X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
IDBI: Topline disappoints - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • May 8, 2003

    IDBI: Topline disappoints

    IDBI, has reported lackluster topline numbers for FY03. However the financial institution (FI) reported improvement in operating margins, thus helping reduce the fall in net profits. For FY03, the FI has reported a 5% fall in bottomline on the back of a 6% fall in topline. Operating margins, on the other hand, have improved considerably by nearly 600 basis points.

    (Rs m) FY02 FY03 Change
    Income from Operations 78,040 73,370 -6.0%
    Other Income 1,450 1,440 -0.7%
    Interest Expenses 62,500 54,340 -13.1%
    Net interest income 15,540 19,030 22.5%
    Other Expenses 2,880 2,830 -1.7%
    Operating Profit 12,660 16,200 28.0%
    Operating Profit Margin (%) 16.2% 22.1%  
    Provisions and Contingencies 7,730 11,100 43.6%
    Depreciation 2,230 1,990 12.1%
    Profit before Tax 4,150 4,550 9.6%
    Tax (90) 540  
    Profit after Tax/(Loss) 4,240 4,010 -5.4%
    Net Profit Margin (%) 5.4% 5.5%  
    No. of Shares (m) 653.0 653.0  
    Diluted Earnings per share* 6.5 6.1  
    P/E Ratio   2.9  
    *(annualised)      

    Poor credit offtake from the industrial sector has taken its toll on the institution's interest income. Disbursals have reduced in FY03 taking a toll on interest income. Apart from that banks seem to have slowly eaten in to the target market of IDBI. In contrast, banks have improved their topline performance considerably by focusing on the retail sector where IDBI has almost no exposure. Operating margins have improved by nearly 600 basis points in FY03, mainly due to an improvement in net interest income as well as a 1% reduction other expenses.

    IDBI has been able to prepay and repay high cost debt and this has significantly brought down its interest expenditure. Thus, despite a fall in topline the institution has been able to improve its net interest income. As is the case with banks and other financial institutions, IDBI has also cut costs in order to improve efficiencies. All these factors have led to an improvement in operating margins.

    Provisioning seems to have increased significantly in FY03. This augurs well for an institution with large amount of NPAs in its books. However NPAs are still fairly large enough to wipe out nearly the entire net worth of the institution. In FY02 the provision coverage ratio of the institution stood at 50%, which is low compared to banks. However, since the institution has made considerable provisioning in FY03, this ratio may rise.

    At Rs 18, the stock is trading at a P/E multiple of 3x its FY03 earnings. IDBI has taken aggressive steps to tackle the issue of NPAs and has been helped to a great extent by the bailout package from the government. NPA concerns not withstanding, slow growth in disbursals is becoming a concern. The institution has set aggressive disbursal targets for FY04, however it needs to assure investors on the issue of NPAs and, simultaneously, on the growth of its core interest income in order to win back their confidence.

     

     

    Equitymaster requests your view! Post a comment on "IDBI: Topline disappoints". Click here!

      
     

    More Views on News

    HDFC: Red Flag in Developer Loans (Quarterly Results Update - Detailed)

    Aug 10, 2017

    HDFC starts FY18 on robust loan growth but asset quality slips on increased exposure to developer loans.

    Shriram Trans Fin: FY17 Ends on a Tepid Note due to Regulatory Headwinds (Quarterly Results Update - Detailed)

    Jun 22, 2017

    Demonetisation led slowdown coupled with shift to stringent bad loan norms keep Shriram Transport Finance on a slow wicket.

    Power Finance Corp: Alignment with RBI Norms Knocks Down FY17 Earnings (Quarterly Results Update - Detailed)

    Jun 14, 2017

    Power Finance Corporation earnings hit by RBI mandated higher provision on state government power generation projects where the recovery continues to be 100%.

    IDFC: Ends FY17 on a Healthy Note (Quarterly Results Update - Detailed)

    May 30, 2017

    IDFC regains its tempo in FY17 post the demerger of the banking business.

    HDFC: Conservative Provisioning tempers down FY17 earnings (Quarterly Results Update - Detailed)

    May 9, 2017

    HDFC ends FY17 on a tepid note as it remains conservative on the asset quality front.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    IDBI BANK SHARE PRICE


    Aug 21, 2017 09:13 AM

    TRACK IDBI BANK

    • Track your investment in IDBI BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    IDBI BANK 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE IDBI BANK WITH

    MARKET STATS