Share Market Update on IDBI Bank for 1QFY2012

Share Market Update on IDBI Bank for 1QFY2012 with a Neutral recommendation. 

For 1QFY2012, IDBI Bank reported healthy 33.6% yoy growth in its net profit to `335cr, which was in-line with our estimates but lower than consensus forecasts. Sequentially stable NIM, lower fee income and higher slippages despite the already-functioning system-based NPA recognition platform were the key highlights of the result. We maintain our Neutral view on the stock.

NIM surprises positively while slippages rise: For 1QFY2012, the bank’s advances declined by 1.3% qoq (up 14.5% yoy). Deposits also declined by 2.3% qoq (up 12.1% yoy). Advances growth on a yoy basis was driven by strong 49.8% growth in retail credit, which has increased its share to 19.2% from 14.7% in 1QFY2011. CASA deposits growth continued to be healthy at 49.2% yoy, leading to a 429bp yoy improvement in CASA ratio to 17.3%. The bank was able to largely sustain (down marginally by 3bp qoq) its reported NIM at 2.1%, despite the 54bp qoq rise in cost of funds. The annualised gross slippage ratio increased to 1.6% as compared to 0.5% in 4QFY2011. Slippages were on the higher side considering the fact that the bank had already switched over to system-based NPA recognition platform. Profitability in 1QFY2012 was aided by the write-back of provisions on SRs of `92cr. However, profits were lower due to the higher effective tax rate at 44.6% (27.6% in FY2011) due to non-tax deductibility of certain provisioning expenses. Profits for the quarter included ~`18cr from the two subsidiaries, which had merged with the bank in 4QFY2011. Branch expansion was healthy with addition of 67 branches, taking the network to 883.

Outlook and valuation: We believe the bank is set to improve its credit and deposit mix going forward on the back of its strong branch expansion plans. The bank has been amongst the fastest-growing in terms of CASA deposits over the past few years even when compared to private banks and now has a market share of 2.1%. At the CMP, the stock is trading at 1.1x FY2013E P/ABV adjusting for SASF (0.8x without adjusting). However, in our view, there are near-term cyclical headwinds to margins and asset quality. Hence, we maintain our Neutral stance on the stock

Stock Market Update on MindTree for 1QFY2012

Stock Market Update on MindTree for 1QFY2012 with a Buy recommendation and a Target Price of `445 (12 months)

 

MindTree reported a strong performance for 1QFY2012. Revenue grew by 7.3% qoq, with volume growth of 6.2% qoq despite ramp down in Kyocera’s revenue. MindTree has been one of the good performers on the revenue growth front in the Indian IT mid-cap space, growing by 21.5% yoy in FY2011 – the company managed this show despite its main founder, Mr. Ashok Soota, exiting the company, which had resulted in a steep de-rating of the stock in 1QCY2011. Further, fears of operational mayhem that took place post the company entered wireless handset manufacturing are behind, as the company exited the business in October 2010. We expect MindTree to continue its growth momentum at a 21% CAGR and return to profitable growth FY2012 onwards. We recommend Buy.

Quarterly highlights: For 1QFY2012, MindTree reported dollar revenue of US$92.5mn, up 7.3% qoq. In rupee terms, revenue came in at `413.1cr, up 5.6% qoq. EBITDA margin for the quarter fell by only 17bp qoq to 11.1%, even when margins had negative impacts of 1) 300bp qoq due to wage hikes given to 76% of the employees from April 1, 2011 and 2) 80bp due to rupee appreciation against dollar, which is a commendable task. These negative impacts were overshadowed by strong volume growth and improved utilisations.

Outlook and valuation:  We expect MindTree’s IT services segment to remain a growth driver because of the recent wins of two deals (one in UK and another in US) worth US$35mn each in the IMS space. We expect the PES business to start growing at the company’s average rate in FY2013. We expect MindTree to post a 20% CAGR in USD revenue over FY2011–13E, with EBITDA and PAT expected to grow at a 25.5% and 26.8% CAGR, respectively. At the CMP of `359, the stock is trading at 8.9x FY2013E EPS of `40.5, i.e. with a PEG ratio of merely 0.33x. Thus, we value the stock at 11x FY2013 EPS (45% discount to Infosys), i.e. with a target price of `445, and recommend a Buy rating.

Indian Trading Through Internet

Investors around the globe are getting many investment opportunities through a sorted out way of investing in the Indian share market online.

Worldwide investors who put in their money in Indian share markets, have a feeling that the stock market India is a secure place to invest, as it is very challenging market in today’s world. The Indian stock market has the potential to defy every unnecessary economic emergency coming its way.

Every investor feels the need of having a sub broker to help him buy and sell shares in the share market. A sub broker charges commission i.e. brokerage fee for their service towards the investor. Brokerage is usually a percent of total amount of trade and varies from broker to broker. With accordance to trading in the share market, every trader or investor needs to have appropriate knowledge of the market Sensex conditions and knowhow of changing Share prices and levels of Nifty; this is possible by keeping a tab on the market news more often. The Sensex is an indicator of all the major companies of the BSE. The Nifty is an indicator of all the major companies of the NSE.

Market News serves you with the most up-to-date financial information from India ranging from the headlines, top survivals to the gainers and losers to the pioneers of the market along with its current statistics.

It doesn’t make a difference if you are a stock market layperson or an expert in the field, a small mistake could cost you a fortune in this game of trading, which happens on account of pure knowledge and market attention. To avoid doing such follies, you need to keep yourself updated and gather investment advice from the right personnel. Free stock research reports along with the right kind of investment advice from the apt source will give a free way to the investor in knowing that he would not be heading the wrong way. These free stock research reports are one of those instruments which are a weapon to a good investing plan that provides support and a hold on the way you invest and trade in online shares.

We at angel broking provide all these above mentioned facilities for the traders who register with us. Our sub broker is the largest in NSE and the training and support provided to the sub brokers under us, helps them help their clients in business. Free stock research reports and market news is provided on our site with utmost detailing not leaving any more room for doubts with regard to online share trading.

Happy investing with the share market ups and downs!!