Corporation Bank (Buy) - Avendus

We lower the FY14f-FY16f PAT forecast by up to c20% to factor higher provisions for NPLs, investment depreciation and lower NIM. We increase our estimate for provisions on investment depreciation in FY14f by 20-bp to 0.35% of the G-sec at the beginning of the year, as against the write-back in the preceding year. The NIM forecast for FY14F has been cut by 10-bp to 1.93%, implying a 3-bp fall y-o-y. We raise our FY15f-FY16f NPL provision estimate, as we assume a rise in the PCR from a very low level of c31% in FY13-FY14f. The stock has underperformed the broader market and CNXPSBK by c32% and c3%, respectively, in the last three months. We rollover the TP to Sep14 and lower it to INR451. The TP values the stock at the one-year forward adjusted P/B of 0.66x. We maintain a Buy rating.

Source : Equity Bulls

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