Andhra bank has reported its Q4FY09 numbers, which are slightly above our expectations.
Net profit grew 61.9% to Rs2.13 billion in Q4FY09 from Rs1.24 billion in Q4FY08 due to strong traction in non-interest income (65.0%), healthy growth in NII (22.6%) and lower growth in total provisions including tax provisions (22.1%).
The bank’s net interest income (NII) grew 22.6% on back of strong loan growth (28.6%) and improvement in C/D ratio from 69.9% in Q4FY08 to 74.8% in Q4FY09. Its net profit grew 61.9% due to strong traction in non-interest income (65.0%) and 22.6% growth in NII.
We have slightly tweaked our earning estimates for FY10E and now expect net profit to be Rs6.72 billion. This will result into an EPS of Rs13.8 and adjusted book value of Rs77.8 for FY10E.
Maintain ACCUMULATE rating on the stock with the revised target price of Rs71 (earlier Rs68).
At the target price, the stock would trade at 0.91x its FY10E adjusted book value (assigning 75:25 weights to historical multiple and fair multiple based on single-stage Gordon Growth Model, respectively).