Sunday, April 24, 2011

Result Flash - Indian Bank - 4QFY2011 - Buy

Result Flash on Indian Bank for 4QFY2011 with a Buy recommendation and a Target Price of Rs269 (12 months).

Indian Bank announced its 4QFY2011 results today, registering a net profit growth of 7% yoy to Rs439cr, however on a sequential basis the net profit declined by 10.7%.The result was below our estimates of Rs486cr mainly on account of higher tax provisioning (43.5% effective tax rate for 4QFY2011) than factored in by us. Net Interest Income (NII) grew by 18.9% yoy which was slightly above our estimates The net advances for the bank grew by a marginal 1.8% qoq and 21.1% yoy to Rs 75,250cr, while the deposits grew by 4.7% qoq and 19.9% yoy to Rs1,05,804cr. Non-interest income grew by 9.2% qoq but came in lower by 7.3% on a yoy basis to Rs272cr. Operating expenses remained muted sequentially but increased by 35.2% on a yoy basis to Rs480cr. Cost to income ratio further improved to 34.7% from 36.9% in 3QFY2011. The bank's asset quality also showed improvement with Gross and Net NPAs in absolute terms declining by 1.6% qoq and 4.8% qoq, respectively. The Gross and Net NPA ratios of the bank both improved marginally by 4 bps each to 0.98% and 0.53%, respectively, with a provision coverage ratio of 84.3% including write-offs (83% in 3QFY2011).

At the CMP, the stock is trading at 0.9x FY2013E ABV. We maintain a Buy recommendation on the stock with the Target Price of Rs269. We may revise our estimates post interaction with the management.

 

 

Exhibit 1: 4QFY2011 Actual vs. Estimates

(Rs cr)

Actual

Estimates

Var (%)

Net interest income

        1,111

        1,045

                  6.3

Non-interest income

            272

            270

                  0.4

Operating income

        1,383

        1,316

                  5.1

Operating expenses

            480

            522

                 (8.1)

Pre-prov. profit

            903

            794

                13.7

Provisions & contingencies

            127

            100

                26.6

PBT

            776

            694

                11.9

Prov. for taxes

            337

            208

                62.1

PAT

            439

            486

                 (9.6)

  Source: Company, Angel Research

 

 

Exhibit 2: 4QFY2011 Performance summary

 

(Rs cr)

4QFY2011

3QFY2011

% chg (qoq)

4QFY2010

% chg  (yoy)

Interest earned

2,594

2,392

8.5

2,025

28.1

Interest expenses

1,483

1,354

9.5

1,091

36.0

Net interest income

1,111

1,038

7.1

934

18.9

Non-interest income

272

249

9.2

293

(7.3)

Operating income

1,383

1,286

7.5

1,227

12.7

Operating expenses

480

474

1.1

355

35.2

Pre-prov. profit

903

812

11.2

872

3.5

Provisions & contingencies

127

54

136.8

214

(40.6)

PBT

776

758

2.4

659

17.8

Prov. for taxes

337

267

26.3

249

35.6

PAT

439

491

(10.7)

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