Andhra Bank’s Q3FY09 results were broadly in line with expectations. Net interest income clocked in at Rs4.5 billion as against Rs3.7 billion during the corresponding quarter last year, a growth of 22% y-o-y.
Buoyed by treasury gains and higher fee-based income, operating profit grew 27% y-o-y, from Rs2.93 billion during Q3FY08 to Rs3.73 billion during the quarter under review.
A reversal in MTM provisioning made during H1FY09 boosted the bank’s bottomline by 30% y-o-y to Rs2.13 billion from Rs1.64 billion during the corresponding quarter last year.
At Rs56, the stock trades at 0.8x and 0.7x our FY09E and FY10E ABVPS estimates. Given a strong operational performance and sustenance of a superior asset quality in a difficult quarter, we maintain our BUY recommendation on the stock with a revised target price of Rs100 (earlier Rs102).