Buy IndusInd Bank LtdOutlook
Beating street estimates IndusInd Bank posted record profits of Rs 1,061.2 crore (up 32.2% YoY) on the back of good traction in its consumer book. NIM expansion to 3.7% (+40 bps) was above analysts’ expectations. This coupled with the strong outlook on credit book of 25-30% and enhancement of CASA by 35% to just a shade below 40% of total deposits, is extremely positive and we are enthused to raise our outlook on the stock from a HOLD to BUY. At a CMP of Rs 450, the stock is trading at 2.8x and 2.3x, its estimated P/BV for FY14E and FY15E.
Key Takeaways
• Q4FY13 net profit grew by 37.6% YoY to Rs 307.4 crore, aided by higher interest as well as core fee income. NII increased by 42% YoY to Rs 661.2 crore in Q4FY13 from Rs 464.4 crore in Q4FY12. This was primarily driven by healthy growth in NIM to 3.7% YoY in Q4FY13 from 3.3%.
• Non Interest Income grew by 26% on YoY basis to Rs 367.9 crore in Q4FY13 from Rs 292.1 crore. Core fee income increased 31% YoY to Rs 344.9 crore in Q4FY13.
• In Q4FY13, IndusInd Bank witnessed a healthy growth in advances and deposits with the total business assets growing to 27% YoY at Rs 98,438 crore while the total advances grew by 26% to Rs 44,321 crore in Q4FY13 YoY. CD ratio improved from 80% to 82% YoY in Q4FY13. Large corporates accounted for 26.7% of the total advances while mid-sized and small corporates accounted for 14.6% and 8.1% respectively.
• Loan book expanded 26% YoY to Rs 44,321 crore with a contribution of 22.5% from commercial vehicle loans in Q4FY13. Consumer finance contribution to the loan book rose from 24% to 58% QoQ in Q4FY13 and the management has further guided that their loan book is expected to grow at 25% - 30% per annum driven by robust consumer finance. Credit card book size currently is only a meager Rs 342 crore but the management has guided to double to Rs 700 crore this financial year.
• Total deposits grew by 28% YoY to Rs 54,117 crore in Q4FY13 while the bank's total assets grew by 27% YoY to Rs 73,307 crore in Q4FY13. CASA deposits grew 37% on a YoY basis to Rs 15,868 crore in Q4FY13, thereby improving CASA ratio to 29.3%.
• GNPA of IndusInd Bank inched up from 0.99% to 1.03% QoQ in Q4FY13 due to its exposure to commercial vehicle loans while its NNPA changed marginally to 0.31%. Provision coverage ratio was at 70.1%, down by 17 bps QoQ in Q4FY13. Cost to income ratio reduced by 269 bps to 47.19% YoY in Q4FY13 while restructured advances were maintained at 0.28%.• RoA and RoE were at 1.8% and 16.7% respectively in Q4FY13 whereas capital adequacy ratio was at 15.4% with Tier 1 at 13.8%.
• IndusInd announced a dividend of Rs 3 per equity share of paid up value of Rs 10/- thereby raising the dividend payment to 30% in FY13 as against 22% in FY12.
Buy State Bank of Bikaner & Jaipur For Target Rs.543.00State Bank of Bikaner & Jaipur (SBBJ) started its business with 124 branches & Rs. 450 million of total business in 1963.
* Bank’s Capital Adequacy Ratio registered at 12.44% as on 30.09.12.
* The deposit growth of the Bank during the year has been 13.58%.
* Net profit for Q2FY13 was up 50.84% to Rs. 1692.00 mn as compared to Rs. 1121.70 mn for Q2FY12 driven primarily by sustained & diversified revenue growth.
* SBBJ plans to offer loans to students & small and medium enterprise (SME) online. The growth in advances during the year is a shade better at 14.22%.
* Country’s first Financial Super Market Branch was opened in Jaipur by State Bank of Bikaner & Jaipur (SBBJ).
* The Gross NPA has improved from 3.70% to 3.29% year over year and during the same period, the Net NPA ratio has improved from 2.48% to 1.91%.
* Net Income and PAT of the company are expected to grow at a CAGR of 26% and 18% over 2011 to 2014E respectively.
Outlook and Conclusion
* At the current market price of Rs.485.00, the stock P/E ratio is at 3.64 x FY13E and 3.11 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 111.12 and Rs.129.90 respectively.
* Net Income and PAT of the company are expected to grow at a CAGR of 26% and 18% over 2011 to 2014E respectively.
* On the basis of Debt-Equity Ratio, the stock trades at 15.01 x for FY13E and 14.58 x for FY14E.
* Price to Book Value of the stock is expected to be at 0.57 x and 0.48 x for FY13E and FY14E respectively.
* We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs. 543.00 for Medium to Long term investment.
Buy NTPC Ltd For Target Rs.191Adjusted PAT in line with estimate: For 3QFY13, NTPC's recurring PAT was INR24.7b, after adjusting for INR1b of reversal/write-back of variable pay (included in staff cost) and for INR0.3b prior-period sales. The PAT, however, includes the benefit on tax gross-up. We estimate adjusted PAT at INR23.1b, in line with our forecast. Staff cost was INR6.9b, down 23% QoQ and 4% YoY, even after adjusting for write-back of variable pay. The decline in staff cost is substantial, considering the utility nature of the business and fixed cost structure.
* Sales growth muted: Revenue was muted (lower than our estimate) due to lower fuel cost (on higher usage of domestic coal) and lower contribution of gas projects. Realization declined from INR3.30/unit in 2QFY13 to INR2.83/ unit in 3QFY13, as fuel cost declined from INR2.03/unit to INR1.81/unit.
* Operational performance robust: Overall generation growth during 3QFY13 was robust at 6.6% YoY. While coal-based generation grew 9.5% YoY, gasbased generation declined 16.5% YoY. Average PLF for coal-based plants was 84.7% (v/s 83.8% in 3QFY12 and 74.8% in 2QFY13). In YTD FY13, NTPC added capacity of 2.66GW (v/s 2.82GW in FY12 and 2.5GW in FY11) and commercialized capacity of 3.82GW (v/s 1.2GW in FY12 and 1.5GW in FY11).
* Valuation and view: Superior capacity addition and generation growth is likely to drive 18% earnings CAGR over FY12-15, leading to ~250bp RoE expansion. The stock trades at 12x FY14E EPS and 1.6x FY14E BV. We reiterate our Buy recommendation.
Buy Dena Bank For Target Rs.125.00
Dena
Bank, in July 1969 along with 13 other major banks was nationalized and
is now a Public Sector Bank constituted under the Banking Companies
Act, 1970.
* Bank’s Capital Adequacy Ratio registered at 12.05% as on 30.09.12.
* Current and Savings (CASA) deposits grew by 16.35% to Rs. 228790.30
millions from Rs. 266200.70 millions as at end of Sep 2011.
* Net Profit was Rs. 2396.40 mn as against Rs. 1935.80 mn in the corresponding quarter of the previous year, up by 23.79%.
* Bank has appointed IDBI Intech to suggest strategies and assist in
the implementation of Business Processing Re-engineering exercise.
* Bank has opened 59 new branches during the Quarter & plans to open 100 new branches during FY 2012-13.
* Bank has entered into tie-up with different auto manufactures for financing of 3 wheelers.
* Net Income and PAT of the company are expected to grow at a CAGR of 29% and 25% over 2011 to 2014E respectively.
Outlook and Conclusion
At the current market price of Rs.114.00, the stock P/E ratio is at 4.02 x FY13E and 3.38 x FY14E respectively.
Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 28.37 and Rs.33.74 respectively.
Net Income and PAT of the company are expected to grow at a CAGR of 29% and 25% over 2011 to 2014E respectively.
On the basis of Debt Equity Ratio, the stock trades at 17.64 x for FY13E and 16.43 x for FY14E.
Price to Book Value of the stock is expected to be at 0.76 x and 0.62 x for FY13E and FY14E respectively.
We expect that the company will keep its growth story in the coming
quarters also. We recommend ‘BUY’ in this particular scrip with a target
price of Rs. 125.00 for Medium to Long term investment.
Buy Cipla Limited For Target Rs.445.00
Cipla
laid foundations for the Indian pharmaceutical industry back in 1935
with the vision to make India self-reliant in healthcare.
* Cipla is planning to new joint ventures and even acquisitions in key markets like Turkey, Morocco, Brazil and Nigeria.
* Cipla had acquired the over-the-counter and pharmaceutical divisions of Australian drug maker Sigma Pharmaceuticals for $800 million.
* Cipla has already invested $165 million in India and China to acquire facilities and build new ones for its foray.
* During the quarter, the robust growth of Net Profit is increased by 61.83% to Rs. 5000.10 million.
* Cipla has plans to increase its focus on domestic markets, with introduction of its offerings in new oncology and neuropsychiatry therapeutic segments.
* Cipla has launched of ‘Qvir’ drug kit for treating HIV/AIDS.
* Cipla has get approval from World Health Organization for anti-malaria drug.
* Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 18% over 2011 to 2014E respectively.
Outlook and Conclusion
India's pharmaceutical sector is gaining its position as a global leader. The pharma market in India is expected to
touch US$ 74 billion in sales by 2020 from the current US$ 11 billion, according to a PricewaterhouseCoopers
(PwC) report.
* At the current market price of Rs.390.00, the stock P/E ratio is at 22.62 x FY13E and 19.83 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.17.24 and Rs.19.67 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 18% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 14.44 x for FY13E and 12.75 x for FY14E.
* Price to Book Value of the stock is expected to be at 3.44 x and 2.93 x respectively for FY13E and FY14E.
Cipla plans to shift headquarters, keen on buying Rs 270 crore space in central Mumbai. At the end of financial year 2011-12, the company cash and cash equivalents stood at about Rs 1,400 crore while its assets were worth nearly Rs 4,000 crore.
The second quarter witnesses a healthy increase in overall sales as well as profitability on account of growth in anti-depressants, anti-ulcerant, anti-asthma, anti-biotics and cardiovascular therapy segments. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.445.00 for Medium to Long term investment.
Buy SBI For Target Rs.2,245/2,270
SBI `2,096:- The stock has taken support at a cluster zone which coincides at the rising trendline drawn from its Decemeber’11 lows , rising window pattern (dashed horizontal line) and 50% projection from wave ‘iv’ which marks the completion of wave ‘v’. The is presence of positive divergence in RSI and a probable double bottom pattern near the strong support zone indicating a bullish bias. The weekly charts suggests limited downside from the current levels as the RSI has tested a strong support cluster along with a Bullish Harami candle pattern.
COPYRIGHT @ VIKAS PARSHURAM SAMWATSARE 2013
* Cipla is planning to new joint ventures and even acquisitions in key markets like Turkey, Morocco, Brazil and Nigeria.
* Cipla had acquired the over-the-counter and pharmaceutical divisions of Australian drug maker Sigma Pharmaceuticals for $800 million.
* Cipla has already invested $165 million in India and China to acquire facilities and build new ones for its foray.
* During the quarter, the robust growth of Net Profit is increased by 61.83% to Rs. 5000.10 million.
* Cipla has plans to increase its focus on domestic markets, with introduction of its offerings in new oncology and neuropsychiatry therapeutic segments.
* Cipla has launched of ‘Qvir’ drug kit for treating HIV/AIDS.
* Cipla has get approval from World Health Organization for anti-malaria drug.
* Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 18% over 2011 to 2014E respectively.
Outlook and Conclusion
India's pharmaceutical sector is gaining its position as a global leader. The pharma market in India is expected to
touch US$ 74 billion in sales by 2020 from the current US$ 11 billion, according to a PricewaterhouseCoopers
(PwC) report.
* At the current market price of Rs.390.00, the stock P/E ratio is at 22.62 x FY13E and 19.83 x FY14E respectively.
* Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.17.24 and Rs.19.67 respectively.
* Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 18% over 2011 to 2014E respectively.
* On the basis of EV/EBITDA, the stock trades at 14.44 x for FY13E and 12.75 x for FY14E.
* Price to Book Value of the stock is expected to be at 3.44 x and 2.93 x respectively for FY13E and FY14E.
Cipla plans to shift headquarters, keen on buying Rs 270 crore space in central Mumbai. At the end of financial year 2011-12, the company cash and cash equivalents stood at about Rs 1,400 crore while its assets were worth nearly Rs 4,000 crore.
The second quarter witnesses a healthy increase in overall sales as well as profitability on account of growth in anti-depressants, anti-ulcerant, anti-asthma, anti-biotics and cardiovascular therapy segments. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs.445.00 for Medium to Long term investment.
Buy SBI For Target Rs.2,245/2,270SBI `2,096:- The stock has taken support at a cluster zone which coincides at the rising trendline drawn from its Decemeber’11 lows , rising window pattern (dashed horizontal line) and 50% projection from wave ‘iv’ which marks the completion of wave ‘v’. The is presence of positive divergence in RSI and a probable double bottom pattern near the strong support zone indicating a bullish bias. The weekly charts suggests limited downside from the current levels as the RSI has tested a strong support cluster along with a Bullish Harami candle pattern.
COPYRIGHT @ VIKAS PARSHURAM SAMWATSARE 2013
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