Allahabad Bank:-
"Allahabad Bank’s loan book grew at 11.9% YoY and remained flat on QoQ
basis. Out of the total advances portfolio, Retail grew 15.5% YoY, agri
grew 19.6% YoY and SME grew 11.7% YoY. Management expects to sustain
loan growth of 20%+ going forward with major focus on retail book. We
have factored in loan growth of 18.5% for FY13E and 18.4% for FY14E."
"NIM stood at 3.17% in Q1FY13, as compared to 3.23% in Q4FY12 and 3.4%
in Q1FY12 resulting from higher cost of funds coupled with decline in
CASA ratio. Management has reiterated its guidance of maintaining NIMs
3%+ for FY13E. We expect NIMs to be at 3.1% for both FY13E and FY14E."
"Non-interest income of the bank declined 12.8% QoQ and increased 8.3%
YoY to Rs 309.5 cr. Fee based income increased 15.5% YoY to Rs 239 cr in
Q1FY13 and the bank showed a trading profit of Rs 55 cr vs 26 cr in
Q1FY12. Management expects improvement in non-interest income in the
coming quarters driven by higher recoveries. We expect non-interest
income to grow at 8.5% for FY13E and 12.0% for FY14E."
"Given the current challenging macro-economic scenario, the bank’s
strategy is to focus more on improving the asset quality rather than
focus on growth and margins. We believe that the bank will continue to
focus on strengthening its balance sheet. Being an attractive mid size
public bank with above average credit growth, stable NIMs and
comparatively healthy return ratios (RoE of ~20% and RoA of 1%+) we
believe that Allahabad bank looks attractive at current levels."
"At CMP, Allahabad Bank is trading at 0.65x and 0.55x of its FY13E &
FY14E ABV whereas on PE it is trading at 3.26x and 2.66x in FY13E and
FY14E respectively. We continue to maintain BUY on the stock with a
target price of Rs 205," says Nirmal Bang research report.
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