Indian Bank - March 2013 Results Preview - Motilal Oswal

- Loan growth is expected to be in line with the industry average at ~16% YoY, while deposit growth is expected to be better at 17% YoY.

- NIMs are expected to be stable QoQ at 3.2%, led by receding pressure on asset quality. However, pressure on lending yields would continue.

- Slippages are expected to be at a high level. However, upgradation and recovery (partially due to restructuring) in mid-corporate segment is expected to keep GNPAs under check. We expect GNPA %age to fall to 3%, compared to 3.2% in 3QFY13.

- Restructuring is likely to increase, partially led by restructuring of state electricity boards. In 3QFY13, bank restructured loans of INR4b.

- PBT is expected to grow by 29% QoQ. However, PAT is expected to decline by 10%+, led by higher tax rate. In 3QFY13, tax rate was negligible, which we expect to normalize.

- The stock trades at 0.6x FY14E and 0.5x FY15E BV, and 4x FY14E and 3.5x FY15E EPS. Maintain Buy.

Source : Equity Bulls

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