Motilal Oswal - Indian Bank (INDIANB) MOSL: INDIAN BANK (Buy)-Stable operating performance; earnings to recover gradually

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Motilal Oswal

Nitin Aggarwal

MOSL: INDIAN BANK (Buy)-Stable operating performance; earnings to recover gradually

Indian Bank: Stable operating performance; earnings to recover gradually

(INBK IN, Mkt Cap USD2.5b, CMP INR355, TP INR430, 21% Upside, Buy)

INBK reported a 44% YoY decline in net earnings to INR2.09b (in-line) due to elevated provisions.
NII grew 24% YoY to INR18b (7% beat), led by 22% YoY loan growth and a 25bp improvement in the margins (to 3%) on account of INR1.45b recoveries recorded in interest income. Muted treasury gains led to a 33% YoY decline in other income.
Loan book grew by 22% YoY to INR1.58t, while deposits increased 10% YoY to INR2.1t. CASA deposits grew 14% YoY, led by 15% YoY growth in SA deposits, leading to a CASA mix of 37.9%. Management guided for ~20% loan growth for FY19.
Fresh slippages moderated to INR14.4b from INR30.2b in 4QFY18, while recoveries/upgrades came in at INR6.9b/INR2.3b. GNPA declined 1.4% QoQ to INR118.2b, while NNPA increased 0.7% QoQ to INR59.9b. GNPA/NNPA ratio stood at 7.2%/3.8%, while the PCR ratio moderated by 100bp QoQ to 49.3%. Total net stressed book including standard restructured as of 1QFY19 stands at INR80b (5.1% of loans).
Other highlights: (1) O/s exposure of INR28b toward NCLT accounts (both list 1 & 2 and PCR of ~71%. (2) Healthy Tier-1 of 11.6% (CET-1: 11.2%). (3) MTM losses of INR6.36b to be recognized in subsequent quarters.

09/08/2018 10 EN

Underlying

Indian Bank

Indian Bank offers deposits, loans and services. The Bank's segments include Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations. The Company offers products under various categories, including agriculture, corporates, personal/individual, business, professional self-employed, small and medium-sized enterprise (SME), cards, education, Non-Resident Indian (NRI), property and technology. Its deposits include savings bank (SB) account, such as SB Vikas Khata, SB Platinum, SB Power, SB Silver and SB Gold; current account, including Premium Current Account and IB i-Freedom Current Account; term deposits, including fixed deposit, re-investment plan, insured recurring deposit, variable recurring deposit and facility deposit, and NRI accounts, including Non-Resident Ordinary Account. It also offers services, which include premium services, insurance services and e-payment of indirect taxes. The Bank has approximately 70 specialized branches across the country.

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INE562A01011 National Stock Exchange of India India

Provider

Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Nitin Aggarwal

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MOSL: INDIAN BANK (Buy)-Stable operating performance; earnings to recover gradually

MOSL : INDIAN BANK: Operating performance healthy; asset quality improves

INDIAN BANK sees an upgrade to Slightly Positive due to a better fundamental star rating

MOSL: INDIAN BANK (Buy)-Operating performance showing recovery signs

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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