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Last Updated : May 16, 2012 02:45 PM IST | Source: Moneycontrol.com

Accumulate Bank of Mah; target of Rs 55: Angel Broking

Angel Broking is bullish on Bank of Maharashtra and has recommended accumulate rating on the stock with a target of Rs 55 in its May 10, 2012 research report.

 
 
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Angel Broking is bullish on Bank of Maharashtra and has recommended accumulate rating on the stock with a target of Rs 55 in its May 10, 2012 research report.


“Bank of Maharashtra reported a muted performance for 4QFY2012, registering net profit growth of just 4.9% yoy to Rs73cr, despite moderate growth in operating income and a sizeable decline in operating expenses, mainly due to higher provisioning expenses during the quarter. We recommend an Accumulate rating on the stock.”


“During 4QFY2012, the bank’s advances grew at a healthy rate of 19.6% yoy, while deposits growth was moderate at 14.5% yoy. CASA deposits growth stood at 17.0% yoy, which was higher as compared to overall deposit growth, mainly due to 28.1% yoy growth in current account deposits, leading to an 89bp yoy improvement in CASA ratio to 41.3% (33bp sequentially). The bank shed around ~Rs3,000cr of high cost bulk deposits during 4QFY2012, taking its total bulk deposits to ~Rs4,000cr (5.0% of overall deposits as against 8.6% in 3QFY2012). Cost of funds for the quarter decreased by relatively low 11bp qoq compared to a 22bp qoq decrease in yield on funds. Consequently, reported NIM witnessed a decline of 11bp qoq to 3.2%. The bank’s fee income witnessed healthy traction during 4QFY2012, growing by healthy 22.5% yoy to Rs117cr. The bank’s asset quality deteriorated sequentially during 4QFY2012, with both absolute gross and net NPAs increasing on a qoq basis. While gross NPAs increased from 2.1% to 2.3%, net NPA ratio increased from 0.5% to 0.8%. Slippage ratio increased on a sequential basis to 3.9%, much above the comfortable 1-1.5% levels. PCR for the bank dipped by 664bp, but remained at comfortable levels. The bank restructured ~Rs485cr of loans during the quarter, taking its outstanding restructured advances to Rs3,227cr (~5.6% of the overall loan book).”


“At the CMP, the stock is trading at attractive valuations, in our view, of 0.6x FY2014E ABV, which is even below its lower trading range for the past five years (its five-year range of 0.7–1.2x and median of 0.9x). On the back of high NIM, moderate fee income and better provisioning coverage than peers, we expect the bank to deliver a healthy 38.5% earnings CAGR over FY2012–14E. We value the stock at 0.7x and, hence, recommend an Accumulate rating with a target price of Rs55,” says Angel Broking research report.  


Institutional holding more than 40% in Indian cos


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To read the full report click on the attachment

First Published on May 16, 2012 02:36 pm
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