BSE Index Analysis, Securties , Standard Experts
ING Vysya Bank : Q4 Adj. PAT Beats Expectations......
Reco : Buy
Cmp : 356
Target : 440
ING Vysya Bank (ING) reported PAT of Rs 1.3 bn, up 40% YoY, which was in line with our estimate. NII was up 19% YoY. ING made a tax adjustment relating to Special Reserve of Rs 145 mn in Q4FY12 leading to lower tax rate (22% vs. 33% in 9MFY12) and made higher than mandated NPA provisions (up from Rs 43 mn in Q4FY11 to Rs 566 mn in Q4FY12).
Adjusted for these, PAT was higher than our estimate reflecting improvement in core operating performance.
Key highlights
Tax adjustment of Rs 145 mn: ING considered one-time tax adjustment of Rs 145 mn in Q4FY12 relating to Special Reserve created under Section 36 (1) (viii) of Income Tax Act for long term lending to Infrastructure segment, which resulted in effective tax rate declining to 22% in Q4FY12 (from 33% in 9MFY12).
Maintain BUY with TP of Rs 440
Key highlights
Tax adjustment of Rs 145 mn: ING considered one-time tax adjustment of Rs 145 mn in Q4FY12 relating to Special Reserve created under Section 36 (1) (viii) of Income Tax Act for long term lending to Infrastructure segment, which resulted in effective tax rate declining to 22% in Q4FY12 (from 33% in 9MFY12).
Maintain BUY with TP of Rs 440
Higher-than-mandated PCR will support the bankⳠPAT in difficult quarters. With asset quality issues behind, ING is increasing its focus on advances growth and improving NIM and C/I ratio, which will augur well for return ratios. Hence we revise our PAT estimates upwards by ~3% each in FY13 and FY14.
Our TP of Rs 440 (1.3x FY14E ABV of Rs 327) implies 24% upside from CMP of Rs 356.
The stock trades at 1.3x FY13E ABV of Rs 186 (9.1x FY13E EPS of Rs 39) and 1.1x FY14E ABV of Rs 327 (7.4x FY14E EPS of Rs 48).
Suggest : Maintain BUY.
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