Andhra Bank-The Dolphin Gets Moving
PAT growth of 25% for Q1FY11 to Rs3.2bn, NII growth at above 60%. Margins at 3.72% for the quarter on bi-directional change in business; likely to sustain at above 3% for the full year. NPA accretion from restructured pool at Rs0.93bn; provision coverage ratio stays comfortable at above 80%. Restructured portfolio at Rs31bn witnesses cumulative ~5% slippages; management team confident of arresting slippages in single-digits. Operating at sub-8% Tier-I ex-Q1 profits; proposed equity infusion of Rs6.5bn to flow in conditional on end-Mar'11 Tier-I staying sub-8%. Introducing FY12E forecasts with modest growth assumptions. Maintain 'BUY' with an FY12E-based TP of Rs195. Andhra Bank announced a stupendous set of numbers in its Q1FY11 results with NII growth in excess of 66% and net profit growth at just above 25%. NII clocked in at Rs7.36bn while the net profit clocked in at Rs3.2bn. We are positively surprised by the QoQ movement in NIMs to 3.72% vis-à-vis 3.21% during the Jan-Mar'10 quarter, despite banks having had to migrate to a daily interest accrual on the savings deposits. Valuation and recommendation: Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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