Hold IDBI Bank; target of Rs 106: Unicon Investment

46754 Investors following IDBI Bank. Share this News with them.

0

Like this story, share it with millions of investors on M3

Hold IDBI Bank; target of Rs 106: Unicon Investment

Unicon Investment has recommended hold rating on IDBI Bank with a target of Rs 106, in its February 2, 2012 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Angel Broking neutral on JSW Steel Angel Broking neutral on Federal Bank Accumulate NTPC; tgt of Rs 182: PINC Research ALSO READ See previous views by Unicon Investment See what other Experts & Brokerages are saying about IDBI Bank See messages about IDBI Bank IDBI Bank BSE | NSE 01/06/12 Are Mutual Funds betting on IDBI Bank?

Unicon Investment has recommended hold rating on IDBI Bank with a target of Rs 106, in its February 2, 2012 research report.

"In Q3FY12, IDBI Bank Ltd. (IDBI) reported a disappointing result and much below our estimates. PAT fell by 10% to INR 4098 mn YoY (est. INR 6080 mn); even operating profit fell by 27% to INR 8243 mn YoY. Higher growth interest expenses (37% YoY) dragged down the net interest income to INR 10595 mn in Q3FY12 (est. INR 12944 mn) from INR 12040 mn in Q3FY11 falling by 12% YoY. The non interest income fell by 3.4% to INR 4318 mn on YoY basis as fee income growth was flat (0.83% YoY). Even on the sequential basis the PAT, Operating Profit & NII has fell by 21%, 18% & 6% respectively."

"Advances grew by 16% to INR 1.56 tn due to growth in agri & retail portfolio & Deposits grew by 18% to INR 1.77 tn on YoY basis. The proportion of bulk deposits in total deposits is also reducing due to a rise in retail term deposits. It now constitutes around 44% of deposits. Due to its continuous efforts to garner more CASA, CASA ratio increased to 19.67% in Q3FY12 from 15.05% in Q3FY11. Due to higher cost of funds NIMs declined by 35 bps & 11 bps to 1.89% in Q3FY12 on YoY & QoQ basis respectively."

"During Q3FY12, overall asset quality further deteriorated with higher slippages. The gross and net non performing assets (NPAs) increased to 2.94% and 1.96% in Q3FY12 from 2.22% and 1.2% in Q3FY11 respectively. The slippages remained high at INR 12.34 Bn, mainly contributed by aviation sector. The provision coverage ratio has fallen to 69.09% from 75.61% in Q3FY11. The cost to income ratio of the bank increased to 44.7% as against 31.2% in Q3FY11 and 37.1% in Q2FY12. The bank has opened 25 branches during the quarter taking the total branches to 933. The bank plans to expand its branch network to 980 branches by FY12."

"The management has maintained its strategy of slower loan book growth, in favour of a higher CASA share and higher NIMs & expansion of branch network. In wake of lower NIMs, the bank has indicated a strategy of lower advances growth (~15% for FY13) to concentrate on increasing the percentage of low-cost CASA deposits and consciously shifting focus from large corporate lending to retail and MSME lending to bring in higher-yielding loans. In next few quarters bank is likely to face challenges on the asset quality front, due to slow recovery, higher slippages. Given the disappointment on key metrics asset quality, lower loan & deposit growth; we have reduce our rating to HOLD and we downgrade our target to INR 106," says Unicon Investment research report.

FIIs holding more than 30% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment