IDFC-SSKI Securities assigns ‘underperformer’ rating to IDBI Bank
IDFC-SSKI Securities has assigned an ‘underperformer’ rating to IDBI Bank on concerns about the bank’s ability to maintain earnings growth and quality of assets.
IDBI BANK
CMP: Rs 63.60
TARGET PRICE: Rs 67
IDFC-SSKI Securities has assigned an ���underperformer��� rating to IDBI Bank on concerns about the bank���s ability to maintain earnings growth and quality of assets. ���We remain concerned about the tenacity of IDBI Bank���s earnings. While margins expanded in Q4FY09 (over a low base) we expect yields to remain suppressed in the near term, owing to full impact of rear-ended PLR cuts and aggressive investments in low-yielding G-Secs to build up SLR ratio.
Moreover, excessive reliance on wholesale funding (CASA at 14.8%) exposes earnings to market volatility,��� the institutional broking firm said in a report. ���We expect earnings to remain flat over the next two years with an average RoE (return on equity) of 10% (low compared to PSU peers). Though, the stock currently trades at attractive valuations of 0.93 times, FY10E stress on asset quality and subdued core earnings growth are likely to depress the valuations,��� the report added.
CMP: Rs 63.60
TARGET PRICE: Rs 67
IDFC-SSKI Securities has assigned an ���underperformer��� rating to IDBI Bank on concerns about the bank���s ability to maintain earnings growth and quality of assets. ���We remain concerned about the tenacity of IDBI Bank���s earnings. While margins expanded in Q4FY09 (over a low base) we expect yields to remain suppressed in the near term, owing to full impact of rear-ended PLR cuts and aggressive investments in low-yielding G-Secs to build up SLR ratio.
Moreover, excessive reliance on wholesale funding (CASA at 14.8%) exposes earnings to market volatility,��� the institutional broking firm said in a report. ���We expect earnings to remain flat over the next two years with an average RoE (return on equity) of 10% (low compared to PSU peers). Though, the stock currently trades at attractive valuations of 0.93 times, FY10E stress on asset quality and subdued core earnings growth are likely to depress the valuations,��� the report added.
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