Professional Documents
Culture Documents
Aug 5, 2011
Syndicate Bank
ACCUMULATE
Performance Highlights
CMP
Target Price
Particulars (` cr)
NII
Investment Period
1,110
1,161
(4.4)
964
15.2
Pre-prov. profit
743
672
10.5
587
26.5
Stock Info
PAT
343
289
18.5
265
29.2
Sector
`115
`131
12 Months
Banking
For 1QFY2012, Syndicate Bank reported a strong set of numbers, with net profit
increasing by robust 18.5% qoq (up by 29.2% yoy), in-line with our estimates.
A significant decline in slippages and a marginal improvement in CASA ratio were
the key positives of the result. We recommend an Accumulate rating on the stock.
6,579
Beta
1.2
164/98
198,759
10
BSE Sensex
Healthy business growth with stable asset quality: The banks advances grew by
2.0% qoq (up 15.8% yoy) to `108,928cr, while deposits declined by 2.0% qoq (up
by strong 22.4% yoy) to `132,889cr. CASA deposits declined sequentially by 1.4%
qoq to `41,346cr, primarily due to an 8.4% qoq decrease in current account
deposits. The effect of rising interest rates was felt in 1QFY2012, with cost of
deposits increasing by 56bp to 6.4%. Reported NIM witnessed a decline of 27bp
qoq to 3.2%, partly compensated by the 34bp qoq rise in yield on advances
to 10.2%. For 1QFY2012, CEB income grew by 28.7% yoy to `130cr, while
treasury income witnessed a robust increase of 190.0% yoy to `58cr. Slippages
declined considerably to `350cr during 1QFY2012 (slippage ratio of 1.3%)
compared to `542cr in 4QFY2011 (slippage ratio of 2.4%). NPA ratio was stable
sequentially, with gross NPA ratio at 2.4% (2.4% in 4QFY2011) and net NPA ratio
at 0.9% (1.0% in 4QFY2011). Until now, the bank has only switched over accounts
worth `25lakh and above to system-based NPA recognition.
Nifty
Outlook and valuation: At the CMP, the stock is trading at 0.8x FY2013E ABV
compared to its five-year range of 0.7x1.3x one-year forward ABV with a median
of 0.94x. Keeping in mind the banks stable asset quality and moderate NIM, the
valuation appears cheap relative to its peers. We value the stock at 0.9x FY2013E
ABV and, hence, recommend Accumulate with a target price of `131.
Syndicate Bank
17,306
5,211
Reuters Code
SBNK.BO
Bloomberg Code
SNDB@IN
69.5
12.6
4.2
Abs. (%)
Sensex
13.8
3m
1yr
3yr
(5.0)
(4.8)
15.7
4.3
7.8
90.8
Key financials
Y/E March (` cr)
FY2010
FY2011
FY2012E
FY2013E
2,740
4,383
4,359
4,545
7.5
60.0
(0.5)
4.3
813
1,048
1,007
1,236
(10.9)
28.8
(3.9)
22.7
NIM (%)
2.1
3.0
2.6
2.3
EPS (`)
15.6
18.3
17.6
21.6
P/E (x)
7.4
6.3
6.5
5.3
P/ABV (x)
1.3
1.1
0.9
0.8
RoA (%)
0.6
0.7
0.6
0.6
RoE (%)
16.6
17.6
14.3
15.6
NII
% chg
Net profit
% chg
Vaibhav Agrawal
022 3935 7800 Ext: 6808
vaibhav.agrawal@angelbroking.com
Shrinivas Bhutda
022 3935 7800 Ext: 6845
shrinivas.bhutda@angelbroking.com
Varun Varma
022 3935 7800 Ext: 6847
varun.varma@angelbroking.com
Interest earned
3,399
3,162
7.5
2,604
30.5
- on Advances / Bills
2,777
2,593
7.1
2,065
34.5
603
574
5.1
533
13.0
19
188.0
- on investments
- on balance with RBI & others
- on others
(5)
(100.0)
Interest Expended
2,288
2,001
14.4
1,641
39.5
1,110
1,161
(4.4)
964
15.2
Other income
291
255
14.5
215
35.3
233
247
(5.4)
195
19.5
- Fee Income
130
160
(18.8)
101
28.7
58
625.0
20
190.0
- Treasury Income
- Others
103
87
19.4
94
9.5
1,402
1,416
(1.0)
1,179
18.9
Operating expenses
659
744
(11.4)
592
11.4
- Employee expenses
454
521
(12.8)
421
7.9
- Other Opex
205
223
(8.1)
171
20.0
Pre-provision Profit
743
672
10.5
587
26.5
327
353
(7.5)
235
39.2
251
176
42.6
144
74.3
Operating income
38
38
- Other Provisions
38
174
(78.4)
53
(28.5)
416
319
30.4
353
18.0
73
30
145.9
87
(16.3)
PAT
343
289
18.5
265
29.2
17.6
9.3
825bp
24.7
(718)bp
PBT
Provision for Tax
Actual
Estimates
% chg
1,110
1,176
(5.6)
291
241
20.8
Non-interest income
Operating income
1,402
1,417
(1.1)
Operating expenses
659
672
(1.9)
Pre-prov. profit
743
745
(0.4)
327
237
38.1
PBT
416
509
(18.3)
73
165
(55.8)
343
344
(0.3)
Aug 5, 2011
Balance sheet
Advances (` cr)
108,928 106,782
Deposits (` cr)
132,889 135,596
94,062
15.8
(2.0) 108,560
2.0
22.4
82.0
78.8
322bp
86.6
(468)bp
9,841
10,739
(8.4)
10,915
(9.8)
31,505
31,207
1.0
28,154
11.9
41,346
41,946
(1.4)
39,069
5.8
31.1
30.9
18bp
36.0
(488)bp
CAR (%)
12.1
13.0
(95)bp
12.4
(28)bp
8.8
9.3
(52)bp
8.3
47bp
6.4
5.8
56bp
5.3
109bp
10.2
9.9
34bp
9.1
111bp
3.2
3.4
(27)bp
3.1
7bp
47.0
52.5
(551)bp
50.2
(317)bp
Asset quality
Gross NPAs (` cr)
2,637
2,599
1.5
2,175
21.3
2.4
2.4
(1)bp
2.3
8bp
1,018
1,031
(1.3)
985
3.3
0.9
1.0
(4)bp
1.1
(13)bp
78.4
77.2
125bp
73.9
457bp
1.3
2.4
(109)bp
1.4
(10)bp
0.6
0.5
17bp
0.4
22bp
Aug 5, 2011
78.8
80.0
2.0
6.9
8.8
5.5
7.3
0.7
7.0
4.0
5.0
60.0
(2.0)
(7.2)
(5.0)
35.0
40.0
20.0
-
(10.0)
30.0
25.0
31.1
80.2
(%)
40.0
30.9
81.5
33.1
34.9
86.6
36.0
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
20.0
(%)
6.60
6.36
6.30
6.00
5.40
3.50
5.80
5.70
5.27
4.00
3.55
3.58
3.43
3.16
3.09
3.00
5.44
5.14
2.50
5.10
2.00
4.80
1.50
4.50
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
Aug 5, 2011
(%)
3.0
2.4
1.8
1.5
1.8
1.8
0.5
0.5
0.0
FY09
73.2
75.0
70.0
FY10
FY11
FY12E FY13E
65.0
60.0
2.4
0.9
1.0
FY08
1.5
1.0
FY07
73.0
2.4
1.0
1.5
1.7
73.9
2.0
2.3
1.0
2.0
2.2
1.0
2.0
2.5
2.3
1.1
2.5
55.0
50.0
Aug 5, 2011
20.0
12.9
400
10.0
300
0.0
521
-12.8
461
370
421
100
-12.0
454
200
-10.0
-20.0
60.0
50.0
1.7
1.6
1.9
2.5
2.0
1.7
40.0
1.0
20.0
10.0
2.0
1.5
30.0
47.0
30.0
47.8
500
16.8
41.9
24.6
600
50.2
52.5
0.5
-
Aug 5, 2011
Particulars (%)
Revised estimates
FY2012
FY2013
FY2012
FY2013
Credit growth
15.0
15.0
15.0
15.0
Deposit growth
17.0
17.0
17.0
17.0
CASA ratio
30.0
29.1
30.0
29.1
NIMs
2.8
2.4
2.6
2.3
13.4
12.7
13.4
12.7
11.0
11.0
8.0
11.0
15.0
15.0
15.0
15.0
1.7
1.7
1.8
1.8
78.5
75.0
79.0
75.0
Slippages
Coverage Ratio
Source: Angel Research
FY2013
Var. (%)
Earlier
estimates
Revised
estimates
Var. (%)
4,359
(5.1)
4,770
4,545
(4.7)
1,038
1,170
1,169
(0.0)
5,632
5,397
(4.2)
5,939
5,714
(3.8)
2,859
2,806
(1.9)
3,210
3,151
(1.8)
2,773
2,591
(6.6)
2,730
2,563
(6.1)
986
1,100
11.6
693
734
6.0
1,787
1,491
(16.6)
2,037
1,829
(10.2)
580
484
(16.6)
661
593
(10.2)
1,207
1,007
(16.6)
1,376
1,236
(10.2)
Earlier
estimates
Revised
estimates
NII
4,594
Non-interest income
1,038
Operating income
Operating expenses
Pre-prov. profit
Provisions & cont.
PBT
Prov. for taxes
PAT
Source: Angel Research
0.5x
0.75x
1x
1.25x
1.5x
240
200
160
120
80
40
Feb-12
Jul-11
Dec-10
May-10
Oct-09
Mar-09
Aug-08
Jan-08
Jun-07
Nov-06
Apr-06
Sep-05
Feb-05
Jul-04
Dec-03
May-03
Oct-02
Mar-02
Aug 5, 2011
Tgt. price
(`)
Upside
(%)
FY2013E
P/ABV (x)
FY2013E
Tgt. P/ABV (x)
FY2013E
P/E (x)
FY2011E-13E
EPS CAGR (%)
FY2013E
RoA (%)
FY2013E
RoE (%)
1,244
1,648
32.4
2.0
2.7
10.3
20.9
1.5
21.0
390
441
13.2
1.1
1.2
8.0
19.0
1.2
13.9
Accumulate
473
519
9.7
3.2
3.5
16.5
30.5
1.7
20.9
ICICIBk*
Buy
966
1,281
32.6
1.8
2.3
13.7
25.8
1.5
16.0
SIB
Accumulate
22
24
10.8
1.1
1.3
6.8
11.6
0.9
17.2
YesBk
Buy
301
353
17.0
1.9
2.3
10.2
19.1
1.2
20.6
AllBk
Neutral
193
0.9
5.4
9.2
0.9
17.8
AndhBk
Neutral
134
0.9
6.0
(0.6)
0.9
15.9
BOB
Buy
863
1,018
17.9
1.2
1.4
6.5
10.8
1.1
19.6
BOI
Accumulate
362
397
9.7
1.0
1.1
5.7
18.7
0.8
18.0
BOM
Buy
52
61
17.5
0.7
0.8
4.9
30.8
0.6
14.8
CanBk
Accumulate
434
490
13.1
0.8
1.0
5.0
(2.4)
0.9
17.2
CentBk
Neutral
107
0.8
5.2
(14.0)
0.5
14.4
CorpBk
Buy
470
576
22.7
0.7
0.9
4.4
6.1
0.9
17.9
DenaBk
Neutral
81
0.6
3.8
7.0
0.8
16.5
IDBI#
Neutral
120
0.8
5.6
13.0
0.7
14.3
IndBk
Accumulate
215
242
12.6
0.8
1.0
4.5
10.4
1.4
20.4
IOB
Accumulate
127
143
12.5
0.8
0.9
4.9
22.4
0.7
16.4
J&KBk
Neutral
860
0.9
5.7
8.8
1.2
17.0
OBC
Accumulate
324
372
14.9
0.7
0.9
5.4
7.5
0.9
14.4
PNB
Accumulate
1,076
1,217
13.1
1.2
1.4
6.7
7.4
1.0
20.0
SBI*
Buy
2,233
2,776
24.3
1.7
2.1
8.3
44.2
1.1
22.6
SynBk
Accumulate
115
131
14.5
0.8
0.9
5.3
8.6
0.6
15.6
UcoBk
Neutral
UnionBk
Accumulate
UtdBk
VijBk
Company
Reco.
AxisBk
Buy
FedBk
Accumulate
HDFCBk
78
0.9
4.6
16.5
0.6
17.1
280
313
11.9
1.0
1.2
6.0
20.0
0.8
17.9
Buy
88
103
17.9
0.7
0.9
5.2
13.2
0.6
14.1
Neutral
60
0.8
6.5
61.9
0.4
11.7
Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF
Aug 5, 2011
Income statement
Y/E March (` cr)
Net Interest Income
FY07
FY08
FY09
FY10
FY11
FY12E FY13E
2,150
2,073
2,548
2,740
4,383
4,359
4,545
14.3
(3.6)
22.9
7.5
60.0
(0.5)
4.3
Other Income
651
940
915
1,167
915
1,038
1,169
10.1
44.3
(2.7)
27.6
(21.6)
13.4
12.7
2,801
3,012
3,462
3,907
5,298
5,397
5,714
13.3
7.5
14.9
12.8
35.6
1.9
5.9
1,390
1,495
1,791
2,034
2,548
2,806
3,151
(3.1)
7.5
19.8
13.5
25.3
10.1
12.3
1,411
1,518
1,671
1,874
2,750
2,591
2,563
36.0
7.6
10.1
12.1
46.8
(5.8)
(1.0)
687
512
635
700
1,464
1,100
734
42.8
(25.5)
24.0
10.2
109.3
(24.9)
(33.2)
724
1,006
1,036
1,174
1,285
1,491
1,829
30.1
39.0
3.1
13.3
9.5
16.0
22.7
157
124
361
237
484
593
- as a % of PBT
1.0
15.7
11.9
30.7
18.5
32.4
32.4
PAT
716
848
913
813
1,048
1,007
1,236
33.5
18.4
7.6
(10.9)
28.8
(3.9)
22.7
Balance sheet
Y/E March (` cr)
FY07
FY08
FY09
FY10
FY11
FY12E
FY13E
Share Capital
522
522
522
522
573
573
573
3,769
4,488
5,105
6,478
7,251
8,187
46.6
21.0
21.8
1.0
15.9
17.0
17.0
Borrowings
1,374
1,306
2,190
8,555
6,010
7,032
8,208
Tier 2 Capital
2,405
2,585
3,224
3,618
3,518
4,045
4,652
3,239
3,779
3,946
4,225
4,364
5,601
6,554
10,375
12,543
7,189
10,443
10,312
12,065
2,925
1,282
1,861
5,545
1,523
3,663
4,276
Investments
25,234
28,076
30,537
33,011
35,068
43,214
52,568
Advances
51,670
64,051
81,532
- Growth (%)
41.7
24.0
27.3
10.9
18.1
15.0
15.0
Fixed Assets
772
770
742
701
693
786
890
2,102
2,579
3,040
2,198
2,031
2,376
2,774
Other Assets
Total Assets
- Growth (%)
Aug 5, 2011
3,105
78,634
20.0
21.6
6.8
12.6
17.0
16.7
Ratio analysis
Y/E March
FY07
FY08
FY09
FY10
3.0
2.2
2.2
2.1
3.0
2.6
2.3
49.6
49.6
51.7
52.0
48.1
52.0
55.1
1.0
0.9
0.8
0.6
0.7
0.6
0.6
RoE
24.6
24.0
21.6
16.6
17.6
14.3
15.6
CASA Ratio
30.6
30.9
27.6
31.2
30.9
30.0
29.1
Credit/Deposit Ratio
65.7
67.3
70.4
77.3
78.8
77.4
76.1
CAR
11.7
11.2
12.7
12.7
13.0
12.6
12.3
6.2
6.6
7.9
8.2
9.3
8.8
8.4
Gross NPAs
3.0
2.7
1.9
2.2
2.4
3.1
3.6
Net NPAs
0.8
1.0
0.8
1.1
1.0
1.3
1.8
Slippages
2.0
2.4
1.5
1.8
1.7
1.8
1.8
0.5
0.4
0.3
0.4
0.6
0.5
0.3
72.8
62.6
58.1
49.7
57.8
57.5
49.9
EPS
13.7
16.2
17.5
15.6
18.3
17.6
21.6
60.4
69.9
82.9
90.3
108.3
129.6
145.9
2.8
2.8
3.0
3.0
3.7
3.5
4.5
PER (x)
8.4
7.1
6.6
7.4
6.3
6.5
5.3
P/ABVPS (x)
1.9
1.6
1.4
1.3
1.1
0.9
0.8
Dividend Yield
2.4
2.4
2.6
2.6
3.2
3.1
3.9
NII
2.9
2.1
2.1
2.0
3.0
2.6
2.3
0.9
0.5
0.5
0.5
1.0
0.6
0.4
Adj. NII
1.9
1.6
1.6
1.5
2.0
1.9
1.9
Treasury
0.2
0.3
0.2
0.3
0.0
0.0
0.0
2.1
1.9
1.8
1.8
2.0
1.9
1.9
Other Inc.
0.7
0.6
0.6
0.6
0.6
0.6
0.6
Op. Inc.
2.8
2.5
2.4
2.4
2.6
2.5
2.5
Opex
1.8
1.5
1.5
1.5
1.7
1.7
1.6
PBT
1.0
1.0
0.9
0.9
0.9
0.9
0.9
Taxes
0.0
0.2
0.1
0.3
0.2
0.3
0.3
- Tier I
Asset Quality (%)
Provision Coverage
Per Share Data (`)
DPS
Valuation Ratios
DuPont Analysis
RoA
Aug 5, 2011
1.0
0.9
0.8
0.6
0.7
0.6
0.6
Leverage
25.8
27.8
28.1
27.4
24.9
24.1
25.1
RoE
24.6
24.0
21.6
16.6
17.6
14.3
15.6
10
E-mail: 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.
Syndicate Bank
No
No
No
No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
Aug 5, 2011
11