Andhra Bank - March 2013 Results Preview - Motilal Oswal

- On a sequential basis, business growth is expected to improve. However, on a YoY basis, loan and deposit growth is expected to be moderate at 14% and 15% respectively.

- NIMs are expected to be stable QoQ at 3.2% (calculated).

- Pressure on asset quality is expected to prevail led by stress in midcorporate segments. We factor a slippage ratio of 3.5%, compared to 3.3% in 3QFY13.

- Restructuring is expected to continue, though the pace of addition may recede. In 3QFY13, net addition to restructured loans was INR12.2b, of which TN SEB was of INR5b.

- The stock trades at 0.6x FY14E and 0.5x FY15E BV, and 3.7x FY14E and 3.1x FY15E EPS with a dividend yield of 5%+. Maintain Buy.

Source : Equity Bulls

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