Angel Broking neutral on Allahabad Bank, Union Bank
Angel Broking has come out with its research reports on Allahabad Bank and Union Bank of India (UBI) and has maintained a 'Neutral' rating on both the stocks in its November 2013 reports.
November 09, 2013 / 15:27 IST
Angel Broking's research report
Allahabad BankAllahabad Bank's asset quality has come under severe pain over the past five quarters, as Gross NPAs have tripled and Net NPA levels have nearly grown more than four times. Going ahead, we remain concerned on the bank's asset quality, as we take into account the bank's aggressively high yields on advances, its exposure to stressed sectors and overall weak macro environment. Moreover, the bank is expected to receive capital infusion of Rs 400cr in FY2014 from the Government of India, which would to be at book dilutive valuations. Hence, we recommend a Neutral rating on the stock.Union Bank of India (UBI)Union Bank of India has been witnessing continued asset quality pressures for several quarters now, which has severely impacted its profitability. RoEs for the bank have declined significantly from 20.9 percent in FY2011 to 9.5 percent as of 1HFY2014, impacted by higher credit costs and lower margins. Moreover, its Tier I CAR is also relatively low at 7.1 percent, with core equity tier-1 at 6.9 percent, which is likely to result in book dilutive capital raising (GoI is set to infuse Rs 500cr in FY2014). Hence, we maintain our Neutral rating on the stock. 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. 
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