Views on Indian Bank 3QFY2014 results - Angel Broking

Views of Mr. Vaibhav Agrawal (VP- Research - Banking, Angel Broking) on Indian Bank 3QFY2014 results:

"Indian Bank reported weak operating performance, while asset quality reported improvement aided by sale to ARCs. On the operating front, Net Interest Income for the bank de-grew by 5% yoy, while non-interest income remained flat, in-line with our estimates. Operating expenses grew 10 % yoy and resulted in pre-provisioning profit de-growth of 16%, which was on expected lines. On the asset quality front, the bank reported improvement, as its absolute Gross NPA decreased sequentially by 8% on back of sale of assets worth Rs. 390cr to ARCs. While the Net NPA decreased 11% sequentially. Provision expenses for bank came in at Rs. 238cr as compared to Rs. 412cr in 3QFY2013. Overall earnings for bank de-grew by 20% yoy. Over the last two years, the bank has faced severe asset quality pressures, as Gross and Net NPAs propelled from 1.4% and 0.8%, respectively to 3.4% and 2.2% now. Going ahead, while the management has exuded confidence in maintaining its asset quality at current levels. With relatively healthy capital adequacy (amongst the best within PSUs), the stock currently trades at moderate valuations of 0.4x FY2015E ABV. We recommend Buy rating on the stock."

Source : Equity Bulls

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