Re-iterate Buy on ING Vysya Bank - Motilal Oswal

ING Vysya Bank (VYSB IN; Mkt Cap USD0.9b, CMP Rs342, Buy)

ING Vysya Bank's PAT grew 37% YoY to Rs8.3b in 3QFY11, led by strong growth in net interest income and fall in provisions.

Positives: (1) Momentum in loan growth (+23% YoY), (2) QoQ decline of ~7% in GNPA in absolute terms and (3) Fee income growth of 21% YoY.

Negatives: (1) Reported margins declined 24bp QoQ, adjusted NIM declined to 3.26%, (2) Fall in core CASA ratio to 33.5%, and (3) High cost/ income ratio of 60%

ING Vysya Bank (IVB) is a play on increasing return ratios backed by improvement in core operating performance and improving balance sheet profile. IVB trades at 10.7x FY12E EPS of Rs32 and 8.2x FY13E EPS of Rs41.6, and at 1.5x FY12E BV of Rs235.1 and 1.3x FY13E BV of Rs272. Strong growth coupled with improving return ratios could result in a re-rating. We reiterate Buy with a target price of Rs475 (2x FY12E BV).

Source : Equity Bulls

Keywords