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CMP 434.20
Target Price 486.00
ISIN: INE095A01012
JAN 10th
, 2013
INDUSIND BANK LTD Result Update: Q3 FY13
BUYBUYBUYBUY
Stock Data
Sector Banking
BSE Code 532187
Face Value / Div. Per Share 10.00
52wk. High / Low (Rs.) 440.80/247.25
Volume (2wk. Avg ) 511000
Market Cap ( Rs in mn ) 226760.95
Annual Estimated Results (A*: Actual / E*: Estimated)
Years FY12A FY13E FY14E
Net Income 53592.00 74492.88 94605.96
NII 27160.30 36144.75 45274.02
Net Profit 8026.10 10431.69 12990.53
EPS 17.16 19.97 24.87
P/E 25.30 21.74 17.46
Shareholding Pattern (%)
1 Year Comparative Graph
BSE SENSEX INDUSIND BANK LTD
SYNOPSIS
IndusInd Bank, which commenced its
operations in 1994, caters to the needs of
both consumer and corporate customers.
Capital Adequacy Ratio (with accrued profit)
as on Dec 31, 2012 was 16.56% as against
15.08% at the end of Dec. 31, 2011.
The CASA ratio improved to 28.67% against
26.50%.
Net Profit was Rs.2672.70 mn as against Rs.
2059.60 mn in the corresponding quarter of
the previous year, up by 29.77%.
IndusInd Bank has 461 branches, and 852
ATMs spread across 320 geographic locations
of the country as on December 31, 2012.
Core Fee Income for the quarter was Rs
3292.90 mn as against Rs 2503.40 mn in the
corresponding quarter of the previous year,
showing a spectacular growth of 32%.
Total deposits as on Dec. 31, 2012 were at Rs.
510980 mn as compared to Rs. 405580 mn in
the corresponding quarter of the previous
year, up by 26%.
IndusInd Bank enhances its core banking
system to Finacle 10.2 version
Net Income & PAT of the company are
expected to grow at a CAGR of 38% and 31%
over 2011 to 2014E respectively.
Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
IndusInd Bank Ltd 434.20 226760.95 17.16 25.30 4.49 22.00
Indian Overseas Bank 92.90 74041.10 12.91 7.20 0.69 45.00
Axis Bank 1348.80 576147.50 109.01 12.37 2.52 160.00
SBI 2521.65 1692140.20 219.40 11.49 2.02 350.00
Investment Highlights
Results updates- Q3 FY13,
The company’s net profit jumps to Rs. 2672.70 million as against Rs. 2059.60 million in the corresponding
quarter ending of previous year, an increase of 29.77%. Revenue for the quarter rose 29.56% to Rs. 18004.90
million from Rs. 13897.40 million, when compared with the prior year period. Reported earnings per share of the
company stood at Rs. 5.12 a share during the quarter, registering 16.02% an increase over previous year period.
Net Interest Income is Rs. 9336.00 millions as against Rs. 6957.70 millions in the corresponding period of the
previous year.
Months Dec-12 Dec-11 % Change
Net Income 18004.90 13897.40 29.56%
PAT 2672.70 2059.60 29.77%
EPS 5.12 4.41 16.02%
Segment Revenue
Particulars (Rs.mn.) Q3 FY13
Wholesale Banking 8594.90
Treasury Operations 4464.20
Retailing Banking 11742.40
Other Banking Operations 59.10
Total 24860.60
Latest Updates
• Total deposits as on December 31, 2012 were at Rs. 510980 mn as compared to Rs. 405580 mn in the
corresponding quarter of the previous year, up by 26%.
• Capital Adequacy Ratio (with accrued profit) as on December 31, 2012 was 16.56% as against 15.08% at the
end of December 30, 2011.
• The CASA (Current Accounts-Savings Accounts) ratio improved to 27.98% against 26.50%.
• IndusInd Bank has 461 branches, and 852ATMs spread across 320 geographic locations of the country as on
December 31, 2012. The Bank also has 2 Representative offices, one each in London and Dubai.
• IndusInd Bank enhances its core banking system to Finacle 10.2 version
IndusInd Bank has enhanced its core banking system to power the Bank’s exponential growth agenda. Built
on new generation technology, Finacle 10.2 enables IndusInd Bank to accelerate innovation and stay ahead of
emerging customer demands. By leveraging Finacle, the Bank personalizes offerings, bundles products and
enriches its segment specific product portfolio.
Company Profile
IndusInd Bank derives its name and inspiration from the Indus Valley civilization. IndusInd Bank, which
commenced its operations in 1994, caters to the needs of both consumer and corporate customers. It has a
robust technology platform supporting multi-channel delivery capabilities. IndusInd Bank has 421 branches, and
735 ATMs spread across 288 geographic locations of the country as on June 30, 2012. The Bank also has 2
Representative offices, one each in London and Dubai.
The Bank believes in driving its business through technology. It has multi-lateral tie-ups with other banks
providing ATM access to its customers across the country. It enjoys clearing bank status for both major stock
exchanges - BSE and NSE - and three major commodity exchanges in the country - MCX, NCDEX, and NMCE.
IndusInd Bank also offers DP facilities for stock and commodity segments. The Bank has been bestowed with the
mandate of being a Settlement Banker for six tea auction centers.
Ratings
‘ICRA AA’ for Lower Tier II subordinate debt program and ‘ICRA AA-‘ for Upper Tier II bond program by ICRA.
‘CRISIL A1+’ for certificate of deposit program by CRISIL. ‘CARE AA’ for Lower Tier II subordinate debt program
by CARE. ‘Fitch AA-‘for Long Term Debt Instruments and ‘Fitch A1+’ for Short Term Debt Instruments by Fitch
Ratings.
Products & services offered
Banking for Individuals
Premier Banking
� Indus Exclusive for Individuals � Indus Select for Individuals
Accounts
� Indus Classic Savings Account
� Indus Easy Savings Account
� Indus Privilege Savings Account
� Indus Young Saver
Deposits
� Sweep - In / Out Deposit
� Young Saver Deposit
� Senior Citizen Scheme
� Regular Recurring Deposit
Loans
� Home Loan
� Small Business Loan
� Car Loan
� Two - wheeler Loan
Debit Cards
� International Classic VISA Debit Card
� International Gold VISA Debit Card
� Maximum Platinum VISA Debit Card
� Indus Money
Investments
� e-Trading
� Bonds
� Mutual Funds
� Suvarna Mudra
Insurance
� Health Insurance
� Motor Insurance
� Home Insurance
� Travel Insurance
Demat
� Demat Account
� ASBA
� ASBA Enabled Branches
Offers
� Debit Card Offers
� Credit Card Offers
� IndusNet & IndusMobile Offer
� Credit Cards
Defence Accounts
� Indus Force
� Indus Force Maxima
Indus Forex
� Indus Forex Card
� Foreign Currency Bank Notes
� Travellers Cheque
� Foreign Currency Demand Draft
Banking for Corporate & Institutions
Coverage
� Corporate & Investment Banking
� Commercial Banking
� Financial Institutions & Public Sector
� Business Banking Group
Investment Banking
� Products/Services
� Global Access
� IndusInd Adds Value
Transaction Banking
� Supply Chain Finance & Services
� Channel Finance
� Dealer Financing
� Vendor Financing
Global Markets
� Money Market Desk
� Currency Option
� Interest Rate Swap (IRS)
� Currency Swap
Capital & Commodities Markets
� Stock Exchange Cell
� Commodities Exchange Cell
� Banker to Public/Rights Issues
� Debenture Trustee
Government & Specialized Accounts
� Indus TASC
� Indus Prime
� Indus LBO
� Indus Escrow
Banking for Business Owners
Business Solutions
� Indus Prestige
� Indus Gold Plus
� Indus Gold
� Indus Silver
Payment & Collection
� Payment Solutions
� Easy Collections
Trade & Foreign Exchange
� Exporters
� Importers
� Inland Trade Services
� Bank Guarantees
Lending Services
� Commercial Vehicle Loan
� Traders Advances
� Three Wheelers Loan
Premium Business Banking
� Indus Exclusive for Business Owners
� Indus Select for Business Owners
Banking for NRIs
Accounts
� NRE Regular Savings Account
� NRO Regular Savings Account
� RFC Account
Deposit Schemes
� NRE Fixed Deposits
� NRO Fixed Deposits
� FCNR Deposits
� RFC Deposits
Remittances
� Telegraphic & Wire Transfers
� Indus Speed Remit
� Indus Fast Remit
� E-Remittance
Investments & Insurance
� Mutual Funds
� Insurance
� Equity Trading for NRIs
� Portfolio Investment Scheme
Value Added Services
� Returning NRIs
� Taxation
� Indus NEAT
� Indus ASSIST
Premier Banking for NRI’s
� Indus Exclusive NRI Program
� Indus Select NRI Program
Online banking
� IndusNet
� ATMs
� E-Statement
� Mobile Alert
� e-Trading
� Indus Online
� Remittance Services
� MF Portfolio Tracker
� Indus Direct
� Mobile top-up
� Mobile Banking
� Fast Forex
Financial Highlight
Balance Sheet
(A*- Actual, E* -Estimations & Rs. In Millions)
FY11 FY12 FY13E FY14E
CAPITAL AND LIABILITIES
Capital 4659.66 4677.02 5222.50 5222.50
Employee Stock Options Outstanding 79.80 109.46 137.92 165.50
Reserves and Surplus 35762.66 42630.60 50978.39 63968.92
Deposits 343653.71 423615.50 508338.60 599839.55
Borrowings 55254.24 86820.13 134050.28 201075.42
Other Liabilities and Provisions 16948.34 18107.98 19918.79 21771.22
Total 456358.41 575960.69 718646.47 892043.11
ASSETS
Cash and Balances with Reserve Bank of India 24560.39 29035.76 33971.84 39407.33
Balances with Banks and Money at Call and Short notice 15685.60 26360.46 44812.78 72148.58
Investments 135508.14 145719.46 160291.41 176320.55
Advances 261656.47 350639.51 448435.44 563943.31
Fixed Assets 5964.59 6567.98 7235.63 7959.19
Other Assets 12983.22 17637.52 23899.37 32264.15
Total 456358.41 575960.69 718646.47 892043.11
Annual Profit & Loss Statement for the period from 2011 to 2014E
Value(Rs.in.mn) FY11 FY12 FY13E FY 14E
Description 12m 12m 12m 12m
Net Income 35893.60 53592.00 74492.88 94605.96
Other Income 7136.60 10117.80 13051.96 15662.35
Total income 43030.20 63709.80 87544.84 110268.31
Interest Expended -22128.70 -36549.50 -51400.09 -64994.29
Net Interest Income 20901.50 27160.30 36144.75 45274.02
Operating Expenses -10084.80 -13430.00 -18474.23 -23178.46
Operating Profit 10816.70 13730.30 17670.52 22095.56
Provisions and Contingencies -2018.90 -1803.80 -2261.83 -2850.33
Profit Before Tax 8797.80 11926.50 15408.69 19245.23
Tax -3024.60 -3900.40 -4977.01 -6254.70
Profit After Tax 5773.20 8026.10 10431.69 12990.53
Equity Capital 4659.70 4677.00 5222.50 5222.50
Reserves 33589.00 40546.70 50978.39 63968.92
Face Value (Rs.) 10.00 10.00 10.00 10.00
EPS 12.39 17.16 19.97 24.87
Quarterly Profit & Loss Statement for the period from 30 June 2012 to 31 Mar 2013E
Value(Rs.in.mn) 30-Jun-12 30-Sep-12 31-Dec-12 31-Mar-13E
Description 3m 3m 3m 3m
Net Income 16320.40 17279.30 18004.90 19265.24
Other Income 3187.80 3204.90 3558.00 3878.22
Total income 19508.20 20484.20 21562.90 23143.46
Interest Expended -11479.40 -12182.00 -12226.90 -13370.08
Net Interest Income 8028.80 8302.20 9336.00 9773.38
Operating Expenses -3988.50 -4104.00 -4614.40 -4816.31
Operating Profit 4040.30 4198.20 4721.60 4957.07
Provisions and Contingencies -535.00 -490.70 -786.80 -684.08
Profit Before Tax 3505.30 3707.50 3934.80 4273.00
Tax -1142.70 -1205.00 -1262.10 -1388.72
Profit After Tax 2362.60 2502.50 2672.70 2884.27
Equity Capital 4689.30 4697.20 5222.50 5222.50
Face Value (Rs.) 10.00 10.00 10.00 10.00
EPS 5.04 5.33 5.12 5.52
Ratio Analysis
Particulars FY11 FY12 FY13E FY14E
EPS (Rs.) 12.39 17.16 19.97 24.87
Operating Profit Margin (%) 30.14% 25.62% 23.72% 23.36%
PAT Margin (%) 16.08% 14.98% 14.00% 13.73%
P/E Ratio (x) 35.05 25.30 21.74 17.46
ROE (%) 15.09% 17.75% 18.56% 18.77%
ROCE (%) 2.47% 2.47% 2.75% 2.97%
Debt-Equity Ratio 10.43 11.29 10.44 9.76
Book Value (Rs.) 82.08 96.69 107.61 132.49
P/BV (x) 5.29 4.49 4.03 3.28
Charts
Outlook and Conclusion
� At the current market price of Rs.434.20, the stock P/E ratio is at 21.74 x FY13E and 17.46 x FY14E
respectively.
� Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 19.97 and
Rs.24.87 respectively.
� Net Income and PAT of the company are expected to grow at a CAGR of 38% and 31% over 2011 to 2014E
respectively.
� On the basis of EV/EBITDA, the stock trades at 10.44 x for FY13E and 9.76 x for FY14E.
� Price to Book Value of the stock is expected to be at 4.03 x and 3.28 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. 486.00 for Medium to Long term investment.
Industry Overview
India has a robust banking system, governed by stringent regulations. An intense supervision by the Reserve
Bank of India (RBI) has resulted in stringent regulatory and compliance requirements on capital adequacy and
risk management practices which have strengthened the overall banking system in India.
India’s banking sector includes 86 scheduled commercial banks, 82 regional rural banks, 1,645 urban
cooperative banks (53 scheduled cooperative banks) and 95,765 rural cooperative banks.
Key Statistics
• According to RBI’s ‘Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks’, December
2011, Nationalised Banks, as a group, accounted for 52.1 per cent of the aggregate deposits, while State Bank
of India (SBI) and its associates accounted for 21.9 per cent. The share of New Private Sector Banks, Old
Private Sector Banks, Foreign Banks, and Regional Rural Banks in aggregate deposits was 13.9 per cent, .8
per cent, 4.5 per cent and 2.9 per cent, respectively.
• Nationalised Banks also held the highest share of 51.2 per cent in the total bank credit followed by SBI and its
associates at 22.5 per cent and New Private Sector Banks at 13.8 per cent. Foreign Banks, Old Private Sector
Banks and Regional Rural Banks had shares of around 5.2 per cent, 4.8 per cent and 2.5 per cent, respectively.
• Another statement released by RBI revealed that banks' advances grew 0.1 per cent to US$ 913 billion in July-
September 2012, while deposits expanded by 1 per cent. The RBI projects credit growth at 17 per cent and
deposit growth at 16 per cent in 2012-13.
• Foreign exchange reserves stood at US$ 294.81 billion for the week ended September 28, 2012 wherein the
value of gold reserves was recorded at US$ 28.133 billion and that of foreign currency assets (FCAs) was at
US$ 259.96 billion.
Recent Developments
• Export-Import Bank of India (Exim Bank) has partnered with IL&FS Financial Services (IFIN) to facilitate
accessibility to Indian companies for CNH bond markets as well as other international bond markets which
are not dominated in US Dollar, Euro and Yen. The memorandum of understanding (MoU) gives broad
clauses of co-operation between the two entities on a bond guarantee facility programme which will facilitate
a credit enhancement mechanism to Indian bond issuers in international bond markets.
• Working further on its innovation finance programme for the micro, small and medium enterprises (MSME)
sector, Small Industries Development Bank of India (SIDBI) has entered into a EUR 53 million (US$ 68.53
million) - loan agreement with KFW Germany. SIDBI aims to promote entrepreneurial innovations in MSME
sector, particularly those involved in clean technologies. The scheme also aims to provide financing
instruments specially customised to the needs of the MSMEs.
• India’s second largest private bank HDFC Bank has opened its first representative office in Abu Dhabi to
render financial services to a large customer base of non-resident Indians (NRIs) staying in the UAE. The new
office will help NRIs open accounts in India and will also offer remittance services, fixed deposits and other
related banking services.
• IDBI Bank has received internationally recognised BS 25999 certificate from Intertek India, a global
certification agency. The bank has become India’s first public sector bank to get certified for its business
continuity management (BCM) process, for comprehensive coverage of major business and support
functions. The honour clearly authenticates bank’s dedication towards customer satisfaction, quality of
services, better performance and regulatory compliance.
• The State Bank of Bikaner & Jaipur (SBBJ) has opened a unique and first-of-its kind financial supermarket in
the city. The branch, which will not be a conventional one, will offer a wide range of diversified products and
services. It will primarily aim at cross-selling by offering non-standard products such as insurance (both life
and general), credit card and mutual funds. The supermarket will sell products of its channel partners
namely SBI Life, Mutual Fund, SBI General and SBI Card, both across the counters and through electronic
means.
• India’s third largest private bank – Axis Bank – has entered into a strategic agreement with Tata AIG General
Insurance wherein the latter would be its corporate agent for general insurance. Tata AIG will leverage on
bank’s wide distribution network to offer general insurance solutions to its clients. This initiative by Axis
Bank aimed at broadening insurance cover options while offering Tata AIG’s proclaimed Customer and
Claims service to its' customers across the country.
Government Initiatives
In order to speed up the process of financial inclusion in India, the RBI has announced setting up of a high-level
committee that would ensure accessible financial services in the country.
The Financial Inclusion Advisory Committee, to work under RBI Deputy Governor K C Chakrabarty, would
formulate suitable regulatory framework to align the twin objectives of financial inclusion and financial stability.
The 11-member panel is expected to acknowledge issues such as developing feasible and sustainable banking
services delivery models and devising products and processes for rural as well as urban consumers outside the
banking network.
About 58.7 per cent households are reported to be availing banking facilities, as per 2011 census.
Road Ahead
Indian banking industry is anticipated to grow exponentially and become the world’s third largest in asset size
(projected at US$ 28,500 billion from the current US$ 1,350 billion) by 2025, according to a report by the Boston
Consulting Group (BCG) India, prepared in association with a leading industry organisation and Indian Banks
Associations (IBA). Driven by 3G and smartphones, mobiles would emerge as the most preferred mediums for
banking wherein they will account for almost 20-30 per cent of the transactions.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.
Firstcall India Equity Research: Email – [email protected]
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