Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Union Budget
Budget 2011-2012 Home
Industry Expectations - Budget 2011-2012
Industry Reactions - Budget 2011-2012
Budget 2010-2011
Budget 2010-2011 Home
Industry Expectations - Budget 2010-2011
Industry Reactions - Budget 2010-2011
Contributor's Corner
Bonanza Portfolio
Hemant K Gupta
Krish Bhatt
S A A R T H I
Trinity Investments
Exchange Information
BSE 2009 Holidays
NSE 2009 Holidays
Investor Guide
Depository & Dematerialisation
Grievance Redressal
Investor Guide
SEBI
Trading of Securities
Transfer of Securities
Your Rights
Budget 2009-2010
Budget 2009-2010 Home
Industry Expectations - Budget 2009-2010
Industry Reactions - Budget 2009-2010
Interim Budget 2009-2010 Home
Industry Expectations - Interim Budget 2009
Budget 2008-2009
Railway Budget 2008-2009
Industry Expectations - Budget 2008
Union Budget 2008-2009
Highlights of Budget 2008-2009
Summary of Budget 2008-2009
Industry Reactions - Budget 2008
IPOs
Current IPOs
Past IPOs
IPO Subscription
Mutual Funds
Gold Exchange Traded Fund
MF Unique Holding
Forthcoming Dividends
ELSS Schemes Comparison
Tax Plans
New Fund Offers
Research
Arbitrages
Equity
Market Whispers
Tax Planning
Home
Equity Linked Savings Scheme
Post Office MIS
9% GOI Senior Citizens Savings Scheme
8% Savings (Taxable) Bonds
Kisan Vikas Patra
National Savings Certificate
Public Provident Fund
Research

| More
Federal Bank - One-off slippage mars performance - Centrum

FED's Q3FY13 core performance was largely in line (PPP at Rs3.9bn vs Rs3.8bn estimated) though spike in provisions led to a lower than expected bottomline. NIM contracted by ~10bps QoQ on reversal of interest income on NPAs. Asset quality matrices deteriorated due to one-offs with 1) gross slippage rate jumping to 5.4% led by chunky slippage 2) GNPA going up 9% QoQ to 3.85% and 3) PCR eroding by 600bps QoQ despite high provisioning cost at 82bps. Notwithstanding the one-off hit to asset quality during the quarter, we remain positive on the radical changes introduced by the new management and its potential long term benefits. We stick to our thesis of RoE expansion, which in turn should drive further re-rating of the stock over the long term. We maintain Buy and target price of Rs600.

- NIM contracts by 11bps QoQ: NII de-grew by 6% YoY to Rs5.0bn as NIM contracted by 11bps QoQ offsetting the uptick in credit growth (19% YoY vs 8% last quarter). Importantly, the contraction in NIM was the result of reversal of interest income on NPAs (Rs300mn mainly Air India & NAFED). Meanwhile, cost of deposits inched up marginally as the last leg of NR deposits repriced upwards to post-deregulation rates. Q4FY13 would still have the burden of Air India FITL and hence will continue to contain NIMs. Management guided for a NIM of 3.55% for FY13.

- Uptick in loan growth: Loan growth during the quarter registered an uptick and stood at 19% YoY (from 8% in the previous quarter) with key segments driving growth. The corporate segment made a major comeback with 12.6% QoQ growth. Incrementally, the bank remains comfortable in expanding its SME and retail book given acceptable slippage performance though cautious stance towards corporate segment will stay for the near term. The management intends to close FY13 with a loan growth of 15-16% while for FY14 it expects to get more aggressive with target of ~25% YoY.

- Slippage rate spikes to 5.4%: After a clear moderating trend for the last 4 quarters, slippage rate spiked to 5.4% led by chunky NPAs. Exposure to NAFED (Rs2bn) was recognized as NPA (40% provided for) and the borrower has requested for a settlement with 40% haircut. Various banks exposed to NAFED have declined to accept 40% haircut and hence negotiations are underway with resolution likely in a couple of quarters. The bank sold off Rs710mn worth of NPAs to ARCIL, net of which the slippage rate would have been 4.8%. Effectively, the %GNPA inched up by 10bps QoQ to 3.85% while pushing the PCR down by 600bps QoQ to 77%.

- Maintain Buy: The management's strategy to enhance RoE by optimally leveraging the equity, enhancing liability franchisee and containing asset stress is gradually yielding results (albeit mixed). We expect the aggressive branch expansion to start yielding results over FY14 & FY15 in terms of growth and enhanced liability profile. At the current price, the stock is trading at 1.3x FY14E ABV and implies 19% upside to our price target of Rs600. We suggest investors should Buy the stock.

Source: Equity Bulls

Posted On: 2013-01-21 19:50:42

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

CAN FIN HOMES LTD- Initiating Coverage, CMP Rs.201, BUY, Target Rs.270 - Sushil Finance
Angel Broking recommends Buy on Sun Pharmaceuticals with a 12 months Target Price of Rs 661
MOIL raises price of manganese ore - Angel Broking
BHEL announces provisional FY14 figures - Angel Broking
Kotak Mahindra Bank - In a right direction - ICICI Securities
Sell BHEL - Insufficient inflows, weakness in revenue and margin trajectory to continue - Kotak
Angel Broking recommends Buy on Tata Motors DVR with a Target Price of Rs 365 (12 months)
Sun Pharmaceuticals & Ranbaxy announce merger - Angel Broking
CAN FIN HOMES LTD - Initiating Coverage, CMP Rs.201, BUY, Target Rs.270 - Sushil Finance
Initiating Coverage - Mangalore Refinery & Petrochemicals (Buy): At the crack of dawn... - ICICIDirect
Havells India Ltd - Well on Track; Retain BUY - Emkay
SRF - On the cusp of high growth trajectory - Emkay
Info Edge - Rating Revision - Valuations still attractive - Centrum
Nestle India - Slow and Steady; Retain Accumulate - Emkay
IDFC - In-principle approval for banking license a positive - Emkay
Building Materials - Q4FY14 Results Preview - Cement and paints to be stagnant, tiles to look up - Centrum
IDFC - Banking licence - a long term story... - ICICIDirect
Power and Oil & Gas Utilities - Q4FY14 Results Preview - Strong earnings quarter - Centrum
Media - Q4FY14 Results Preview - Most segments set to soar
Ashok Leyland receives orders for vehicles from Government of Zimbabwe - Angel Broking
Bajaj Auto registers lower-than-expected sales in March 2014 - Angel Broking
RBI grants in principle approval for bank license to IDFC and Bandhan Financial services - Angel Broking
JSW Steel cuts steel prices for April 2014 - Angel Broking
Larsen and Toubro wins new orders worth Rs. 1,009cr - Angel Broking
Angel Broking recommends Buy on Heritage Foods with a Target Price of Rs 275 (12 months)
Sun TV Network - Brightness to intensify! - LKP Research
MphasiS Limited - Well geared for growth: BUY - Antique
SBI - Well-positioned; recovery in macro is another positive factor - Kotak
PI INDUSTRIES - Expansion, robust R&D to drive growth - Edelweiss
TV18 Broadcast - Digitization boost - Prabhudas Lilladher
Hindustan Unilever - Management meeting notes - market weakness persists - Kotak
Mindtree - Earnings upgrade nearing fag end, cut to HOLD - Emkay
Tesco Trent JV - A Step Closer - PhillipCapital
MRPL - Initiating Coverage - Phase III delay set to end; initiate with a BUY - Centrum
Sell Jubilant Foodworks - Putting the cart before the horse? - Ambit
Mahindra Finance - Strong parentage, diversified product - Anand Rathi
Voltas - Hopeful EMP recovery priced in - Ambit
Buy Bata India - Management Meet Update - Nirmal Bang
Sell Arvind - Nirmal Bang - Arvind Arm Buys 49% Stake in Calvin Klein Licensee In India
Shriram City Union Finance - Rurally entrenched, multi-product play - Anand Rathi
Sintex Industries - Moulding a better future - IDFC
Hindustan Unilever - Dull season continues - IDFC
Bajaj Finance - Rural foray, high NIM, stable asset quality - Anand Rathi
Reduce Nestle India - Kotak
Shriram Transport - Structural issues; Downgrade to sell - Anand Rathi
Oberoi Realty - Land acquisition adds visibility... - ICICIdirect
Chola Finance - Multi product, high operating leverage - Anand Rathi
Dabur India - Building blocks in place; project CORE a catalyst - Motilal Oswal
Magma Finance - Diversifying product, inexpensive valuations - Anand Rathi
Jaiprakash Associates - Focus on de-leveraging continues - Motilal Oswal




  

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2014