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30 The current outlook for SEBs is not very positive. The bank management has become cautious due to this and is focusing on reducing its exposure to SEBs. This is evident from the fact that the bank has been successful in reducing its exposure to SEBs from `6,000 crore in March ’11 to `5,180 crore in June ’11. Moreover, the bank has not yet shifted to a 100% system-based NPA recognition. The bank still has to migrate its ‘`50-lakh and below’ portfolio to system-based NPA recognition. This constitutes around 18% of the total advance portfolio of the bank. As observed by the performance of other banks, we believe that migrating to a system-based NPA recognition can lead to higher slippages. However, the management of the bank is confident that the slippages will not be higher and it aims to reduce its gross NPAs from around 1.8% in FY11 to 1.6% in FY12. Going forward, we expect gross NPAs and net NPAs of the bank to remain higher in FY12 owing to the reasons mentioned here. However, we are of the opinion that Dena Bank will witness a substantial improvement in the quality of its assets on the back of recoveries, the right steps taken to NPA Movement 1400 1200 1000 800 2.13% 1.80% 1.21% 1.87% 1.24% 1.90% 1.16% 1.85% 1.09% 1.80% 600 400 200 1.08% 0.90% 0 0.00% FY 2009 FY 2010 FY 2011 FY 2012E FY 2013E Gross NPA Net NPA GNPA (%) NNPA (%) Source: Company Data, Nirmal Bang Research ` in Crs contain fresh slippages by way of constant monitoring as well as adequate provisions that would be provided by the bank itself. Financials Year FY 10A FY 11A FY 12E FY 13E Beyond Market 10th Oct ’11 Focus On Non-Interest Income The bank’s non-interest income has shown dismal growth and had been a point of concern for the bank. However, the management is confident of a revival in its non-interest income in the coming quarters. The bank is leveraging its relationship with its current customer base to increase the non-fund based business, which will, in turn, increase the fee-based income of the bank. The bank has tied up with all the top mutual fund houses in the industry to distribute their products through the bank’s branches. The bank is also focusing on core banking solution (CBS) to enable its customer’s branch banking. Moreover, the bank is focusing on recoveries, which will further boost the bank’s bottom line performance. RISKS AND CONCERNS o In the event of the macro‐economic scenario worsening again, there is a strong possibility of higher‐than‐expected NPA provisions. o A change in the management of the bank could impact the bank’s strategic target leading to a phase of uncertainty for the bank. VALUATIONS We expect Dena Bank to improve its core operating metrics, going forward, driven by focus on its liability franchise along with operating efficiency. Dena Bank is currently trading at a very attractive valuation in the banking space. Dena Bank has been able to sustain growth in advances above industry average and has a major presence in the state of Gujarat, which has the highest GDP among all the states in India. NII (`crs) Growth % Op. profit (`crs) Margin % PAT (`crs) EPS (`) P/E (x) Adj BVPS (`) P/ABV (x) ROE % 1,100 1,763 2,017 2,390 3.10% 60.30% 14.40% 18.50% 841 1,224 1,480 1,768 Source: Company Data, Nirmal Bang Research 49.80% 53.30% 56.00% 56.50% 511 612 679 816 17.82 18.34 20.37 24.48 4.79 4.66 4.19 3.49 73 92 108 126.2 1.17 0.93 0.8 0.68 21.40% 19.50% 17.20% 17.80% Higher exposure in Gujarat, increasing focus on high-yield retail credit, strengthening of its balance sheet, coupled with lower operating costs would improve efficiency and drive earnings of Dena Bank, going forwarD. It’s simplified...
COMMODITY FUTURES Nickel $28,000/tonne Crude Oil $98/barrel Copper $8,500/tonne Pepper `25,000/quintal Guar Seed `3,200/quintal Silver $32/troy ounce Gold $1,500/troy ounce Zinc $2,100/tonne Chana `2,500/ quintal Aluminium $2,450/tonne Jeera `14,000/quintal Cardamom `1,000/kg Predicting Accurate Results. Consistently. Our research goes beyond numbers to identify the forces that affect the kundali of commodities - global events, domestic issues, and everything in between. Which is why, our predictions have invariably come true on several occasions, proving that we are among the best in the industry when it comes to commodity trading. EQUITIES* | DERIVATIVES* | COMMODITIES | CURRENCY* | MUTUAL FUNDS ^ | IPOs ^ | INSURANCE ^ | DP* www.nirmalbang.com Disclaimer: Insurance is a subject matter of solicitation. Mutual Fund investments are subject to market risk. Please read the scheme related document carefully before investing. Please read the Do’s and Don’ts prescribed by Commodity Exchange before trading. The PMS Service is not oering for commodity segment. *Through Nirmal Bang Securities Pvt. Ltd. ^Distributors REGD. OFFICE: Sonawala Building, 25 Bank Street, Fort, Mumbai - 400 001. Tel: 022 - 39267500 / 7501; Fax: 022 - 39267510 CORPORATE OFFICE: B-2, 301/302, Marathon Innova, O Ganpatrao Kadam Marg, Lower Parel (W), Mumbai - 400 013. Tel: 022 - 39268000 / 8001; Fax: 022 - 39268010 # For job openings at Nirmal Bang, visit http://www.nirmalbang.com/careers.aspx Prepared by Research Analyst of Nirmal Bang Commodities Pvt. Ltd. BSE SEBI REGN No. INB011072759, INF011072759 & INE011072759, NSE SEBI REGN No. INB230939139, INF230939139 & INE230939139 DP SEBI REGN. No NSDL: IN-DP-NSDL-136-2000, CDS(I)l: IN-DP-CDSL-37-99, AMFI REGN. No. arn-49454 NCDEX REGN. NO. 00362, FMC Code-0075, MCX REGN. No. 16590, FMC Code-MCX/TCM/CORP/0490, MCX SX-INE260939139, PMS-INP000002981
Page 1: The IMF, in its World Economic Outl
Page 4 and 5: 4 PROPHECY OF DOOM The repercussion
Page 6 and 7: 6 The IMF, in its World Economic Ou
Page 8 and 9: 8 There could be further pressure a
Page 10 and 11: 10 Movements In Key Policy Rates In
Page 13 and 14: The Reserve Bank of India has been
Page 15 and 16: Micro analysis. Mega gains. Trading
Page 17 and 18: made it clear that Gujarat is the s
Page 19 and 20: Contact: Sushmita Desai: +91 77380
Page 21 and 22: Honda Siel Cars India Ltd (HSCIL),
Page 23 and 24: Despite the immense potential of th
Page 25 and 26: Now, Commodity Trading Is No More A
Page 27 and 28: (Janssen) and Lundbeck - that can h
Page 29: Dena Bank Advances V/s Industry Adv
Page 33 and 34: FORTNIGHTLY OUTLOOK FOR CURRENCIES
Page 35 and 36: In accordance with the announcement
Page 38 and 39: 38 Beyond Market 10th Oct ’11 Adv
Page 40 and 41: CHANGE IN PRICE AND OPEN INTEREST 4
Page 42 and 43: 42 MOVERS AND LAGGARDS IN MUTUAL FU
Page 44 and 45: 44 Beyond Market 10th Oct ’11 A M
Page 46 and 47: 46 their homework and wait for clea
Page 48 and 49: LEARN THE ART OF COMMODITY INVESTIN
Page 50: Kunal Shah, Head of Commodity Resea

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