You are on page 1of 3

Company Report | Q1FY12 Result Update


25 July 2011
Industry CMP (INR) Target (INR) 52 week High/Low (INR) Market Cap (INR MN) 3M Avg. Daily Volumes P/BV FY12E Shareholding Pattern (%)
Institutions, 15.75% NonInstitutions, 11.74%


Banking 220 304 271/172 10383 861840 0.9x

Q1FY12 Result Highlights Allahabad Bank (ALBK) delivered strong quarter, with net profits increasing by 21% to INR 4.2 bn on YoY basis. This was contributed by higher growth in net interest income (NII) of INR 11.7 bn (38% YoY) driven by 30.4% yoy growth in advances. Other income declined by 4.2% YoY to INR 2.9 bn primarily led by 71% decline in trading gains and fee income by 31%. NIMs improved to 3.4% in Q1FY12 from 3.1% in Q1FY11 after a 100 bps rise in cost of deposits which was more than compensated by 90 bps increase in yield on advances. However, on sequential basis NIMs declined from 3.49%. CASA ratio declined to 32% from 33.5% in Q4FY11 due to 12% decline in saving deposits. Going forward, CASA deposits are likely to improve on back of ALBKs mandate

FII, 14.51%

Promoters, 58.00%

with state government to handle the salary accounts of its staff. ALBKs advances have grown by 30% YoY driven by SME which

Stock Performance
300 280 260 240 220 200 180 160 140 120 100 Aug Dec Jul Sep Jan Nov May Oct Feb Mar Apr Jun Jul

grew by 55% YoY to INR 163 bn. The growth in retail advances was largely driven by 290% YoY growth in commercial vehicles loans, 217% growth in trade loans and 24% YoY growth in education loans. In Q1FY12, slippages came down considerably to 0.2% from 0.9% in Q4FY11. The recoveries/upgradation also improved to INR 2 bn, as a result the GNPAs declined to 1.6% from 1.7% in Q4FY11 & NNPAs to 0.6% from 0.7% in Q4FY11. Also provision coverage ratio improved to 79.9% from 75.6% in the previous quarter. Outlook & Valuation 3 Months -0.8 -4.0 1 Year 22.3 3.5 Allahabad Bank is in a strong growth trajectory with strong distribution network and vast customer base in CASA-rich states. This provides significant business opportunities in the current rising interest rate scenario. This along with a balanced loan portfolio and high proportion of low-cost funds would help the bank earn better margins compared with other public sector banks. The stock trades at 0.9x of its FY12E BV. Maintaining asset quality would be a key challenge for the bank going ahead, but cheap valuations offer a good buying opportunity. We maintain BUY rating on the stock for target price of INR 304.


NSE Nifty

Performance (%) 1 Month ALBK 15.5 NIFTY 6.7

* Source: Ace, Unicon Research

(INR in mn)

Particulars NII Operating Profit PAT

11756 8896 4181

Estimates 12735 10518 4430

* Source: Ace, Unicon Research

Analyst Shweta Rane |

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email:

INR in mn)

Interest income Interest expense Net Interest Income Other Income Total Operating income Operating expenditure Operating Profit Operating Profit (%) Provisions PBT Tax PAT EPS (INR.) NIMs
Source: Company, Unicon Research

Q1 FY12 35498 19679 11756 2859 14615 5719 8896 25.06 3197 5700 1518 4181 8.78 3.40

Q1 FY11 24031 15528 8503 2986 11489 4443 7046 29.32 1511 5535 2064 3471 7.77 3.1

Y-o-Y 47.72 26.73 38.24 -4.23 27.21 28.70 26.26 -425 bps 111.63 2.98 -26.44 20.47 13.00 30bps

Q4 FY11 31182 19679 11503 4695 16198 8407 7791 24.98 4655 3136 569 2567 5.39 3.49

Q-o-Q 13.84 0.00 2.19 -39.10 -9.77 -31.98 14.19 7.6 bps -31.33 81.72 166.68 62.88 62.88 -9 bps

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email:

Unicon Investment Ranking Methodology

Rating Return Range Buy >= 20% Accumulate 10% to 20% Hold -10% to 10% Reduce -10% to -20% Sell <= -20%

This document has been issued by Unicon Financial Intermediaries Pvt. Ltd. (UNICON) for the information of its customers only. UNICON is governed by the Securities and Exchange Board of India. This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these restrictions. The information and opinions contained herein have been compiled or arrived at based upon information obtained in good faith from public sources believed to be reliable. Such information has not been independently verified and no guarantee, representation or warranty, express or implied is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document has been produced independently of any company or companies mentioned herein, and forward looking statements; opinions and expectations contained herein are subject to change without notice. This document is for information purposes only and is provided on an as is basis. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as an offer, or solicitation of an offer, to buy or sell or subscribe to any securities or other financial instruments. We are not soliciting any action based on this document. UNICON, its associate and group companies its directors or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this document, including but not restricted to, fluctuation in the prices of the shares and bonds, reduction in the dividend or income, etc. This document is not directed to or intended for display, downloading, printing, reproducing or for distribution to or use by any person or entity who is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or would subject UNICON or its associates or group companies to any registration or licensing requirement within such jurisdiction. If this document is inadvertently sent or has reached any individual in such country, the same may be ignored and brought to the attention of the sender. This document may not be reproduced, distributed or published for any purpose without prior written approval of UNICON. This document is for the general information and does not take into account the particular investment objectives, financial situation or needs of any individual customer, and it does not constitute a personalised recommendation of any particular security or investment strategy. Before acting on any advice or recommendation in this document, a customer should consider whether it is suitable given the customers particular circumstances and, if necessary, seek professional advice. Certain transactions, including those involving futures, options, and high yield securities, give rise to substantial risk and are not suitable for all investors. UNICON, its associates or group companies do not represent or endorse the accuracy or reliability of any of the information or content of the document and reliance upon it is at your own risk. UNICON, its associates or group companies, expressly disclaims any and all warranties, express or implied, including without limitation warranties of merchantability and fitness for a particular purpose with respect to the document and any information in it. UNICON, its associates or group companies, shall not be liable for any direct, indirect, incidental, punitive or consequential damages of any kind with respect to the document. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Unicon Financial Intermediaries Pvt. Ltd.

Address: Wealth Management Unicon Financial Intermediaries. Pvt. Ltd. VILCO Center, 2nd Floor, 8 Subhash Road, Vile Parle (E) Mumbai 400 057
Ph: 022-3390 1234 Email: Visit us at

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: