2QFY2013 Result Update Banking October 26, 2012 Indian Bank Performance Highlights Particulars (` cr) 2QFY13 2QFY13 % chg (qoq) 2QFY12 % chg (yoy) NII 1,120 1,153 (2.8) 1,135 (1.3) Preprov. profit 907 840 8.0 921 (1.5) PAT 496 462 7.3 469 5.7 During 2QFY2013, Indian Bank reported a poor operating performance, with flattish operating income and a 1.5% yoy decline in the operating profit. However, 8.2% yoy decline in provisioning expenses (on a base of higher investment provisioning in 2QFY2012 and writeback of contingent provision) as well as large `101cr interest on IT refund, aided the bank to report an earnings growth of 5.7% yoy. NIMs decline sequentially; Slippages higher due to one chunky account: The advances for the bank grew at a moderate pace of 10.8% yoy during 2QFY2013, mainly aided by a strong growth in the agri segments and the overseas book. Despite a 13.5% yoy growth in savings deposits, the growth in the lowcost CASA franchise remained moderate at 9.8% yoy, due to a 5.4% yoy decline in current deposits. The CASA ratio for the bank dipped 35bp sequentially to 29.0%. The reported NIM for the bank declined sequentially by 18bp to 3.3% largely due to a 16bp fall in the yield on advances on interest reversal of `26cr on slipped accounts and full impact of base rate reduction in May 2012. The growth in noninterest income (excluding treasury) for the bank remained muted at 3.7% yoy to `333cr, despite being aided by interest on IT refund amounting to `101cr. On the asset quality front, slippages came in at `734cr (which included one chunky account of `360cr currently referred to CDR) compared to `232cr in 1QFY2013 and quarterly average of `425cr since 1QFY2011. Annualized slippage ratio came in at 3.3%, much higher than 1.0% witnessed in 1QFY2013 and average run rate of 2.4% since 1QFY2011. On an absolute basis, both gross and net NPA levels increased by 27.4% and 30.8%, respectively. PCR for the bank dipped sequentially by 411bp to 71%. Additionally, the bank restructured ~`675cr worth of advances, thereby taking its outstanding restructured book to `10,349cr as of 2QFY2013. As per the management, no major restructuring is in the pipeline, except for the aforementioned exposure of ~`360cr under CDR. NEUTRAL CMP `178 Target Price Investment Period Stock Info Sector Banking Market Cap (` cr) 7,669 Beta 1.1 52 Week High / Low 265/152 Avg. Daily Volume 22,179 Face Value (`) 10 BSE Sensex 18,625 Nifty 5,664 Reuters Code INBA.BO Bloomberg Code INBK@IN Shareholding Pattern (%) Promoters 80.0 MF / Banks / Indian Fls 5.4 FII / NRIs / OCBs 8.7 Indian Public / Others 5.9 Abs. (%) 3m 1yr 3yr Sensex 11.9 7.7 11.3 Indian Bank (3.1) (12.1) 8.2 Outlook and valuation: The stock currently trades at 0.7x FY2014E ABV, below its eightyear trading range (0.8x1.3x) and median of 1.0x. However, in our view, upsides are likely to be lower than peers as we remain circumspect on the bank s high RoAs and remain cautious on its asset quality. Hence, we recommend a Neutral rating on the stock. Key financials (Standalone) Y/E March (` cr) FY2011 FY2012 FY2013E FY2014E NII 4,036 4,418 4,726 5,407 % chg 27.7 9.5 7.0 14.4 Net profit 1,714 1,747 1,792 1,844 % chg 10.2 1.9 2.6 2.9 NIM (%) 3.7 3.5 3.2 3.2 EPS (`) 38.8 39.6 40.6 41.8 P/E (x) 4.6 4.5 4.4 4.3 P/ABV (x) 1.0 0.8 0.7 0.6 RoA (%) 1.5 1.3 1.2 1.1 RoE (%) 23.5 20.4 18.1 16.3 Vaibhav Agrawal 022 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com Varun Varma 022 3935 7800 Ext: 6847 varun.varma@angelbroking.com Sourabh Taparia 022 3935 7800 Ext: 6872 sourabh.taparia@angelbroking.com Please refer to important disclosures at the end of this report 1
Exhibit 1: 2QFY2013 performance (Standalone) Particulars (` cr) 2QFY13 1QFY13 % chg (qoq) 2QFY12 % chg (yoy) 1HFY13 1HFY12 % chg (yoy) Interest earned 3,410 3,374 1.1 3,035 12.4 6,784 5,816 16.6 on Advances / Bills 2,612 2,610 0.1 2,356 10.9 5,222 4,516 15.6 on investments 788 758 4.0 675 16.7 1,546 1,292 19.6 on balance with RBI & others 10 6 64.1 3 196.0 16 8 110.1 Interest Expended 2,290 2,221 3.1 1,899 20.6 4,511 3,651 23.6 Net Interest Income 1,120 1,153 (2.8) 1,135 (1.3) 2,273 2,165 5.0 Other income 363 223 63.2 342 6.2 586 592 (0.9) Other income excl. treasury 333 200 66.2 321 3.7 533 524 1.9 Fee Income 280 169 65.3 281 (0.5) 449 465 (3.3) Treasury Income 30 22 36.0 21 44.4 53 68 (22.6) Recoveries from writeoff acc 53 32 65.5 40 33.1 85 59 44.7 Operating income 1,484 1,376 7.8 1,478 0.4 2,860 2,757 3.7 Operating expenses 576 536 7.6 557 3.5 1,112 1,055 5.4 Employee expenses 379 369 2.7 367 3.4 748 725 3.2 Other opex 197 166 18.4 190 3.7 364 330 10.3 Preprovision Profit 907 840 8.0 921 (1.5) 1,747 1,702 2.7 Provisions & Contingencies 202 146 38.8 220 (8.2) 348 397 (12.4) Provisions for NPAs 251 98 156.8 102 146.2 349 170 105.2 Provisions for Investments 9 2 295.3 96 (90.4) 12 165 (93.0) Other provisions (58) 46 22 (13) 62 PBT 705 695 1.5 701 0.6 1,400 1,305 7.3 Provision for Tax 210 233 (10.0) 232 (9.6) 442 429 3.1 PAT 496 462 7.3 469 5.7 958 876 9.3 Effective Tax Rate (%) 29.7 33.5 (379)bp 33.1 (337)bp 31.6 32.9 (128)bp Exhibit 2: 2QFY2013 Actual vs Angel estimates Particulars (` cr) Actual Estimates Var. (%) NII 1,120 1,200 (6.6) Noninterest income 363 258 41.1 Operating income 1,484 1,457 1.8 Operating expenses 576 551 4.6 Preprov. profit 907 906 0.1 Provisions & cont. 202 203 (0.4) PBT 705 703 0.3 Prov. for taxes 210 228 (8.1) PAT 496 475 4.4 October 26, 2012 2
Exhibit 3: 2QFY2013 performance (Standalone) Particulars 2QFY13 1QFY13 % chg (qoq) 2QFY12 % chg (yoy) Balance sheet Advances (` cr) 95,000 93,876 1.2 85,765 10.8 Deposits (` cr) 131,180 127,012 3.3 116,218 12.9 CredittoDeposit Ratio (%) 72.4 73.9 (149)bp 73.8 (138)bp Current deposits (` cr) 6,448 6,292 2.5 6,813 (5.4) Saving deposits (` cr) 31,546 30,936 2.0 27,804 13.5 CASA deposits (` cr) 37,994 37,228 2.1 34,617 9.8 CASA ratio (%) 29.0 29.3 (35)bp 29.8 (82)bp CAR (%) 13.0 13.0 (2)bp 12.2 73bp Tier 1 CAR (%) 10.7 10.7 (1)bp 9.9 82bp Profitability Ratios (%) Cost of deposits 7.1 7.0 7bp 6.6 48bp Yield on advances 11.1 11.3 (16)bp 12.1 (94)bp Reported NIM 3.1 3.3 (18)bp 3.8 (64)bp Costtoincome ratio 38.9 38.9 (8)bp 37.7 117bp Asset quality Gross NPAs (` cr) 1,980 1,554 27.4 1,048 89.0 Gross NPAs (%) 2.1 1.7 40bp 1.2 85bp Net NPAs (` cr) 1,260 963 30.8 596 111.4 Net NPAs (%) 1.3 1.0 29bp 0.7 64bp Provision Coverage Ratio (%) 71.0 75.1 (411)bp 79.4 (838)bp Slippage ratio (%) 3.3 1.0 222bp 2.0 123bp NPA to avg. assets (%) 0.7 0.3 40bp 0.3 36bp Business growth moderates; NIMs decline sequentially During 2QFY2013, the bank s advances grew at a moderate pace of 10.8% yoy. Within advances, the overseas book grew by 20.9% (partly due to INR depreciation), while growth in the agriculture book was strong at 18.2% yoy. On the liability front, growth in deposits was relatively higher at 12.9% yoy. Despite a 13.5% yoy growth witnessed in savings deposits, growth in the lowcost CASA franchise remained moderate at 9.8% yoy, due to a 5.4% yoy decline witnessed in current deposits. Consequently, the CASA ratio for the bank dipped by 82bp yoy (35bp sequentially) to 29.0%. Reported NIMs for the bank declined sequentially by 18bp to 3.3% on lower yield on advances and slightly higher cost of deposits. The bank s yield on advances declined by 16bp qoq to 11.1% on account of both a) interest reversal of `26cr on slipped accounts and b) full impact of base rate reduction in May 2012. The cost of deposits was slightly higher by 6bp qoq to 7.1%. October 26, 2012 3
Exhibit 4: Business growth moderates in 2QFY2013 Exhibit 5: CASA ratio declines sequentially 25.0 20.0 15.0 10.0 5.0 Adv. yoy chg (%) Dep. yoy chg (%) CDR (%, RHS) 74.8 73.8 73.9 73.4 72.4 23.5 18.6 18.2 17.8 20.0 14.2 13.8 15.0 10.8 12.9 76.0 74.0 72.0 70.0 31.0 30.0 29.0 28.0 CASA ratio (%) CASA yoy growth (%, RHS) 13.0 11.1 9.5 9.8 8.8 29.8 30.2 30.5 29.3 29.0 20.0 10.0 Exhibit 6: 16bp qoq lower yield on advances led to... Exhibit 7:...18bp qoq fall in reported NIM (%) 14.00 12.00 10.00 12.07 11.66 10.90 11.29 11.13 (%) 4.00 3.60 3.20 3.76 3.58 3.16 3.30 3.12 8.00 2.80 6.00 2.40 4.00 2.00 Growth in noninterest income (excluding treasury) remained muted During 2QFY2013, the growth in noninterest income (excluding treasury) for the bank remained muted at 3.7% yoy to `333cr, despite being aided by interest on IT refund amounting to `101cr. The treasury income for the quarter came in at `30cr visàvis `21cr in 2QFY2012, while recoveries from writtenoff accounts were strong at `53cr compared to `40cr in 2QFY2012. Slippages higher due to one chunky account On the asset quality front, slippages came in at `734cr (included one chunky account of `360cr currently referred to CDR) compared to `232cr in 1QFY2013 and quarterly average of `425cr since 1QFY2011. The annualized slippage ratio came in at 3.3%, much higher than 1.0% witnessed in 1QFY2013 and average run rate of 2.4% since 1QFY2011. On an absolute basis, both gross and net NPA levels increased by 27.4% and 30.8%, respectively. While the gross NPA ratio increased by 40bp sequentially to 2.1% from 1.7% in 1QFY2013, the increase in the net NPA ratio was by 29bp to 1.3% from 1.0% in 1QFY2013. The Provisioning coverage ratio (PCR) for the bank dipped sequentially by 411bp to 71%. October 26, 2012 4
During the quarter, the bank restructured ~`675cr worth of advances, thereby taking its outstanding restructured book to `10,349cr as of 2QFY2013. As per the management, no major restructuring is in the pipeline except for `360cr of the aforementioned exposure which is under CDR. Exhibit 8: Asset quality deteriorates sequentially Exhibit 9: Slippage ratio spikes in 2QFY2013 2.2 1.7 1.2 0.7 0.2 Gross NPAs (%) Net NPAs (%) NPA coverage (%, RHS) 79.4 76.5 75.1 70.1 71.0 1.2 0.7 1.4 0.8 2.0 1.3 1.7 1.0 2.1 1.3 85.0 80.0 75.0 70.0 65.0 6.0 5.0 4.0 3.0 2.0 1.0 Slippages (%) Credit cost (%, RHS) 1.4 0.7 0.3 0.3 0.3 2.0 1.6 5.5 1.0 3.3 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 Exhibit 10: Costtoincome ratio stabilizes Exhibit 11: Opextoaverage asset trends 750 600 450 300 Staff exps (` cr) Other opex (` cr) CIR (%, RHS) 42.6 37.7 37.2 38.9 38.9 40.0 190 168 206 166 197 30.0 20.0 44.0 42.0 40.0 38.0 Costtoincome ratio (%) 1.7 1.6 Opex to average assets (%, RHS) 1.8 1.7 1.7 1.5 1.5 1.6 1.5 150 367 372 386 369 379 10.0 36.0 34.0 37.7 37.2 42.6 38.9 38.9 1.4 1.3 October 26, 2012 5
Investment arguments Indian Bank's performance has broadly been positive and balanced since its listing in 2007, leading to a gradual improvement in the quality of earnings, visible amongst other things in the substantial ~50bp decline in the bank's operating costs as a percentage of assets. Rural and semiurban presence relatively high, moderate CASA Indian Bank opened 136 branches in the last 18 months, taking its total branch network to 1,999 as of 2QFY2013. The bank has a higher proportion of rural and semiurban presence (~55% of its total branches). Aided by this, the bank has been able to maintain a moderate CASA in the vicinity of 30%, with the CASA registering a 17.2% CAGR during FY2007 12. Investment concerns Relatively high yields A larger portion of SME and midcorporate loans has contributed to the bank s relatively high yield on advances. This has supported its NIM, which in FY2012 was higher than even larger banks having ~40% CASA deposits vs Indian Bank s ~30%. Past experience shows that banks that delivered high NIMs on the back of high yields later paid the price for the higher risk taken in the form of higher NPAs in subsequent years. The bank had felt the heat on the assetquality front in 4QFY2012, with significant increase in slippages and higher restructuring. Even in 1HFY2013, though recoveries are higher mainly from the slippages of 4QFY2012, fresh slippages are still on the higher side and hence we remain cautious on the bank s asset quality and NIM outlook as in case of other banks with unsustainably high yields. Outlook and valuation The stock currently trades at 0.7x FY2014E ABV, below its eightyear trading range (0.8x1.3x) and median of 1.0x. However, in our view, upsides are likely to be lower than peers, as we remain circumspect on the bank s high RoAs and remain cautious on its asset quality. Hence, we recommend a Neutral rating on the stock. October 26, 2012 6
Exhibit 12: Key assumptions Particulars (%) Earlier estimates Revised estimates FY2013E FY2014E FY2013E FY2014E Credit growth 14.0 15.0 14.0 15.0 Deposit growth 14.0 15.0 14.0 15.0 CASA ratio 29.3 28.1 29.3 28.1 NIM 3.4 3.4 3.2 3.2 Other income growth (9.1) 2.0 (6.8) (0.3) Growth in staff expenses 5.0 15.0 5.0 15.0 Growth in other expenses 12.0 15.0 12.0 15.0 Slippages 1.7 2.3 1.7 2.0 Coverage ratio 75.0 75.0 75.0 75.0 Exhibit 13: Change in estimates Particulars (` cr) Earlier estimates FY2013 Revised estimates % chg Earlier estimates FY2014 Revised estimates % chg NII 4,942 4,726 (4.4) 5,675 5,407 (4.7) Noninterest income 1,120 1,148 2.5 1,143 1,144 0.1 Operating income 6,062 5,874 (3.1) 6,818 6,551 (3.9) Operating expenses 2,346 2,346 2,697 2,697 Preprov. profit 3,716 3,528 (5.1) 4,121 3,854 (6.5) Provisions & cont. 1,069 912 (14.6) 1,406 1,124 (20.0) PBT 2,648 2,616 (1.2) 2,715 2,730 0.6 Prov. for taxes 859 824 (4.1) 881 886 0.6 PAT 1,789 1,792 0.2 1,834 1,844 0.6 Exhibit 14: P/ABV bands 600 Price(`) 0.5x 0.8x 1.1x 1.4x 1.7x 500 400 300 200 100 0 Mar07 Jun07 Sep07 Dec07 Mar08 Jun08 Sep08 Dec08 Mar09 Jun09 Sep09 Dec09 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 October 26, 2012 7
Exhibit 15: Recommendation summary Company Reco. CMP (`) Tgt. Price (`) Upside (%) FY2014E P/ABV (x) FY2014E Tgt. P/ABV (x) FY2014E P/E (x) FY1214E CAGR in EPS (%) FY2014E RoA (%) FY2014E RoE (%) AxisBk Buy 1,231 1,439 16.9 1.7 2.0 8.9 16.0 1.6 20.2 FedBk Neutral 488 1.2 9.4 6.7 1.1 13.3 HDFCBk Neutral 637 3.6 17.7 27.9 1.9 22.0 ICICIBk* Buy 1,078 1,245 15.5 1.7 2.0 13.1 20.9 1.4 15.5 SIB Accumulate 22 25 12.8 0.9 1.1 5.7 4.2 0.9 16.9 YesBk Buy 413 483 16.8 2.1 2.5 9.8 23.5 1.5 23.5 AllBk Neutral 135 0.5 3.6 (0.4) 0.9 15.7 AndhBk Reduce 108 97 (9.5) 0.7 0.6 4.4 1.0 0.9 15.3 BOB Accumulate 761 860 13.0 0.9 1.0 5.5 6.4 1.0 17.0 BOI Accumulate 287 330 14.9 0.7 0.8 4.2 20.8 0.8 16.3 BOM Neutral 53 0.7 4.6 35.5 0.7 15.5 CanBk Accumulate 424 449 5.9 0.8 0.8 5.0 7.2 0.9 15.3 CentBk Neutral 71 0.7 3.4 100.1 0.6 14.7 CorpBk Accumulate 405 447 10.4 0.7 0.7 4.0 (2.2) 0.8 15.1 DenaBk Neutral 106 0.7 4.4 3.1 0.8 15.9 IDBI# Accumulate 96 108 13.2 0.6 0.7 4.2 20.1 0.9 14.4 IndBk Neutral 178 0.6 4.3 2.8 1.1 16.3 IOB Neutral 75 0.5 3.5 27.1 0.6 13.6 J&KBk Neutral 1,149 1.0 6.1 6.5 1.3 17.7 OBC Neutral 309 0.7 4.7 29.0 0.9 14.4 PNB Accumulate 749 842 12.4 0.8 0.9 4.5 7.4 1.0 17.3 SBI* Accumulate 2,173 2,353 8.3 1.4 1.5 8.4 21.7 1.0 17.7 SynBk Neutral 119 0.7 4.4 11.5 0.7 16.6 UcoBk Neutral 76 0.8 4.6 7.9 0.6 14.4 UnionBk Accumulate 206 226 9.9 0.7 0.8 4.4 19.8 0.8 16.3 UtdBk Buy 65 78 19.4 0.5 0.55 2.9 20.7 0.7 16.2 VijBk Neutral 55 0.7 4.8 12.1 0.5 13.0 ; Note: *Target multiples=sotp Target Price/ABV (including subsidiaries), # Without adjusting for SASF Company Background Indian Bank is a Chennaibased midsized public sector bank, with 1,999 branches and a balance sheet size of ~`1.5lakh cr. Around twothirds of the bank's branches are spread across the southern states with majority being in the parent state of Tamil Nadu (~43%). October 26, 2012 8
Income statement (Standalone) Y/E March (` cr) FY08 FY09 FY10 FY11 FY12 FY13E FY14E NII 1,992 2,609 3,161 4,036 4,418 4,726 5,407 YoY Growth (%) 6.4 31.0 21.2 27.7 9.5 7.0 14.4 Other Income 1,068 1,035 1,316 1,182 1,232 1,148 1,144 YoY Growth (%) 29.7 (3.0) 27.1 (10.2) 4.3 (6.8) (0.3) Operating Income 3,060 3,644 4,478 5,218 5,650 5,874 6,551 YoY Growth (%) 13.5 19.1 22.9 16.5 8.3 4.0 11.5 Operating Expenses 1,400 1,415 1,730 1,926 2,187 2,346 2,697 YoY Growth (%) 12.3 1.1 22.3 11.3 13.5 7.3 15.0 PreProvision Profit 1,659 2,229 2,747 3,292 3,463 3,528 3,854 YoY Growth (%) 14.6 34.3 23.3 19.8 5.2 1.9 9.2 Prov. & Cont. 424 443 396 657 1,195 912 1,124 YoY Growth (%) (24.8) 4.3 (10.6) 66.1 81.9 (23.7) 23.2 Profit Before Tax 1,235 1,786 2,352 2,634 2,268 2,616 2,730 YoY Growth (%) 39.7 44.6 31.7 12.0 (13.9) 15.3 4.4 Prov. for Taxation 226 541 797 920 521 824 886 as a % of PBT 18.3 30.3 33.9 34.9 23.0 31.5 32.4 PAT 1,009 1,245 1,555 1,714 1,747 1,792 1,844 YoY Growth (%) 32.8 23.5 24.9 10.2 1.9 2.6 2.9 Preference Dividend 40 43 46 46 46 46 46 PAT avl. To equity sh. 969 1,203 1,509 1,668 1,701 1,745 1,798 YoY Growth (%) 33.9 24.1 25.5 10.5 2.0 2.6 3.0 Balance sheet (Standalone) Y/E March (` cr) FY08 FY09 FY10 FY11 FY12 FY13E FY14E Share Capital 830 830 830 830 830 830 830 Equity 430 430 430 430 430 430 430 Preference 400 400 400 400 400 400 400 Reserves & Surplus 4,381 6,306 7,442 8,691 9,972 11,317 12,715 Deposits 61,046 72,582 88,228 105,804 120,804 137,716 158,374 Growth (%) 29.6 18.9 21.6 19.9 14.2 14.0 15.0 Borrowings 1,283 531 657 800 3,783 4,302 4,931 Tier 2 Capital 216 300 300 1,300 1,090 1,063 1,036 Other Liab. & Prov. 2,752 3,573 3,932 4,293 4,941 5,619 6,477 Total Liabilities 70,508 84,122 101,389 121,718 141,419 160,847 184,364 Cash Balances 6,433 6,212 7,061 6,878 6,319 6,197 6,335 Bank Balances 340 472 1,052 1,684 2,494 2,837 3,252 Investments 21,915 22,801 28,268 34,784 37,976 44,002 50,875 Advances 39,839 51,465 62,146 75,250 90,324 102,969 118,414 Growth (%) 37.1 29.2 20.8 21.1 20.0 14.0 15.0 Fixed Assets 539 1,594 1,580 1,606 1,631 1,799 2,000 Other Assets 1,442 1,578 1,282 1,516 2,676 3,043 3,488 Total Assets 70,508 84,122 101,389 121,718 141,419 160,847 184,364 Growth (%) 25.6 19.3 20.5 20.1 16.2 13.7 14.6 October 26, 2012 9
Ratio analysis Y/E March FY08 FY09 FY10 FY11 FY12 FY13E FY14E Profitability ratios (%) NIMs 3.2 3.5 3.5 3.7 3.5 3.2 3.2 Cost to Income Ratio 45.8 38.8 38.6 36.9 38.7 39.9 41.2 RoA 1.6 1.6 1.7 1.5 1.3 1.2 1.1 RoE 25.8 24.7 25.6 23.5 20.4 18.1 16.3 B/S ratios (%) CASA Ratio 32.3 31.6 32.2 30.9 30.6 29.3 28.1 Credit/Deposit Ratio 65.3 70.9 70.4 71.1 74.8 74.8 74.8 CAR 12.9 13.3 12.7 13.6 13.5 13.3 12.9 Tier I 11.4 11.3 11.1 11.0 11.1 11.2 11.0 Asset Quality (%) Gross NPAs 1.2 0.9 0.8 1.0 2.0 2.4 3.3 Net NPAs 0.2 0.2 0.2 0.5 1.3 1.2 1.3 Slippages 1.5 0.6 1.1 1.5 2.5 1.7 2.0 Loan loss prov. /avg. assets 0.6 0.0 0.4 0.6 0.6 0.5 0.6 Provision Coverage 79.9 79.6 93.6 84.3 70.1 75.0 75.0 Per Share Data (`) EPS 22.5 28.0 35.1 38.8 39.6 40.6 41.8 ABVPS 106.9 127.5 154.7 184.4 210.4 246.2 278.8 DPS 3.0 5.0 6.5 7.5 7.5 8.0 8.0 Valuation Ratios PER (x) 7.9 6.4 5.1 4.6 4.5 4.4 4.3 P/ABVPS (x) 1.7 1.4 1.2 1.0 0.8 0.7 0.6 Dividend Yield 1.7 2.8 3.6 4.2 4.2 4.5 4.5 DuPont Analysis (%) NII 3.1 3.4 3.4 3.6 3.4 3.1 3.1 () Prov. Exp. 0.7 0.6 0.4 0.6 0.9 0.6 0.7 Adj. NII 2.5 2.8 3.0 3.0 2.4 2.5 2.5 Treasury 0.4 0.3 0.4 0.1 0.1 0.0 0.0 Int. Sens. Inc. 2.9 3.1 3.4 3.2 2.5 2.6 2.5 Other Inc. 1.3 1.1 1.0 0.9 0.9 0.7 0.6 Op. Inc. 4.2 4.1 4.4 4.1 3.4 3.3 3.1 Opex 2.2 1.8 1.9 1.7 1.7 1.6 1.6 PBT 2.0 2.3 2.5 2.4 1.7 1.7 1.6 Taxes 0.4 0.7 0.9 0.8 0.4 0.5 0.5 RoA 1.6 1.6 1.7 1.5 1.3 1.2 1.1 Leverage (x) 16.2 15.3 15.3 15.3 15.3 15.3 15.3 RoE 25.8 24.7 25.6 23.5 20.4 18.1 16.3 October 26, 2012 10
Research Team Tel: 022 39357800 Email: research@angelbroking.com Website: www.angelbroking.com DISCLAIMER This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies 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. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report. Disclosure of Interest Statement Indian Bank 1. Analyst ownership of the stock No 2. Angel and its Group companies ownership of the stock No 3. Angel and its Group companies' Directors ownership of the stock No 4. Broking relationship with company covered No Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (5 to 5%) Reduce (5% to 15%) Sell (< 15%) October 26, 2012 11