This action might not be possible to undo. Are you sure you want to continue?
Rs. 67.35 Buy Rs. 150
Market Data As On 13th October 2011 Total Equity Shares 62.752 Cr. Equity Share Capital RS. 627.52 Cr. Market Capital Rs. 4226 Cr. Face Value Rs.10 BSE Code 532505
The growth of the banking sector is highly dependant on overall growth of the economy. The Indian economy had clocked 8.5% growth last fiscal. GDP growth decelerated to 7.7% in Q1 FY11 from 8.8% in the corresponding quarter last year. During the last 5-6 months we have seen inflation remain close to double digit, which forced the Reserve Bank of India to increase repo and reverse repo rate consistently. Because of such a high interest rate scenario, loan growth is expected to slow down. However we expect that interest rate cycle is near its peak level and RBI will pause from hereon. Also we have seen that because of global economic crisis, the commodity prices have shown the downward trend. We expect the inflation to come down at 7.5% by FY12. India being a highly under banked country, have enormous potential for growth. Only 40% of Indian population possesses bank accounts. All this points towards the low level of financial inclusion in the country. Because of which we have seen that during the last two years the deposit base of all the banks have grown 1820% across the board, and we expect that going forward the growth in Deposits will remain at 16-18% during FY12-14. Historical evidence suggests that loan growth has limited correlation with interest rates and a higher correlation with economic growth. As long as real GDP growth is likely to be between 7-8%, we expect loan growth to be strong in long run.
asset management and other related services. 608 ATMs all over India.10% 68.33% FII DII Public & Body Corporates 5. The bank also provides merchant banking.Company Overview Uco bank is a Public sector bank (with Government of India holding 63. Shareholding Pattern Shareholding Pattern 16.44% Promoter & Promoter Group 10. UCO can enhance its Other Income by introducing and cross selling of newer products like mutual funds. insurance and other wealth management products. Average age of Bank’s Employees shall come down in next 3 to 4 years. It has implemented 100% Core Banking Solutions (CBS) into its operations CBS implementation will enhance efficiency of the Bank.59% stake).13% . The bank has pan India presence with 2206 branch offices. as existing staff retires and makes way for younger professionals. the bank is primarily involved in commercial banking and other related services.
Uco Bank’s Deposits grew at CAGR of 21.1 C-D Ratio FY11 100561 145278 69.22 Uco bank has shown tremendous growth during the last 5 years in its business. In its move to increase CASA.60%.61 Deposits FY09 69669 100222 69.33 FY07 47471 64860 73. However. We expect that bank’s business will grow at 16-18% YOY due to its focus on retail customers.51 FY10 83371 122416 68. in Cr. with increase in retail deposit rate and increased focus to tap the retail customers. higher proportion of CASA. Percent . 100000 50000 0 Advances Deposits C-D Ratio 74 73 72 71 70 69 68 67 66 65 FY06 37817 54544 69.Advances 200000 150000 Rs.19 Advances FY08 55627 79909 69. Uco bank’s CASA is just around 25% which is probably least in the sector.64% during last five years and Advances grew at CAGR of 21.Strong Growth in Deposits & Advances Deposits . increase in C-D ratio. bank will be able to improve its CASA ratio and thereby will improve its NIM.. Uco bank has recently waived all charges on saving bank accounts. implementation of technology and financial inclusion.
Malaysia & Guangzhou. we have seen that 100% CBS has help all private sector and some of public sector banks in improving its business. Internationally. It also has two Representative offices at Kuala Lumpur. 940 Cr. Uco Bank received Rs. Going forward we expect. China. capital infusion from Government of India. 100% CBS will help UCO in improving its business per branch and business per employees significantly. Bank has four branches.Strong Network Uco bank has Pan India presence with 2206 branches and 608 ATMs all over India. In past. . which is above the minimum level prescribed by RBI. this will help the bank in meeting their future growth requirements. This will help the bank in improving its business along with increase in deposits. Capital Adequacy During the FY11. Branches 2500 2000 1500 1000 500 0 FY05 FY06 FY07 FY08 Business Per Branch 120 100 80 60 40 20 0 FY09 FY10 FY11 In Cr. 2 each in Singapore and Hong Kong. The bank’s capital adequacy ratio is at 13.71%.
Capital Adequacy 16 14 Percentage 12 10 8 6 4 2 0 FY08 FY09 FY10 FY11 11.71 Asset Quality Uco Bank’s NPA were gradually decreasing from FY06 to FY10.13 1.14 1. bank shifted to system based recognition of NPA.18 1.5 3 2.5 1 0.98 3.21 2. Gross & Net NPA 3.17 2.97 3.5 2 1.17 2.21 13.84 Gross NPA Net NPA .27 3.02 11. In FY11. Once this mandate is implemented.99 1. provisioning of NPA shall come down.93 13.1 2. RBI has mandated Banks to convert into 100% system driven NPA recognition process by Sept’ 2011.5 0 FY06 FY07 FY08 FY09 FY10 FY11 1.
05 72.57 2.00 20.82 4.56 10.20 2.07% Union Bank of India 2.45.19 FY11 3845 3.) CASA (%) ROE (%) ROA (%) C-D Ratio (%) Business per Employee (In Cr.36 4.07 0.44% Data as on 31st March 2011 and Price as on 13th Oct 2011) Percent .86% Uco Bank 1.5 1 0.00 70.18 6.68 4.97 FY06 1566 2. in Cr.92 1.72 FY07 1695 2.87 FY09 1644 1.22 11.76 18.) Profit per Employee (In Lacs) NIM (%) Price/B.02.42 26. Bank has waived all charges on saving and current accounts in its drive to increase CASA.278 22. Peer Comparison Particulars Deposits (In Cr.5 2 1.82 2. Uco Bank’s CASA is merely at 24%.210 35. Net interest income has grown at CAGR of 19.07 3.36 3.33 0.22 12.77 6.V P/E Ratio Dividend Yield (%) Bank of India 2.70 0.84 6.68 1.5 3 2.62 3. We expect that going forward bank will manage to improve its CASA which will reduce its overall cost of deposits.5 0 Uco Bank’s net interest income has shown remarkable performance during last five years.43 7.18 17.10% Dena Bank 64.98.51 NII FY08 1488 1. 4000 2000 0 NII NIM FY05 1409 2.33 10.Consistent Growth in Net Interest Income Net Interest Income & NIM 6000 Rs.19 3.80 72.33 1. Currently.886 29.68% during last five years.17 0.66 69.71 1.461 31.17 6.50 3.97 NIM FY10 2324 2.15 3. Uco Bank has recognized this and is focused on increasing its CASA.
42 3676.62 -631.89 -340.98 1201.21 -556.40 944.45 579.36 18.46 275.33 301.74 302.41 12296.23 214.31 611.36 2694.) Sept’ 2010 2735.42 1705.32 965.53 627.38 1019.98 765.24 549.54 -1733.22 225.52 14.66 .28 -6476.27 -455.) Interest Earned Other Income Total Income Interest Expended Operating Expenses Operating Profit Provisions PBT Tax Net Profit Equity EPS (Rs.14 -510.90 627.23 229.Actual Yearly Performance (Rs.36 2.49 292. In Cr.02 124.98 1012.62 2009-10 9526.77 239.39 -1832.29 Actual Quarterly Performance (Rs.63 -656.28 570.84 483. In Cr.00 119.68 -1462.80 925.25 -7202.49 292.36 6.42 2010-11 11370.21 -7525.96 -1750.93 10492.54 627.67 704.17 Dec’ 2010 2894.48 June 2011 3401.55 -2224.76 -309.88 -2592.56 -38.48 Mar’ 2011 3068.21 -580.02 -9.19 -5.) 2008-09 8121.20 -1584.19 549.16 3108.16 -36.36 5.57 -8.90 9141.66 -526.18 549.52 4.) Interest Earned Other Income Total Income Interest Expended Operating Expenses Operating Profit Provisions PBT Tax Net Profit Equity EPS (Rs.70 309.06 3360.89 -2075.31 2964.12 -13.81 -472.47 1049.34 -86.50 549.02 906.52 3.
48 Valuations Market Cap of UCO is 1. We feel that UCO shall command a PE of atleast 5 times its FY13 EPS of Rs.52 29.30 and shall quote at Rs.52 16. UCO bank is following footsteps of its peers and has implemented technology and infused younger staff. it seems to be on much lower side compared to other PSU Banks.) 2011-12 13500 1000 14500 9500 2000 3000 1700 1300 250 1050 627.73 20112-13 16000 1150 17150 10500 2600 4050 1700 2350 500 1850 627. In Cr. .Financial Forecast (Rs. Once these benefits start accruing.) Interest Earned Other Income Total Income Interest Expended Operating Expenses Operating Profit Provisions PBT Tax Net Profit Equity EPS (Rs. UCO shall command Market Cap of atleast 3 to 4 times its Operating Profit as witnessed presently in the case of Banks like BOI and Union Bank. benefits of these steps shall accrue in couple of years.50 times its Operating Profit.150 We recommend to Buy the stock with an outlook of next 2 years.
RESEARCH TEAM Dixit Doshi Research Analyst Tel: 43472750 Disclaimer Swechha Salgia Research Analyst Hardik Jain Director Bhavesh Premji Head Research website: www. Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.involve substantial risk and are not suitable for all investors. This material is for the personal information of the authorized recipient.whitestonepms. nor any person connected with it. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. We have reviewed the report. and employees world wide may: (a) from time to time.com 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. or other reasons that prevent us from doing so. It is for the general information of clients of Whitestone Financial Advisors Pvt Ltd. Price and value of the investments referred to in this material may go up or down. It does not constitute a personal recommendation or take into account the particular investment objectives. Certain transactions –including those involving futures. The recipients of this material should rely on their own investigations and take their own professional advice. and in so far as it includes current or historical information. Persons into whose possession this document may come are required to observe these restrictions. While we endeavor to update on a reasonable basis the information discussed in this material. accepts any liability arising from the use of this document. No part of this material may be duplicated in any form and/or redistributed without Whitestone Financial Advisors Pvt Ltd. and buy or sell the securities thereof. directors. Opinions expressed are our current opinions as of the date appearing on this material only.com Email: info@whitestonepms. it is believed to be reliable though its accuracy or completeness cannot be guaranteed. of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company (ies) discussed herein or act as advisor or lender / borrower to such company (ies) or have other potential conflict of interest with respect to any recommendation and related information and opinions. prior written . financial situations. and we are not soliciting any action based upon it. as opposed to focusing on a company’s fundamentals and as such. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities. or needs of individual clients. have long or short positions in. Neither Whitestone Financial Advisors Pvt Ltd. there may be regulatory. Past performance is not a guide for future performance. officers. directly or indirectly related to specific recommendations or views expressed in this report. is or will be. We and our affiliates. compliance. Reports based on technical analysis centers on studying charts of a stock’s price movement and trading volume. This report is not to be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. may not match with a report on a company’s fundamentals. options and other derivatives as well as non-investment grade securities . and no part of his or her compensation was.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.