532814 Indian Bank

MOSL: INDIAN BANK (Buy)-Strong operating performance with improving asset quality

Indian Bank: Strong operating performance with improving asset quality; Reiterate Buy

(INBK IN, Mkt Cap USD2.7b, CMP INR356, TP INR430, 21% Upside, Buy)


  • INBK reported core operating profit (excl. treasury gains) growth of 55% YoY to INR 11.3b. However, PAT of INR3b was 38% below estimates, as provisions of INR9.2b were above estimates (included INR4.7b of provisions for MTM losses).
  • NII grew 30% YoY to INR16.2bn (6% above estimate) led by 22% YoY loan growth and 3bp QoQ improvement in global margins. NII growth was partially offset by other income (8% YoY decline led by 74% decline in treasury gains of INR0.8b).
  • C/I ratio rose sharply by 520bp QoQ to 44.3% mainly led by decline in other income. PPoP growth thus stood at 18% YoY; however, high provisions led to decline in PAT by 19% YoY to INR3b.
  • Fresh slippages increased 168% QoQ to INR9.5b led by 4 lumpy accounts (~INR4.5b) slipping from SDR. However, elevated write-offs of INR4.1b and sale to ARCs worth INR3.6b led to QoQ flat GNPA at INR96b. Calculated PCR deteriorated by 172bp QoQ to 48.9% on the back of lower provisions
  • The Bank has a total exposure of INR26.4b (8 accounts) towards first list and INR7.4b towards second list (10 accounts). The bank has made total provisions of INR18.2b towards the two lists against a requirement of INR19.8b (by FY18), the balance to be made in 4QFY18.
12 pages

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​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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