28 April 2015
4QFY15 Results Update | Sector:
Financials
Andhra Bank
BSE SENSEX
27,396
Bloomberg
Equity Shares (m)
M.Cap. (INR b) / (USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val/Vol ‘000
Free float (%)
S&P CNX
8,286
ANDB IN
602.8
46.2/0.7
110 / 61
-2/-1/-7
410/4755
39.0
CMP: INR77
TP: INR120 (+56%)
Buy
Strong core performance; Positive asset quality guidance by management
Andhra Bank’s (ANDB) 4QFY15 PAT was at INR1.9b (2x YoY on a lower base),
driven by healthy NIM (3.5%, 12 quarter high), strong loan growth (+17% YoY) and
lower credit costs (1.6% vs. 2.5% in 4QFY14).
Slippages during the quarter declined to a 4 quarter low of INR7.7b vs. INR9b in
3QFY15. Agriculture GNPA declined 20% QoQ to INR10.6b led by strong recoveries
(INR3b+ in 4Q) in AP/Telangana. Management is confident of recovering another
INR5-6b over the next couple of quarters (Agri NPA target of 3% by 2QFY16 vs.
5.2% currently and 7.2% in 1QFY15).
Bank continued to report healthy NIM (3.5%, +5bp QoQ) led by interest write-back
on Agriculture NPA recoveries (INR300m) from AP/Telangana. Management
guided that the margins would remain at similar levels over the next few quarters.
Other highlights:
(1) fees grew 21% QoQ (only 2% YoY on higher base) led by
strong traction in processing fees (INR1,132m) led by pickup in growth in 4QFY15,
(2) PCR, including technical write-offs, improved 580bp QoQ to 59%, (3) Bank
restructured INR31.3b in 4Q vs INR22.9b in 9M and (4) CASA ratio improved 151bp
QoQ to 27.4% (growth of 21% YoY and 15% QoQ). (5) CET 1 at 7.5%. Bank to raise
Tier I bonds in 1Q; equity raising unlikely in near term
Valuation and view:
Declining trend in slippages and zero restructuring pipeline
were the key positives. Over FY13-14, ANDB's earnings were severely hit due to
rising NPAs and further impacted in 1QFY15 due to a spike in Agriculture NPAs.
With clarity emerging on the farm loan waiver scheme and management’s focus
on recoveries, we believe earnings would improve gradually going forward
(INR5b+ of interest write-back and upgrade/recoveries of INR5-6b Agri related
NPAs). We expect RoA/RoE to improve to 0.7%/14% by FY17E led by normalized
tax rate and healthy margins. Maintain
Buy
with a TP of INR120 (0.6x FY17E BV).
Financials & Valuation (INR Billion)
2016E
NII
55
OP
40
NP
12
NIM (%)
3.0
EPS (INR)
20.6
EPS Gr. (%) 94.8
BV/Sh. (INR) 170
ABV/Sh.(INR) 145
ROE (%)
12.2
ROA (%)
0.6
D. Payout(%) 29.0
Valuations
P/E(X)
3.7
P/BV (X)
0.45
P/ABV (X)
0.5
Div. Yield (%) 6.7
Y/E MAR
2017E 2018E
62
74
43
52
15
19
2.9
2.9
25.5
31.4
23.6
23.0
188
210
172
193
14.2
15.7
0.7
0.7
29.0
29.0
3.0
0.41
0.4
8.3
2.4
0.36
0.4
10.2
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415
Vallabh Kulkarni
(Vallabh.Kulkarni@MotilalOswal.com); +91 22 3982 5430
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

Andhra Bank
Strong Agri NPA recoveries aid GNPA; Positive outlook by management
Slippages declined to a four
quarter low of INR7.7b
GNPA declined 68bp QoQ at 5.3% led by lower slippages and strong recoveries
in AP/Telangana farm NPA portfolio. Reported PCR increased 580bp QoQ to 59%
in 4QFY15 resulting in NNPA declining 77bp to 2.9% vs 3.7% in the previous
quarter.
Slippages during the quarter declined to a 4 quarter low of INR7.7b vs. INR9b in
3QFY15. As per the management, slippage run rate would remain near these
levels over the next couple of quarters and subside further as the economic
growth picks up.
Agriculture GNPA declined 20% QoQ to INR10.6b led by strong recoveries
(INR3b+ in 4Q) in AP/Telangana. Management is confident of recovering
another INR5-6b over the next couple of quarter (Agri NPA target of 3% by
2QFY16 vs. 5.2% currently and 7.2% in 1QFY15).
Fresh restructuring increased sharply during the quarter (INR31.3b vs INR22.9b
in 9M – one major account from Power sector). OSRL stood at INR 144b (11.1%
of loans). Management stated that, unlike a few other banks who have reported
results thus far, the restructured pipeline is Nil.
Loan growth (+17% YoY)
was mainly driven by SME
(+21% YoY and +14% QoQ)
and retail segment (+20%
YoY and +7% QoQ)
Other highlights
Loans grew 17% YoY (+6% QoQ), while deposits grew at 9% YoY and QoQ each.
CD ratio declined to 81.3% in 4QFY15 vs. 83.6% in 3QFY15.
Loan growth was mainly driven by SME (+21% YoY and +14% QoQ) and Retail
segment (+20% YoY and +7% QoQ).
Within, retail segment growth was mainly driven by Housing loans (+36% YoY
and 14% QoQ) which is 50% of total retail book. Non Agriculture gold loan book
declined 11% QoQ (formed 16% of the bank’s total retail book).
CASA deposits growth was at a twenty quarter high at 21% YoY to INR424b
(CASA ratio of 27.4% - improvement of 151bp QoQ and 255bp YoY). SA/CA
deposits increased by 13%/23% QoQ and 18%/30% YoY.
Buy with a target price of
INR120 (0.6x FY17E BV)
Valuation and view
Declining trend in slippages and zero restructuring pipeline were the key
positives.
Over FY13-14, ANDB's earnings were severely hit due to rising NPAs and further
impacted in 1QFY15 due to a spike in Agriculture NPAs.
With clarity emerging on the farm loan waiver scheme and management’s focus
on recoveries, we believe earnings would improve gradually going forward
(INR5b+ of interest write-back and upgrade/recoveries of INR5-6b Agri related
NPAs).
We expect RoA/RoE to improve to 0.7%/14% by FY17E led by normalized tax
rate and healthy margins. Maintain
Buy
with a TP of INR120 (0.6x FY17E BV).
28 April 2015
2

Andhra Bank
Exhibit 1: We upgrade our FY16/17 estimates to factor in higher NIM
INR B
Net Interest Income
Other Income
Total Income
Operating Expenses
Operating Profits
Provisions
PBT
Tax
PAT
Margins (%)
Credit Cost (%)
RoA (%)
RoE (%)
Old Estimates
FY16E
FY17E
50.5
59.3
16.3
18.0
66.8
77.3
31.1
36.1
35.7
41.2
20.2
22.2
15.5
19.0
5.0
5.7
10.5
13.3
2.84
2.88
1.30
1.20
0.4
0.6
7.3
11.0
New Estimates
% Change
FY16E
FY17E
FY18E
FY16E
FY17E
55.3
62.4
73.9
9.5
5.2
16.7
18.4
20.4
2.3
2.4
72.0
80.8
94.3
7.7
4.6
32.3
37.4
42.7
3.6
3.5
39.7
43.4
51.6
11.3
5.5
21.0
20.3
23.2
4.0
-8.5
18.7
23.1
28.4
20.7
21.8
6.3
7.7
9.5
26.4
36.1
12.4
15.4
18.9
18.1
15.7
2.97
2.88
2.91
1.35
1.15
1.00
0.4
0.6
0.7
6.8
12.2
14.2
Source: MOSL, Company
Exhibit 2: One year forward P/BV
Exhibit 3: One year forward P/E
Source: MOSL, Company
Source: MOSL, Company
28 April 2015
3

Andhra Bank
Exhibit 4: DuPont Analysis: Gradual improvement in profitability led by decline in credit costs and tax rate (%)
Y/E MARCH
Net Interest Income
Fee income
Fee to core Income
Core Income
Operating Expenses
Cost to Core Income
Employee cost
Emp. to total exp (%)
Others
Core Operating Profit
Trading and others
Operating Profit
Provisions
NPA
Others
PBT
Tax
Tax Rate
RoA
Leverage (x)
RoE
FY08
2.57
0.84
24.57
3.41
1.75
51.19
0.98
56.03
0.77
1.66
0.37
2.03
0.27
0.23
0.04
1.76
0.66
37.27
1.11
16.26
17.97
FY09
2.60
0.75
22.42
3.35
1.77
52.65
1.00
56.51
0.77
1.59
0.47
2.06
0.62
0.29
0.33
1.44
0.39
27.28
1.04
18.13
18.94
FY10
2.76
0.75
21.40
3.52
1.70
48.33
1.04
61.06
0.66
1.82
0.46
2.28
0.47
0.45
0.02
1.81
0.49
27.16
1.32
19.71
25.96
FY11
3.23
0.71
17.95
3.94
1.71
43.43
1.11
64.77
0.60
2.23
0.19
2.42
0.65
0.56
0.08
1.77
0.50
28.30
1.27
18.28
23.24
FY12
3.21
0.60
15.71
3.81
1.54
40.45
0.98
63.73
0.56
2.27
0.14
2.41
0.85
0.50
0.35
1.56
0.41
26.29
1.15
16.74
19.25
FY13
2.77
0.56
16.70
3.33
1.50
45.17
0.95
63.17
0.55
1.82
0.22
2.04
0.73
0.58
0.15
1.31
0.36
27.21
0.95
17.04
16.19
FY14
2.38
0.54
18.36
2.92
1.47
50.46
0.88
59.86
0.59
1.45
0.31
1.76
1.29
1.07
0.22
0.47
0.19
40.64
0.28
18.26
5.07
FY15
2.57
0.60
18.89
3.17
1.55
48.96
0.96
61.98
0.59
1.62
0.25
1.87
1.18
1.15
0.03
0.69
0.33
47.59
0.36
18.75
6.79
FY16E
2.78
0.60
17.66
3.37
1.62
48.07
1.02
62.89
0.60
1.75
0.24
2.00
1.06
1.01
0.04
0.94
0.31
33.50
0.62
19.60
12.24
FY17E
FY18E
2.70
2.73
0.58
0.56
17.73
17.13
3.28
3.30
1.62
1.58
49.31
47.86
1.02
0.99
63.18
62.91
0.60
0.59
1.66
1.72
0.21
0.19
1.88
1.91
0.88
0.86
0.84
0.75
0.04
0.11
1.00
1.05
0.33
0.35
33.50
33.50
0.66
0.70
21.42
22.54
14.24
15.74
Source: MOSL, Company
28 April 2015
4

Andhra Bank
Story in charts
Exhibit 5: Loan growth driven by MSME and Retail segments
32
22 20
Loans (INR b)
YoY Gr. (%)
17
13 14 16
22 20
20
15
18
Exhibit 6: Bank utilized other funding avenues in 4Q
Deposits (INR b)
YoY Growth (%)
9
18 16 15 15
17 14 16 14
9
19 17
15 14 17 17
15 17 12
8
Source: MOSL, Company
Source: MOSL, Company
Exhibit 7: Margin improvement (%) led by interest write-back Exhibit 8: GNPA ratio declined led by higher recoveries
3.8 3.8 3.8
GNPA (%)
3.3 3.3 3.1 3.4
3.0
2.7
3.2
2.5 2.7
2.9
2.1
3.4 3.5
82
62
65 71
NNPA (%)
PCR (reported %)
60
53 48 50 53
53 52 50
45 45 46
59
Source: MOSL, Company
Source: MOSL, Company
Exhibit 9: Gross slippages at 4 quarter low (INRb)
21.6
Exhibit 10: Credit cost remained stable QoQ (%)
2.5
1.6 1.6
8.3 9.2
4.0
11.8
6.5
8.9
7.2 6.9
5.1
9.8 9.0
7.7
0.6
1.2
0.2
0.5
0.7
0.8
0.6 0.7
1.1
1.3
0.8
1.3 1.4
Source: MOSL, Company
Source: MOSL, Company
28 April 2015
5

Andhra Bank
Exhibit 11: Quarterly Snapshot
FY14
INR m
Profit and Loss
Net Interest Income
Other Income
Trading profits
Recoveries
Forex
Others (Ex non core)
Total Income
Operating Expenses
Employee
Others
Operating Profits
Provisions
PBT
Taxes
PAT
Asset Quality
GNPA
NNPA
GNPA (%)
NNPA (%)
PCR (Reported, %)
Slippages
Slippage Ratio
Ratios (%)
Fees to Total Income
Cost to Core Income
Tax Rate
CASA (Reported)
Loan/Deposit
Margins (%)
Yield on loans
Yield On Investments
Cost of deposits
Margins
Balance Sheet (INR B)
Loans
Deposits
CASA Deposits
Break up of Loans
Agriculture Adv
SME Credit
Retail Loans
Other loans
1Q
2Q
3Q
4Q
1Q
2Q
FY15
3Q
4Q
Variation (%)
QoQ
YoY
9
12
7
127
-63
21
10
11
13
8
9
17
-3
3
-8
-3
-13
-68
-77
580
-29
-66
44
30
190
33
-38
9
41
84
187
11
18
-11
168
268
110
17
10
2
-18
638
70
77
Cumulative Numbers
FY14 FY15 YoY Gr (%)
37,373
13,328
4,008
1,081
887
7,353
50,702
23,100
13,829
9,271
27,602
20,265
7,337
2,982
4,356
45,380
14,998
3,665
765
1,832
8,736
60,379
27,394
16,980
10,415
32,984
20,802
12,182
5,798
6,384
21
13
-9
-29
106
19
19
19
23
12
19
3
66
94
47
17
10
2
-18
638
8,739 10,454 8,683 9,498
4,677 2,256 3,029 3,366
2,861
207
520
420
122
434
308
218
283
115
258
231
1,412 1,501 1,944 2,497
13,416 12,710 11,712 12,864
5,954 6,282 6,496 4,368
3,852 4,011 4,149 1,817
2,103 2,271 2,347 2,550
7,462 6,428 5,216 8,497
3,849 5,022 4,280 7,114
3,613 1,407
936
1,382
1,300
700
480
502
2,313
707
456
881
47,484 51,872 56,925 58,576
32,117 34,774 36,534 33,425
4.7
5.2
5.4
5.3
3.3
3.5
3.6
3.1
45.0
44.6
45.8
52.6
11,817 7,232 6,933 5,053
5.5
3.3
3.1
2.0
8,035 11,042 12,591 13,712
3,947
2,775 3,903 4,374
954
355
1,139 1,217
255
91
128
291
795
500
393
144
1,942
1,828 2,243 2,723
11,982 13,817 16,494 18,086
5,720
6,357 7,262 8,057
3,395
3,732 4,628 5,224
2,325
2,625 2,634 2,832
6,263
7,460 9,232 10,030
4,143
4,915 5,415 6,330
2,120
2,545 3,817 3,700
1,050
1,100 1,800 1,848
1,070
1,445 2,017 1,852
68,272 68,843 71,181 68,765
43,215 43,158 42,642 36,886
6.0
6.0
6.0
5.3
3.9
3.9
3.7
2.9
48.2
50.3
53.1
58.9
21,601 9,801 9,046 7,689
8.6
3.9
3.5
2.8
61,671 68,765
38,772 36,886
5.3
5.3
3.1
2.9
52.6
58.9
10.5
58.7
36.0
23.8
79.8
11.2
7.6
7.8
2.7
1,004
1,258
300
171
170
144
520
11.8
52.5
49.8
23.9
77.9
11.4
7.9
7.7
3.2
1,007
1,293
309
181
166
146
515
16.6
61.1
51.3
23.5
79.5
11.2
8.0
7.8
2.5
1,047
1,317
310
187
167
151
543
19.4
36.4
36.3
24.8
77.7
11.0
8.3
7.9
2.7
1,102
1,418
352
203
183
165
551
16.2
57.3
49.5
23.5
77.4
10.7
8.1
7.9
2.1
1,142
1,475
347
212
186
171
572
13.2
49.4
43.2
24.4
79.2
11.5
8.1
7.8
2.9
1,149
1,451
354
208
186
173
582
13.6
49.0
47.2
25.8
83.6
11.7
8.2
7.7
3.4
1,188
1,421
367
198
195
186
610
15.1
49.0
49.9
27.4
83.5
11.7
8.2
7.6
3.5
1,295
1,550
424
204
222
198
670
0
3
-5
5
9
9
15
3
14
7
10
67
-10
-33
83
18
9
21
1
21
20
22
14.5
51.6
40.6
25
77.7
11.2
8.1
7.8
2.8
1,102
1,418
352
14.5
50.6
47.6
27
83.5
11.4
8.2
7.7
3.0
1,295
1,550
424
16
14
-8
24
18
9
21
203
204
1
183
222
21
165
198
20
551
670
22
Source: MOSL, Company
28 April 2015
6

Andhra Bank
Exhibit 12: Valuation metrics
62.34
Rating
ICICIBC*
Buy
HDFCB
Buy
AXSB
Buy
KMB*
Neutral
YES
Buy
IIB
Buy
DCBB
Buy
FB
Buy
JKBK
Neutral
SIB
Buy
Private Aggregate
SBIN (cons)* Buy
PNB
Buy
BOI
Neutral
BOB
Neutral
UNBK
Buy
INBK
Buy
CRPBK
Neutral
ANDB
Buy
IDBI
Neutral
DBNK
Neutral
Public Aggregate
HDFC*
Buy
LICHF
Buy
IHFL
Buy
IDFC
Buy
RECL
Buy
POWF
Buy
SHTF
Buy
MMFS
Buy
BAF
Buy
NBFC Aggregate
CMP
(INR)
327
1,004
535
1,339
826
827
118
127
99
24
272
161
215
174
143
147
58
77
75
49
1,228
437
573
167
317
271
990
274
3,989
Mcap
(USDb)
30.4
40.4
20.2
16.5
5.5
7.0
0.5
1.7
0.8
0.5
123.6
32.6
4.7
2.2
1.2
1.5
1.1
0.2
0.7
1.9
0.4
46.5
30.7
3.5
3.4
4.3
5.0
5.7
3.6
2.5
3.2
62.0
EPS (INR)
FY16
22.9
51.2
37.5
49.2
60.9
43.2
7.3
13.0
13.6
3.7
29.0
26.8
50.3
24.1
36.6
28.7
16.5
17.9
14.4
9.7
38
33
63
13
66
55
78
17
219
FY17
27.4
64.0
44.0
60.4
76.4
54.6
9.5
15.6
18.1
4.7
36.2
36.2
64.3
30.8
47.1
33.5
21.9
22.5
19.7
13.6
46
39
77
14
75
63
92
20
267
P/E (x)
FY16
11.4
19.6
14.3
27.2
13.6
19.1
16.3
9.8
7.2
6.5
17.2
9.0
6.0
4.3
7.2
3.9
5.1
3.5
4.3
5.2
5.0
7.5
20.4
13.3
9.1
13.3
4.8
4.9
12.7
15.9
18.2
14.4
FY17
9.2
15.7
12.2
22.2
10.8
15.2
12.4
8.2
5.4
5.1
14.2
7.2
4.5
3.4
5.7
3.0
4.4
2.6
3.4
3.8
3.6
5.9
15.4
11.2
7.5
11.6
4.2
4.3
10.8
13.4
15.0
12.4
BV (INR)
FY16
131
287
219
371
332
227
63
100
137
29
231
231
455
184
320
287
141
169
157
130
165
198
213
109
300
288
494
113
1,137
FY17
151
336
255
427
393
274
72
112
151
33
260
263
511
208
359
313
158
185
173
141
192
229
245
120
358
334
573
128
1,360
P/BV (x)
FY16
1.99
3.50
2.45
3.61
2.48
3.64
1.88
1.27
0.72
0.82
2.78
1.13
0.70
0.47
0.94
0.45
0.51
0.41
0.45
0.47
0.38
0.82
4.74
2.21
2.69
1.27
1.06
0.94
2.00
2.43
3.51
2.66
FY17
1.67
2.99
2.10
3.13
2.10
3.02
1.64
1.14
0.65
0.73
2.41
1.00
0.61
0.42
0.84
0.40
0.47
0.36
0.42
0.43
0.35
0.74
3.67
1.91
2.34
1.14
0.89
0.81
1.73
2.15
2.93
2.32
RoA (%)
FY16
1.72
1.97
1.79
1.86
1.68
1.90
1.12
1.20
0.81
0.78
0.77
0.77
0.46
0.70
0.57
0.63
0.54
0.55
0.58
0.36
2.53
1.43
3.90
2.20
3.50
3.18
2.27
2.62
2.94
FY17
1.78
2.02
1.75
1.86
1.70
1.97
1.17
1.19
0.95
0.86
0.84
0.91
0.49
0.78
0.64
0.63
0.64
0.60
0.69
0.44
2.53
1.42
3.87
2.19
3.36
3.11
2.44
2.72
2.88
RoE (%)
FY16
16.3
19.2
18.4
14.3
19.9
20.7
12.3
13.7
10.4
13.3
12.8
12.2
11.6
13.7
12.0
10.4
12.3
11.0
9.5
7.7
23.8
17.8
31.9
11.5
24.2
20.6
16.3
16.1
21.0
FY17
17.2
20.6
18.5
15.0
21.1
21.8
14.1
14.7
12.6
15.2
14.5
14.6
13.3
15.7
13.9
11.2
14.7
12.7
11.9
10.0
24.9
18.3
33.5
12.0
22.8
20.1
17.7
17.0
21.4
*Multiples adj. for value of key ventures/Investments; For ICICI Bank and HDFC Ltd BV is adjusted for investments in subsidiaries
# Div Yield based on FY14 declared dividend; UR: Under Review
Source: Company, MOSL
28 April 2015
7

Andhra Bank
Financials and valuations
Income Statement
Y/E March
Interest Income
Interest Expense
Net Interest Income
Change (%)
Non Interest Income
Net Income
Change (%)
Operating Expenses
Pre Provision Profits
Change (%)
Provisions (excl tax)
PBT
Tax
Tax Rate (%)
PAT
Change (%)
Pref. Dividend (Incl tax)
Profits for Equity SH
Change (%)
Equity Dividend (Incl tax)
Core PPP*
Change (%)
*Core PPP is (NII+Fee income-Opex)
Balance Sheet
Y/E March
Share Capital
Reserves & Surplus
Net Worth
Deposits
Change (%)
Borrowings
Other Liabilities & Prov.
Total Liabilities
Current Assets
Investments
Change (%)
Loans
Change (%)
Fixed Assets
Other Assets
Total Assets
Asset Quality
GNPA (INR M)
NNPA (INR M)
GNPA Ratio
NNPA Ratio
PCR (Excl Tech. write off)
E: MOSL Estimates
28 April 2015
2011
82,913
50,703
32,210
46.8
8,970
41,179
30.3
17,049
24,131
33.3
6,460
17,671
5,000
28.3
12,671
21.2
0.0
12,671
21.2
3,577
22,210
54.0
2012
113,387
75,794
37,593
16.7
8,599
46,193
12.2
18,042
28,150
16.7
9,907
18,243
4,796
26.3
13,447
6.1
0.0
13,447
6.1
3,577
26,559
19.6
2013
129,097
91,527
37,570
-0.1
10,474
48,044
4.0
20,372
27,672
-1.7
9,962
17,711
4,819
27.2
12,891
-4.1
0.0
12,891
-4.1
3,273
24,727
-6.9
2014
142,973
105,600
37,373
-0.5
13,328
50,702
5.5
23,100
27,602
-0.3
20,265
7,337
2,982
40.6
4,355
-66.2
0.0
4,355
-66.2
756
22,678
-8.3
2015
163,686
118,306
45,380
21.4
14,998
60,379
19.1
27,394
32,984
19.5
20,802
12,182
5,798
47.6
6,384
46.6
0.0
6,384
46.6
1,405
28,554
25.9
2016E
182,946
127,674
55,273
21.8
16,719
71,992
19.2
32,270
39,721
20.4
21,021
18,700
6,265
33.5
12,436
94.8
0.0
12,436
94.8
3,622
34,855
22.1
2017E
209,680
147,262
62,418
12.9
18,420
80,838
12.3
37,412
43,426
9.3
20,313
23,113
7,743
33.5
15,370
23.6
0.0
15,370
23.6
4,477
38,460
10.3
(INR Million)
2018E
243,976
170,027
73,949
18.5
20,352
94,301
16.7
42,706
51,595
18.8
23,169
28,427
9,523
33.5
18,904
23.0
0.0
18,904
23.0
5,506
46,529
21.0
2011
5,596
59,328
64,924
921,563
18.6
76,397
26,123
1,089,007
104,590
242,040
21.0
714,354
27.3
3,175
24,849
1,089,007
2012
5,596
69,198
74,794
1,058,512
14.9
82,406
33,931
1,249,642
86,456
296,289
22.4
836,418
17.1
3,026
27,454
1,249,642
2013
5,596
78,816
84,412
1,237,956
17.0
111,193
29,428
1,462,989
64,059
376,324
27.0
983,733
17.6
3,035
35,839
1,462,989
2014
5,896
81,478
87,375
1,418,451
14.6
131,851
35,733
1,673,409
94,406
453,566
20.5
1,076,442
9.4
4,339
44,656
1,673,409
2015
6,029
94,612
100,641
1,550,122
9.3
153,072
47,868
1,851,704
76,638
464,994
2.5
1,259,547
17.0
12,636
37,889
1,851,704
2016E
6,029
96,464
102,492
1,829,144
18.0
141,163
56,235
2,129,035
97,602
534,743
15.0
1,448,479
15.0
6,533
41,677
2,129,035
(INR Million)
2017E
2018E
6,029
6,029
107,357
120,755
113,386
126,784
2,158,390
2,546,901
18.0
18.0
158,157
171,303
65,312
73,847
2,495,246
2,918,834
118,577
137,850
609,608
694,953
14.0
14.0
1,709,206
2,016,863
18.0
18.0
7,843
9,153
50,013
60,015
2,495,246
2,918,834
(%)
83,099
16,293
3.99
0.81
80.4
9,956
2,737
1.38
0.38
72.2
17,980
7,559
2.12
0.90
58.0
37,145
24,092
3.73
2.45
35.1
58,576
33,425
5.32
3.11
42.9
68,765
37,526
5.33
2.98
45.4
65,248
23,229
4.38
1.60
64.4
68,643
14,468
3.89
0.85
78.9
8

Andhra Bank
Financials and valuations
Ratios
Y/E March
Spreads Analysis (%)
Avg. Yield-Earning Assets
Avg. Yield on loans
Avg. Yield on Investments
Avg. Cost-Int. Bear. Liab.
Avg. Cost of Deposits
Interest Spread
Net Interest Margin
Profitability Ratios (%)
RoE
RoA
Int. Expense/Int.Income
Fee Income/Net Income
Non Int. Inc./Net Income
Efficiency Ratios (%)
Cost/Income*
Empl. Cost/Op. Exps.
Busi. per Empl. (INR m)
NP per Empl. (INR lac)
* ex treasury
Asset-Liability Profile (%)
Loans/Deposit Ratio
CASA Ratio
Investment/Deposit Ratio
G-Sec/Investment Ratio
CAR
Tier 1
Valuation
Book Value (INR)
Change (%)
Price-BV (x)
Adjusted BV (INR)
Price-ABV (x)
EPS (INR)
Change (%)
Price-Earnings (x)
Dividend Per Share (INR)
Dividend Yield (%)
E: MOSL Estimates
2011
9.2
10.5
6.8
5.5
5.4
3.7
3.6
2012
10.5
12.0
7.3
7.1
7.0
3.4
3.5
2013
10.2
11.3
7.4
7.4
7.4
2.9
3.0
2014
9.8
10.8
7.2
7.3
7.4
2.5
2.6
2015
10.0
10.9
7.6
7.3
7.4
2.7
2.8
2016E
9.8
10.7
7.4
7.0
7.0
2.9
3.0
2017E
9.7
10.6
7.2
6.9
6.8
2.8
2.9
2018E
9.6
10.5
7.2
6.8
6.7
2.9
2.9
23.2
1.3
61.2
17.1
21.8
19.2
1.1
66.8
15.2
18.6
16.2
1.0
70.9
15.7
21.8
5.1
0.28
73.9
16.6
26.3
6.8
0.4
72.3
17.5
24.8
12.2
0.6
69.8
16.5
23.2
14.2
0.7
70.2
16.6
22.8
15.7
0.7
69.7
16.2
21.6
43.4
64.8
104.8
8.9
40.4
63.7
120.9
9.2
45.2
63.2
130.2
8.2
50.5
59.9
134.7
2.5
49.0
62.0
131.2
3.2
48.1
62.9
134.7
5.5
49.3
63.2
149.5
6.4
47.9
62.9
167.2
7.5
77.5
29.1
26.3
94.0
14.4
9.7
79.0
26.4
28.0
90.2
13.2
9.0
79.5
25.7
30.4
87.6
11.8
8.5
75.9
24.8
32.0
88.0
10.8
8.1
81.3
27.3
30.0
80.0
10.6
8.0
79.2
27.0
29.2
82.1
7.8
7.6
79.2
27.1
28.2
85.0
7.4
7.1
79.2
27.2
27.3
88.0
7.0
6.8
116.0
27.6
0.7
112.8
0.7
22.6
5.0
3.4
5.5
7.2
133.7
15.2
0.6
124.9
0.6
24.0
6.1
3.2
5.5
7.2
150.8
12.9
0.5
122.9
0.6
23.0
-4.1
3.3
5.0
6.5
148.2
-1.8
0.5
111.3
0.7
7.4
-67.9
10.4
1.1
1.4
166.9
12.7
0.5
126.5
0.6
10.6
43.4
7.2
2.0
2.6
170.0
1.8
0.45
145.0
0.5
20.6
94.8
3.7
5.2
6.7
188.1
10.6
0.41
172.5
0.4
25.5
23.6
3.0
6.4
8.3
210.3
11.8
0.4
192.7
0.4
31.4
23.0
2.4
7.8
10.2
28 April 2015
9

Andhra Bank
Corporate profile
Company description
Andhra Bank, established in 1923, is a Hyderabad
based mid-sized Public Sector Bank. The bank has a
wide network of 2,507 branches and 2,232 ATMs
with focus on Southern India. The bank also has
two representative offices at New Jersey and
Dubai. Government of India holds 61% stake in the
bank.
Exhibit 13: Sensex rebased
Exhibit 14: Shareholding pattern (%)
Mar-15
Promoter
DII
FII
Others
61.0
15.7
7.8
15.5
Dec-14
60.1
16.3
7.6
16.0
Mar-14
60.1
10.9
11.5
17.4
Exhibit 15: Top holders
Holder Name
LIC of India
LIC of India Money Plus Growth Fund
HDFC Standard Life Insurance Company Ltd
% Holding
6.0
1.0
1.0
Note: FII Includes depository receipts
Exhibit 16: Top management
Name
C VR Rajendran
S. K. Kalra
S.V. Venkatasubramanian
Designation
Chairman & Managing Director
Executive Director
General Manager & CFO
Exhibit 17: Directors
Name
C V R Rajendran
K Thamaraiselvan
Amit Goel
Naina Sharma
Pankaj Chaturvedi
N Venkata Ramana Reddy
K Raghuraman
Name
Nandlal L Sarda
G R Sundaravadivel
Satish Kumar Kalra
K K Misra
Anandrao Vishnu Patil
E E Karthak
Y Amarnath
*Independent
Exhibit 18: Auditors
Name
C R Sagdeo & Co
Nag & Associates
Patro & Co
R Subramanian & Co
Type
Statutory
Statutory
Statutory
Statutory
Exhibit 19: MOSL forecast v/s consensus
EPS
(INR)
FY16
FY17
MOSL
forecast
20.6
25.5
Consensus
forecast
16.7
22.9
Variation
(%)
23.5
11.4
28 April 2015
10

Andhra Bank
NOTES
28 April 2015
11

Andhra
and may
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Contact : (+65) 68189233 / 65249115
Office Address : 21 (Suite 31),16 Collyer Quay,Singapore 04931
For Singapore
Motilal Oswal Securities Ltd
28 April 2015
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
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