Buy for return of 50% plus by motilal oswal

CMP: INR77 TP: INR120 (+56%) Buy 27,396 8,286
Bloomberg ANDB IN
Equity Shares (m) 602.8
M.Cap. (INR b) / (USD b) 46.2/0.7
52-Week Range (INR) 110 / 61
1, 6, 12 Rel. Per (%) -2/-1/-7
Avg Val/Vol ‘000 410/4755
Free float (%) 39.0
Financials & Valuation (INR Billion)
Y/E MAR 2016E 2017E 2018E
NII 55 62 74
OP 40 43 52
NP 12 15 19
NIM (%) 3.0 2.9 2.9
EPS (INR) 20.6 25.5 31.4
EPS Gr. (%) 94.8 23.6 23.0
BV/Sh. (INR) 170 188 210
ABV/Sh.(INR) 145 172 193
ROE (%) 12.2 14.2 15.7
ROA (%) 0.6 0.7 0.7
D. Payout(%) 29.0 29.0 29.0
Valuations
P/E(X) 3.7 3.0 2.4
P/BV (X) 0.45 0.41 0.36
P/ABV (X) 0.5 0.4 0.4
Div. Yield (%) 6.7 8.3 10.2
Strong core performance; Positive asset quality guidance by management
 Andhra Bank’s (ANDB) 4QFY15 PAT was at INR1.9b (2x YoY on a lower base),
driven by healthy NIM (3.5%, 12 quarter high), strong loan growth (+17% YoY) and
lower credit costs (1.6% vs. 2.5% in 4QFY14).
 Slippages during the quarter declined to a 4 quarter low of INR7.7b vs. INR9b in
3QFY15. Agriculture GNPA declined 20% QoQ to INR10.6b led by strong recoveries
(INR3b+ in 4Q) in AP/Telangana. Management is confident of recovering another
INR5-6b over the next couple of quarters (Agri NPA target of 3% by 2QFY16 vs.
5.2% currently and 7.2% in 1QFY15).
 Bank continued to report healthy NIM (3.5%, +5bp QoQ) led by interest write-back
on Agriculture NPA recoveries (INR300m) from AP/Telangana. Management
guided that the margins would remain at similar levels over the next few quarters.
 Other highlights: (1) fees grew 21% QoQ (only 2% YoY on higher base) led by
strong traction in processing fees (INR1,132m) led by pickup in growth in 4QFY15,
(2) PCR, including technical write-offs, improved 580bp QoQ to 59%, (3) Bank
restructured INR31.3b in 4Q vs INR22.9b in 9M and (4) CASA ratio improved 151bp
QoQ to 27.4% (growth of 21% YoY and 15% QoQ). (5) CET 1 at 7.5%. Bank to raise
Tier I bonds in 1Q; equity raising unlikely in near term
 Valuation and view: Declining trend in slippages and zero restructuring pipeline
were the key positives. Over FY13-14, ANDB's earnings were severely hit due to
rising NPAs and further impacted in 1QFY15 due to a spike in Agriculture NPAs.
With clarity emerging on the farm loan waiver scheme and management’s focus
on recoveries, we believe earnings would improve gradually going forward
(INR5b+ of interest write-back and upgrade/recoveries of INR5-6b Agri related
NPAs). We expect RoA/RoE to improve to 0.7%/14% by FY17E led by normalized
tax rate and healthy margins. Maintain Buy with a TP of INR120 (0.6x FY17E BV).

 

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But which is the stock? Name is not given  ???

 

Name of the company is Andhra Bank - it is there in the original message....

Strong core performance; Positive asset quality guidance by management
ƒÞ Andhra Bank¡¦s (ANDB) 4QFY15 PAT was at INR1.9b (2x YoY on a lower base),
driven by healthy NIM (3.5%, 12 quarter high), strong loan growth (+17% YoY) and
lower credit costs (1.6% vs. 2.5% in 4QFY14).


I would not look at Andhra Bank stock for the below reasons : Return on Equity is very low at 13% for the last 3 years. They have a significant other income in their balance sheet.....

 

PSU Banks have a lot of asset quality issues, better to stay with private banks or blue chip PSU names like SBI and PNB rather than venturing into midcap PSU bank space.

 

Its andra bank

 

technically its a bit weak at this level weak can go down further reversal above 85 level