Result Review 4QFY2013

Bharti Airtel

For 4QFY2013, Bharti Airtel’s (Bharti) revenue as well as bottomline came in below expectations while operating margins performance surprised positively. Bharti’s consolidated top line came in at `20,460cr, up just 1.0% qoq. The Indian mobility business reported decent KPIs with MOU growing by 4.8% to 455min and 5.1% qoq rise in network traffic. Voice average revenue per minute (ARPM) declined slightly by 0.5% to 35paise/min; consequently the average revenue per user (ARPU) grew by 4.2% qoq to `159/month. VAS as a percentage to revenue remained flat almost flat at 17.4%. Churn level came back to comfortable position after seven quarters and stood at 3.2%. In USD terms, the revenue from Zain Africa declined by 1.1% qoq to US$1,120mn, as MOU declined significantly by 14.2% qoq to 123min. Bharti’s consolidated EBITDA margin grew by ~115bp qoq to 31.7%, led by expansion in margins in its domestic business segments. Mobile- India and South Asia- EBITDA margin grew by 100bp qoq to 31.3%, while Africa margins declined by 103bp qoq to 25.5% due to increase in competitive pressure. Profitability was hit due to higher tax expense with tax rate coming in at ~61%. PAT came in at `509cr, down 50% yoy. The company cited that despite the fact that the number of major telecoms players has fallen from more than a dozen to just seven, due to a Supreme Court ruling that scrapped the licenses of a number of smaller firms due to a scandal-tarnished sale, significant competition prevails in the domestic market as promotions and discount packs for customers have continued to be available. Going ahead, we are positive on the Indian operations and expect tariff to inch up but there are concerns regarding the African operations which might weigh upon Bharti Airtel’s performance. Elevated costs are likely to exert pressure on Bharti' Airtel’s margins in the next couple of quarters. The stock is currently under review. Source: Angelbroking

Canara Bank

Canara Bank posted weak set of numbers for the quarter, as their reported earnings decline of 12.5% yoy. While NII grew at muted pace of around 2.5% yoy to `2,091cr, non-interest income unexpectedly grew by 30.8% yoy, leading to moderate 13.9% yoy growth in the operating profit to `1,698cr. On the asset quality front, while Gross and Net NPA levels were sequentially higher by only 2.8% each, however provisioning expenses grew by 63% yoy, much higher than our estimates, leading to a higher-than-estimated PAT decline of 12.5% yoy to `725cr. At the CMP, the stock trades at 0.7x FY2015E ABV.Source: Angelbroking

OBC

During 4QFY2013, Oriental Bank of Commerce posted healthy growth in net profit at 16.2% yoy to `308cr, however, it was below ours’ as well as streets’ expectations. On the operating front, while the NII grew by 13.6% yoy to `1,214cr, aided by 34.3% yoy growth in non-interest income to `462cr, operating profits were higher strongly by 25.5% yoy to `947cr. The bank’s asset quality deteriorated sequentially, with both gross and net NPA ratios witnessing an increase of 23bp and 13bp, respectively to 3.2% and 2.3%. At the CMP, the stock is trading at 0.5x FY2015 ABV.Source: Angelbroking

Syndicate Bank

During 4QFY2013, Syndicate Bank announced moderate set of numbers on operating front, however reported improvement on the asset quality front. On the operating front, while NII came in flat yoy at 1,344cr (despite robust advance growth at 19.4% yoy), Non-Interest income grew strong at 33.3% yoy, leading to a moderate growth of 6.6% and 14.0% yoy, respectively in operating income and operating profit. On the asset quality front, the bank reported improvement, as its Gross and Net NPA ratios, came down sequentially by 31bp and 9bp, respectively to 1.99% and 0.76%, which aided it to report 32.9% yoy lower provisioning expenses and clock earnings growth of 91.4% yoy. At the CMP, the stock is trading at 0.6x FY2015E ABV. Source: Angelbroking

Andhra Bank 

Andhra Bank registered a flattish growth in net profit at 1.4% yoy to `345cr during 4QFY2013. Growth in net interest income remained subdued at 4.3% yoy to `953cr, aided by 54.0% yoy growth in non-interest income, operating profits grew moderately by 14.3% on a yoy basis to `1,307cr. The bank witnessed continued pressure on the asset quality front, with a sequential increase of 5bp and 16bp in gross and Net NPA ratios, respectively to 3.71% and 2.45%, which resulted in 49.8% yoy increase in provisioning expenses and resulted in flat earnings level performance. At the current market price, the stock is trading at a relatively expensive valuation of 0.6x FY2015E ABV. Source: Angelbroking