Indian Bank - 4QFY2013 Result Review - Angel Broking

Indian Bank reported a weak set of numbers for the quarter, as they posted PBT level earnings decline of 62.2% yoy (PAT decline was limited to 15.4% yoy, owing to higher yoy tax write-backs of Rs. 203cr ). While NII grew at muted 2.3% yoy, noninterest income grew strongly by 50.8% yoy (in-line with industry trends), the bank posted moderate operating income growth of 12.8% yoy. Operating expense for the bank grew unexpectedly by 69.4% yoy (we have sought clarity from management on surge in this line item), leading to 29.2% yoy decline in preprovisioning profits. The bank continued to witness sequential asset quality deterioration, as their Gross and Net NPA levels were higher by around 11% each and consequently, the provisioning expenses for the bank came in higher than expectations, though declined by 15.4% yoy.

The stock is trading at valuations of 0.5x FY2015E ABV. We recommend Buy rating on the stock with a target price of Rs. 193.

Source : Equity Bulls

Keywords