IDBI Bank (Buy) - Avendus

We lower the FY14f-FY16f PAT forecast by c14% to factor higher provisions for NPLs, investment depreciation and lower NIM. We increase our estimate for provisions due to investment depreciation in FY14f by 22-bp to 0.69% of the G-sec, a 28-bp rise y-o-y. We lower our FY14f NIM estimate by 8-bp to 1.72%, implying an 8-bp contraction y-o-y, driven by higher cost of deposits. We raise the incremental NPL assumption for FY14f-FY16f by up to 30-bp. NPL provision/loans is estimated to average at 0.84% during FY14f-FY16f, 15-bp higher than the past three years' average. The stock has underperformed the broader market by c28%, but it has outperformed the CNXPSBK by 2% in the last three months. We rollover the TP to Sep14 and lower it marginally to INR108. The TP values the stock at a one-year forward adjusted P/B of 0.70x. We maintain a Buy rating.

Source : Equity Bulls

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