will government's massive surge in investment ... - Myiris.com

Apr-Jun 2013 Earnings Preview
State Bank of India
Rating
Accumulate
Price (Rs) 1,873
Target Price (Rs) 2,400
M/Cap (Rs bn) 1,281.3
Shares o/s (m) 684.0
Key Figures (Rs m)
Y/e March FY13 FY14E FY15E
NII 611,602 631,164 739,517
PPP 403,000 366,806 440,932
NIM (%) 3.1 2.8 2.8
PAT 177,008 152,792 194,859
EPS (Rs) 258.8 223.4 284.9
Growth (%) 13.7 (13.7) 27.5
PE (x) 7.2 8.4 6.6
P / ABV (x) 1.2 1.1 1.0
We expect PAT to contract by 4.4% YoY. We expect margins to remain flat QoQ after
a muted performance in Q4FY13. Due to pensions and wage revisions, we would
expect opex growth to remain elevated. Gross NPA performance in Q4FY13 seems to
be under check as per mgt guidence but considering large exposures in CDR, we
expect restructuring could remain elevated.
Quarterly Table (Rs m)
Y/e March
Q1
FY14E
Q1
FY13
YoY gr.
(%)
Q4
FY13
12M
FY14E
12M
FY13
YoY gr.
(%)
NII 115,891 111,189 4.2 110,784 631,164 611,602 3.2
PPP 81,825 81,767 0.1 77,606 366,806 403,000 (9.0)
NIM Calculated (%) 3.2 3.6 (11)bps 3.2 2.8 3.1 (10)bps
PAT 35,872 37,516 (4.4) 32,992 152,792 177,008 (13.7)
Operating Metrics
Credit Cost 1.00 1.25 (25)bps 1.68 1.12 1.27 (14)bps
Advances 10,769,850 9,168,410 17.5 10,456,166 14,970,536 12,781,391 17.1
Gross NPA 536,894 461,774 16.3 511,894 810,414 639,874 26.7
Net NPA 225,000 203,240 10.7 219,565 425,334 287,824 47.8
Union Bank of India
Rating
BUY
Price (Rs) 172
Target Price (Rs) 210
M/Cap (Rs bn) 102.4
Shares o/s (m) 596.8
Key Figures (Rs m)
Y/e March FY13 FY14E FY15E
NII 75,428 85,919 98,430
PPP 55,827 60,863 69,006
NIM (%) 2.6 2.6 2.6
PAT 21,579 24,598 28,030
EPS (Rs) 36.2 41.2 47.0
Growth (%) 11.4 14.0 14.0
PE (x) 4.7 4.2 3.7
P / ABV (x) 0.7 0.6 0.5
We expect PAT growth of 24.7% YoY. We expect muted performance on NIMs and
fee income growth is largely recovery-driven. We start to factor in higher opex
growth of 17% YoY due to changes in pension assumptions likely in FY14. Slippages
have been stable for the last three quarters at