIM (YoY), despite moderate loan growth (16.4% YoY). NIM came
at 3.68% during Q2FY12, ahead of our expectations on back of sharper
rise in blended yield on assets (182 bps YoY) vis-à-vis 133 bps rise in cost
of funds.
q However, muted non-interest income (decline of 10.3%) and Rs.824 mn
investment depreciation during Q2FY12 (as against Rs.36 mn in Q2FY11),
somewhat moderated the net profit growth which came at 21.2% YoY
(Rs.4.88 bn).
q Loan book grew at moderate pace (16.4% YoY) due to 7.0% QoQ decline
in agri portfolio; while MSME and retail segments grew at 73.0% and
20.4%, respectively. Deposit mobilization has been strong at 25.0% YoY
with some decline in CASA share (~400 bps YoY); C/D ratio is also down
to 68.2% at the end of Q2FY12.
q Asset quality saw marginal spike as the bank has completely migrated to
system based NPA recognition system. Slippage came at 2.2% (annualized)
during Q2FY12 as against 0.6% witnessed during Q1FY12. In percentage
terms, asset quality is comfortable - gross NPA and net NPA
stand at 1.77% and 0.69%, respectively.
q We are modeling earnings to grow 19.5% CAGR during FY11-13E, while
return ratios are also expected to be healthy (RoE: ~21% during FY12-
13E). At the CMP of Rs.169, the stock is trading reasonable at 4.0x its
FY13E earnings and 0.8x its FY13E ABV. We are maintaining BUY rating
on the stock with revised TP of Rs.225 (Rs.248 earlier) based on 1.0x of its
FY13E adjusted book value.

Allahabad Bank Positive surprises on all fronts :Emkay,

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Allahabad Bank

Positive surprises on all fronts

ACCUMULATE

CMP: Rs161                                        Target Price: Rs200

---

n     ALBK results well ahead of estimates with NII at Rs13.2bn. Net profit at Rs4.9bn further aided by lower tax rate of 9%

n     The NII grew by 36%yoy to Rs13.2n driven by 28bps expansion in NIM’s, albeit advance growth remain moderate at just 16.6%yoy

n     Key highlight for the quarter was- significantly lower slippages at just Rs5.2bn. Mgmt guided for slippage to fall back to normal levels

n     Positively surprised by the substantial improvement in NIMs and lower slippage numbers. Maintain ACCUMUALTE rating with TP of Rs200

Sizzling Stocks: Allahabad Bank, Havells India :: Business Line

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 Allahabad Bank (Rs 169.4)

Allahabad Bank skyrocketed 17 per cent in the previous week, following the company's announcement of strong September quarter results. The stock is rebounding from its significant long-term base zone between Rs 135 and Rs 145 for the second time in October. Moreover, we notice that the weekly relative strength index is displaying positive divergence supporting this trend reversal. It has formed a bullish engulfing candlestick pattern in the weekly chart which also denote trend reversal.

The stock is hovering well above its 21 and 50-day moving averages. However, the stock is currently testing its important long-term resistance at around Rs 170. Strong breakthrough of this level will take the stock upwards to its next key resistance at Rs 185 in the ensuing trading sessions. Key resistance above Rs 185 are Rs 200 and Rs 220. Failure to move above Rs 170 will pull the stock down to Rs 155-158 zone or down to Rs 145 in the medium-term.

Havells India (Rs 417.6)

Conclusively breaking through its significant long-term resistance at around Rs 370, the stock zoomed 15 per cent in the last week. The stock is trading well above its 50 and 200-day moving averages. With the recent surge, the stock is nearing its key long-term resistance band between Rs 430 and Rs 440.

As the stock has accelerated sharply and its daily relative strength index is reaching overbought levels, a near-term decline can not be ruled out in the upcoming trading sessions. In such a case the stock can decline to Rs 395, Rs 380 or Rs 370. Decisive penetration of the stock's long-term resistance band will lift the stock to Rs 460. Conversely, failure to hold above the key support level of Rs 370 will drag the stock lower to Rs 340 and Rs 310.

Allahabad Bank - "Well capitalised with higher NIMs" ::LKP

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Key Highlights

Ø  Allahabad Bank reported 21%/17% yoy/qoq growth in PAT for Q2FY12. NII grew by 36%/12% yoy/qoq. NIMs for the quarter were higher at 3.7% v/s 3.3%/3.4% yoy/qoq. NIMs were benefited from the rebalancing of the loan portfolio towards higher yielding assets and reducing of bulk deposits. The management has continued to guide for NIMs of ~3.5% in FY12.

Ø  The loan book grew by 16%/(2%) yoy/qoq. The bank has focused on re-balancing of the portfolio and has exited some accounts which were either low yields or short term. The yoy growth was led by growth in MSME along with priority and retail loans. The bank has shifted from short term low yielding loans to loans with longer tenures because of which Rs.75 bn portfolio of short trem loans has come down to Rs.30bn. This explains the qoq slowdown in loan book. Infra loans grew 23%/1% yoy/qoq led by growth in power by 54%/(1%) yoy/qoq. The management has guided for a 24-25% yoy growth in FY12 driven by healthy pipeline of sanctions. 

Ø  The bank’s CD ratio was 0.68x v/s 0.73x/0.75x yoy/qoq. The bank expanded deposit base by 25%/6% yoy /qoq.  CASA share was lower at 31% v/s 35%/32% yoy/qoq while CA slowdown SA continued to show traction. Going forward the management expects a benefit from the change in policy of the west Bengal Government to pay all salaries via cheques v.s cash. The bank has continued to reduce share of bulk deposits and increase share of retail deposits.

Ø  The bank has moved to a 100% system based npa recognition system which translated to a 17%/7% and 45%/13% yoy/qoq increase in gross and net npas. Slippages were Rs.3500mn V/s Rs.1600 mn qoq mainly on account of small accounts from the agri sector. The management has guided for the normal run rate of slippages to resume in Q3 and Q4. PCR was marginally lower as new npa accounts come into the system. The bank remains focused on improving quality of assets and has recoveredRs.4,430 mn assets of which Rs.3550 mn were small loans Rs.5 lakhs and below during H1FY12 and expects recoveries of Rs.5500 mn over Q3FY12 and Q4FY12. The restructured portfolio of the bank remained at Rs.29 bn v/s Rs.30bn qoq. The bank restructured one major account of Rs.2680 mn of Electrotherm India during the quarter.

Ø  The bank’s fee income grew by 21%/24% yoy/qoq mainly due LC/BG, exchange revenue and processing fees. Overall non-interest income impacted by lower trading profit of Rs.70 mn V/sRs.380mn/Rs.260mn. 

Ø  The bank’s cost to income (C/I) ratio was higher during the quarter at 42% v/s 41%/39% yoy/qoq.  Operating cost of the bank has increased 27%/19% yoy/qoq mainly on account of employee expenses as the bank increased employee provisions due to higher headcount.

Ø  Tax rate during the quarter was 9% v/s 21%/27% yoy/qoq. Improvement in technology and a system based entry accounts has enabled the bank to claim benefits under agri and priority sector. This has resulted in the lower tax rate. The management expects a Rs.3 bn tax refund to come in during FY12 and thus a tax rate 500-600 bps lower than FY11.

Ø  The bank is sufficiently capitalized with a CAR of 12.99% and Tier I of 8.93% for the next 2 quarters. The management plans to seek Rs.10bn from GoI. The bank’s RoE increased to 26.5% v/s 25%/23% yoy/qoq. RoA was 1.2% v/s 1.3%/1.1%% yoy/qoq. 

All BK is trading at 1.0x and 0.8x P/ABV and 4.1x and 3.3x P/E FY12E and FY13E. We have revised our estimates upwards on account lower tax rate guided by the management for FY12. We have valued the stock at 1.0x which translates to a target price per share of Rs.213 per share.

Buy Allahabad Bank :: Target 183 :: Anand Rathi

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    Allahabad Bank                                CMP      166                                                           SL      157                                                         Target     183  

Company Description

Allahabad Bank provides retail banking, corporate/wholesale banking, and treasury services in India and internationally. It accepts demand deposits, savings bank deposits, term deposits, and current accounts. The company’s loan products consist of housing loans, education loans, car loans, personal loans for pensioners and doctors/medical practitioners, rent loans, property loans, furnishing loans, gold loans, overdraft facilities, and reverse mortgage schemes. In addition, it provides cash management services, depository services, real time gross settlement, national electronic funds transfer, bancassurance, mutual fund services, international banking services, visa debit cum ATM cards, and credit cards, as well as online payment and Internet banking services. Further, the company, through its subsidiary, AllBank Finance Ltd., offers corporate advisory, project appraisal, issue management, loan syndication, and debenture and trusteeship underwriting services. As of March 31, 2011, it operated a network of approximately 2416 branches. The company was founded in 1865 and is headquartered in Kolkata, India.

Technical Comments 

Stock has breached the upper resistance line with huge volume activity indicating upside moment may be seen in the counter from current level. One can initiate buy at CMP for the target of  183 with SL of 157 Rs. in coming days.

Preview of Allahabad Bank Q2FY12 Results Banking Sector Oct 2011 ::Way2Wealth

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􀂙
Allahabad Bank
We expect marginal fall in net interest income of the bank on account of high cost of funds for the
bank for which the effect wasn’t seen in the previous quarter.
􀂙 We do expect healthy growth in business y‐o‐y.
􀂙 We expect the provisions to increase slightly on account of the fall in asset quality due to system
driven recognition of NPA’s.
􀂙 Asset quality will remain under control. Our recent interaction with management has been that
the asset quality will remain under comfortable levels & we will not expect a surprise coming in
from here.
􀂙 Return ratios are expected to be more or less in line with Q1FY12.
􀂙 Currently, the stock is available at a P/ABV of ~0.6x FY13E.

UBI & All BK Thematic Report:: LKP.

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nvestment Argument

Armed with a strong rural and semi urban presence (UBI 40%, All BK
59%)  both these banks are well positioned as the second liners of
growth in the banking industry. Growth drivers steadily moving towards
the East, UBI and All BK with 68% and 41% of branches in eastern
states will stand to benefit from these opportunities. We believe that
their extensive branch network will continue to benefit in terms of
low cost deposits (40% UBI, 30% All BK). The 15%+ growth rates (CAGR
FY09-11) across Eastern states will aid the growth of assets expected
to growth at 20% UBI and 21% All BK over FY11-13E.

Profitability of UBI has lagged peers we believe that an improvement
in CD ratio should protect NIMs in FY12 and contribute to margin
expansion in FY13 (3.3%). Further, a higher fee structure coupled with
firm recoveries should benefit UBI with higher RoAs (0.6% in FY11 to
0.8% in FY13). All Bk has consistently delivered strong profitability
(NIMs 3.8%, RoA 1%).We believe an improvement in operational
parameters (100% CBS and movement to a system based npa recognition)
at add positively to long term profitability.

UBI is trading at 0.8x and 0.7x P/ABV and 3.9x and 2.9x P/E FY12E and
FY13E. We have valued the stock at 1.0x (historical average P/ABV of
1.1x) which translates to a target price per share of Rs.106, a 41%
upside to current market price. We expect the strong franchise and
improving profitability to bring valuations closer to the historical
valuations for PSU banks.

All BK is trading at 1.1x and 0.9x P/ABV and 5.2x and 4.1x P/E FY12E
and FY13E. We have valued the stock at 1.1x (historical average P/ABV
of 1.1x) which translates to a target price per share of Rs.223, a 22%
upside to current market price. The bank compares well to banking
peers on operational and profitability ratios.

Investment Risk

We have reached a stage in the interest rate cycle where the consensus
is that interest rates have almost peaked.  We have factored in a
50-75 bps firming of rates but higher moves from this point can
potentially impact credit growth and NIMs.