Accumulate IDBI Bank; target of Rs 117: Arihant capital

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Accumulate IDBI Bank; target of Rs 117: Arihant capital

Arihant capital markets is bullish on IDBI Bank and has recommended accumulate rating on the stock with a target of Rs 117 in its February 06, 2012 research report.

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Arihant capital markets is bullish on IDBI Bank and has recommended accumulate rating on the stock with a target of Rs 117 in its February 06, 2012 research report.

"In Q3FY12 IDBI bank has given a disappointing result. The PAT of bank was expected to be 468.4 crore as expected growth of 3.1% on YoY basis however bank has reported profit of 409 crore which has resulted into a decline growth of 10% on YoY basis and 21% on QoQ basis. Interest income of bank has grown by 24 % on YoY basis whereas interest expenditure of the bank has increased by 37% on YoY basis to Rs. 4790 crore Q3FY12 from Rs.3508 crore in Q3FY11 this has resulted into an adverse effect on the NII which has come down by 11% on YoY basis & 6% on QoQ basis. NIM has come down from 2.42% in Q3FY11 to 1.89% in Q3FY12. Staff expenditure of bank has increased by 77% on YoY basis whereas other expense has changed marginally. Such higher increase in staff expenditure resulted into a reduction in the operating profit of the bank by 27% on YoY basis and 18% on QoQ basis."

"Bank has reduced its Provisions for non performing assets by 38% on YoY basis. Provision for tax of Q3FY12 quarter is just 1.9% which is at 8 crore whereas it was 28 crore in Q3FY11 it is showing reduction in provision by 71 % on YoY basis such lower amount of provision is on account of DTL (Deffered Tax Liabilities). Return on assets as well as return on equity has come down from 0.83% & 14.87% in Q3FY11 to 0.66% & 0.83% in Q3FY12 respectively. Cost of fund has increased to 8.64% in Q3FY12 from 7.11% in Q3FY11 where as yield on advances has increased from 9.41 in Q3FY11 to 10.11% in Q3FY12 this shows that the increase in the cost of fund is much higher as compared to increase in yield on advances and have negative effect on the earning of the bank. Cost to income ratio jumped from 31.3% in Q3FY11 to 44.7% in Q3FY12. Accumulate IDBI Bank for target of Rs 117," says Arihant capital markets research report.

Institutional holding more than 40% in Indian cos        

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To read the full report click on the attachment