[Attachment(s) from Maverick included below]
| South Indian Bank (SOUIND) business growth continued to show strong traction, with advances growth at ~36% Y-o-Y and 4% Q-o-Q, to Rs. 167 bn in Q1FY11. Gold loans, which constitute a bulk of the bank's loan book (17% of advances), continued to witness strong traction during the quarter. The loan book is expected to grow at 25% (CAGR) over the next two years through network expansion and increased penetration. Over the past few quarters, SOUIND has posted stable margins while balance sheet growth has continued to be resilient with low restructuring, lower slippages, and strong provision coverage ratio. With robust asset quality, we believe the bank is well positioned to play the up cycle in growth. On our FY11E and FY12E EPS estimate of Rs. 24.0 and Rs. 29.4, the stock is currently trading at a P/E of 8.5x and P/ABV of 1.4x on FY11E basis and at a P/E of 6.9x and P/ABV of 1.2x on FY12E basis. Given these attractive valuations and its growth prospects, we believe the stock offers upside potential in the near term. SOUIND generates decent margins of ~2.8% on the back of its structurally strong deposit franchise. Around 32% of its deposits comprise low-cost current account and savings account ( The new management's efforts at improving the bank's operating performance are visible with improvement in return on assets (RoA) to 1% in FY09 from 0.1% in FY05. Over the past four years, the bank has achieved considerable progress in terms of bringing profitability focus among branches, re-energizing employees, improving asset quality, and creating greater brand awareness and technology coverage. We believe the present management is innovative and dynamic, and so far superior to other regional banks' management. South Indian Bank is one of the best regional-based private banks in the country. We like the bank for its strong regional presence, good technology network, improving asset quality and possible M&A play. We expect net revenues and profits from FY09-11E to grow at 2 year CAGR of ~19% respectively. 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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Attachment(s) from Maverick
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INVESTMENTS IN INDIA
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Stocks, mutual funds and the entire investment gamut. Only financing/investment avenues in India will be discussed.
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http://in.groups.yahoo.com/group/investwise/
INVESTMENTS IN INDIA
We are low-risk, long-term investors.
Stocks, mutual funds and the entire investment gamut. Only financing/investment avenues in India will be discussed.
For any assistance, questions or improvement ideas, contact investwise-owner@yahoogroups.co.in
****************************************************************
NEW! ==== Check our LINKS and FILES sections for a world of information. REGULARLY UPDATED.
NEW! ==== Check "Tracklist" in Links and Files sections for Investment Ideas.
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