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: Improvement in performance - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jul 30, 2001

    IDBI: Improvement in performance

    IDBI has reported a stunner performance for the June quarter of FY02. Its operating profits jumped by 66% thanks to a substantial rise in operating margins. However, net profit growth was stemmed by increase in other expenses and provision for contingencies.

    (Rs m) 1QFY01 1QFY02 Change
    Income from Operations 19,865 21,575 8.6%
    Other Income 275 443 61.1%
    Interest Expanded 16,527 16,029 -3.0%
    Operating Profit (EBDIT) 3,338 5,546 66.1%
    Operating Profit Margin (%) 16.8% 25.7%  
    Other Expenses 550 857 55.8%
    Depreciation 557 573 2.9%
    Profit before Tax 2,506 4,559 81.9%
    Tax 270 100 -63.0%
    Provisions & contingencies - 2,640  
    Profit after Tax/(Loss) 2,236 1,819 -18.6%
    Net profit margin (%) 11.3% 8.4%  
    Number of shares (eoy) 660 652  
    Diluted Earnings per share 3.4 2.8  
    P/E (at current price)   7.5  

    For the first time in the past two years, IDBI's operating margins were above 20%. This could be attributed to the repayment of high cost debt and raising fresh funds at substantially lower interest rates. However, considering the high liquidity in the system and increasing competition, margins could witness increasing pressure and are unlikely to sustain at the current level.

    Other income of IDBI increased by 61% on account of capital gain of Rs 1 bn on sale of 50 m shares of SIDBI. With this sale transaction, IDBI has divested its 51% stake in SIDBI (in 4QFY01, IDBI had already booked capital gain of Rs 3.6 bn with respect of 180 m shares).

    Other expenses of the institution were higher by 56% on account of 135% rise in staff cost. The increase in staff cost was mainly due to upward revision in salary with effect from November 1997. However, IDBI's cost to income ratio declined to 14.3% from 15.2% in 1QFY00.

    During the quarter, IDBI made provisions of Rs 2.6 bn on non-performing assets. The institution had not made any provision for NPAs in FY01 accounts. Increasing the provision coverage would help IDBI in cleaning up the accounts.

    At the current market price of Rs 21 IDBI is trading at a P/E of 8x its 1QFY02 annualised earnings. Its Price/Book value ratio of 0.2x is indicative of its deteriorating financial health. Also, the institution's investment (direct or through loans) in K-10 companies has affected its image and consequently valuations.



    Equitymaster requests your view! Post a comment on "IDBI: Improvement in performance". 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

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    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.

    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.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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


    Aug 18, 2017 (Close)


    • 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


    Compare Company With Charts