Bank of Maharashtra - 1QFY2013 Result Update - Angel Broking

During 1QFY2013, Bank of Maharashtra reported 15.1% growth in net profit to Rs.140cr, which was mainly aided by tax write-back of Rs.16cr compared to tax expense of Rs.69cr in 1QFY2012. At the PBT level, the bank witnessed a decline of 34.8% yoy to Rs.125cr, on back of 41.1% yoy increase in provisioning expenses to Rs.316cr.

NIMs decline 26bp qoq, Slippages continue at elevated levels: The bank reported healthy growth in its business, with advances witnessing a growth of 22.7% yoy and deposits registering a growth of 17.4% yoy. CASA deposits remained flat on a sequential basis, as 3.6% qoq growth witnessed in saving deposits was fully offset by 10.1% sequential decline registered in cyclical current deposits. Consequently CASA ratio for the bank declined on a sequential basis by 175bp to 39.6%. The reported NIMs for the bank declined by 26bp qoq to 2.9% due to 19bp sequential decline in the yield on funds and 7bp qoq increase in costs of funds. Non-interest income (excluding treasury) declined by 6.0% yoy. Treasury income for the bank came in at Rs.24cr during the quarter as against Rs.9cr in 1QFY2012, while recoveries from written off accounts came in at Rs.22cr compared to Rs.16cr in 1QFY2012. On the asset quality front, Gross NPA ratio came sequentially lower at 2.2% compared to 2.3% in 4QFY2012. However, Net NPA climbed to 1.0% from 0.8% in 4QFY2012. The slippage ratio for the quarter remained elevated, much above the comfortable 1-1.5% levels at 3.1% (average slippages of Rs.452cr for the last two quarters compared to average of Rs.198cr since 1QFY2011). PCR for the bank dipped by 103bp, but still remains comfortable at 79.3%.

Outlook and valuation: At the CMP, the stock is trading at valuations of 0.6x FY2014E ABV, which we believe factors in expected 30.4% CAGR in earnings over FY2012-14E. Owing to the asset quality concerns arising due to weak macro-economic outlook, we recommend Neutral rating on the stock.

Source : Equity Bulls

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