Angel Broking neutral on Ambuja Cements, Dena Bank
Brokerage house Angel Broking has maintained a neutral rating on Ambuja Cements and Dena Bank in its research reports.
August 05, 2013 / 14:58 IST
Angel Broking's research report -
Ambuja CementsThe top-line fell by 7.8 percent yoy to Rs 2,346cr due to lower volumes and realization. While volume was down by 3 percent yoy, realization was down 5.7 percent on a yoy basis. The company was impacted severely by the demand slowdown in the northern and the western regions of the country as a result of the poor macro-economic scenario. The early arrival of monsoon further impacted demand in the month of June. The OPM, at 22.0 percent, was down by 650bp on a yoy basis, impacted by poor realization and higher input costs. Thus the PAT came in lower than estimated at Rs 324cr.Outlook and valuation: We expect ACEM to register an 8.1 percent and 4.4 percent CAGR in its stand-alone top-line and bottom-line, respectively, over CY2012-14E. The ownership restructuring deal announced by Holcim for its India operations appears to be favouring itself over the minority shareholders of ACEM as ~90 percent of ACEM's cash balance of ~Rs 3,800cr is getting repatriated to the promoter company. At the current market price, the stock is trading at EV/tonne of US$114 on CY2014E capacity, which we believe is fair. Hence, we continue to remain Neutral on the stock.Dena BankDuring 1QFY2014, the advance book for the bank grew moderately by 8.9 percent yoy, while deposits grew at a healthy pace of 18.3 percent yoy. Loan growth was primarily aided by a healthy growth of 25 percent plus in agriculture, MSME and retail book. CASA deposits grew at a moderate pace of 6.9 percent yoy. CASA ratio has been trending downwards for the bank and even during the quarter it declined by 91bp qoq to 27.9 percent. Reported NIM increased by 9bp qoq to 2.5 percent, aided by an 11bp qoq decline in cost of deposits. The bank's non-interest income (excluding treasury), grew at a moderate pace of 7.2 percent yoy to Rs 117cr, on back of subdued CEB income performance (8.2 percent yoy decline to Rs 56cr). Slippages during the quarter came in at Rs 408cr (annualized slippage rate of 2.5 percent), in-line with the Management's guidance. Of incremental slippages, an account from the IT sector (at Rs 98cr) was the largest. Recoveries and Upgrades came in sequentially lower at Rs 103cr compared to Rs 146cr in 4QFY2013. PCR dipped by 144bp sequentially to 68.1 percent. As of 1QFY2014, the bank's outstanding restructured book stood at ~Rs 6,538cr (as compared to Rs 5,423cr in 4QFY2013). Going ahead, the Management has guided for advances worth Rs 800cr to be in the restructuring pipeline.Outlook and valuation: The bank has witnessed a marked decline in its CASA ratio over the last two years (from 35.2 percent to 27.9 percent as of 1QFY2014), which can be largely attributed to strong growth in term deposits (CAGR of 28.8 percent) to fund its aggressive loan book growth. We are cautious on the bank's asset quality performance, in-line with the sectoral outlook, post the recent macro developments in midst of overall weak macro fundamentals. Moreover, the bank plans to raise capital to the tune of Rs 2,180cr, which is likely to be at book-dilutive valuations. Hence, we recommend a 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. 
Read More
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
