Bank of Maharashtra - 4QFY2013 Result Update - Angel Broking

Bank of Maharashtra reported a healthy performance for 4QFY2013, registering a bottom-line growth of 255.6% yoy, which was ahead of our expectation of 192.5% yoy growth. Strong NII growth (34.6% yoy, aided by similar growth in advances), robust non-interest income performance (more than double on a yoy basis) and flat provisioning expenses (a sequential improvement in asset quality and also due to high base), resulted in healthy earnings performance for the bank.

NIMs and Asset quality, both improve sequentially: During 4QFY2013, the bank reported a flat sequential growth in its business, however it posted a strong growth on a yoy basis, with the advances and deposits growing by 34.6% and 23.3% yoy, respectively. Strong loan growth on a yoy basis was primarily led by higher Retail, Agricultural and MSE advances, which grew by 38.4%, 30.9% and 30.8% yoy respectively. The CASA ratio for the bank stood largely stable on a yoy basis to 40.8%, however, was higher sequentially by 684bp, as the bank witnessed a 5.0% qoq decline in overall deposits. Reported NIMs for the bank were higher by 21bp qoq to 3.1%, on back of qoq higher CASA ratio. Non-interest income grew at a robust pace of 121.2% yoy to Rs. 382cr, however, the details regarding the non-interest income break-up are not available from the bank. The bank delivered improvement on the asset quality front, as both gross and net NPAs came down sequentially. However, further details regarding the asset quality - particularly the gross NPA movement and restructuring during the quarter, were not available from the bank. On an absolute basis, Gross and Net NPA levels were sequentially lower by 11.4% and 19.3%, respectively. Gross and Net NPA ratios, for the bank declined sequentially by 22bp and 14bp, respectively to 1.5% and 0.5%. The bank's PCR improved by 85bp qoq and stood amongst the best within the PSU pack at 83.7%.

Outlook and valuation: At the current market price, the stock trades at a valuation of 0.6x FY2015E ABV. Recent capital infusion (albeit at book-dilutive valuations) has strengthened the CAR for the bank (total CAR at 12.6%), still core tier-I remains low (calculated core tier-I at around 6.5%). Additionally, recent aggressive loan growth increases concerns about future asset quality. Hence, we recommend a Neutral rating on the stock.

Source : Equity Bulls

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