Earnings analysis: Axis Bank, LIC Housing

Axis NII at upper end of estimates but slippages rise; LICHF's NIMs hold


NII: Rs16.15 billion (estimated range Rs15.1 billion-Rs16.5 billion)
Net profit: Rs7.3 billion (estimated range Rs6.7 billion-Rs7.5 billion)

(NII and profits were both at the higher end of estimates)

  •  Slippages went up and were more than expected - Q2FY11 at 1.7% (vs. 1.5% in FY10 and 1.6% in Q1FY11). Consequently, provision expenses remained high with NPA provisions of Rs3.2 billion.
  •  Yield on investment was up 93bps q-o-q to 7.5% because it booked gains in liquid mutual funds.
  •  Advances (loans) were up 37% to Rs1.1 trillion (still benefiting from last year's low base) and flattish q-o-q, as expected. Within loans, large corporate loans were up 6%, retail and SME were flat, and agriculture loans actually fell 14% (q-o-q).
  • CASA growth was impressive - 138bps q-o-q to 42%, led by 12% growth in saving deposits and 9% growth in current deposits.
  •  Fee income growth was a positive surprise. Most expected lower growth. It was actually up 18% y-o-y and 14% q-o-q to Rs8.5 billion, against negative sequential growth in the earlier two quarters. Within fee income, corporate banking rose 38% and capital markets 23% y-o-y.

In the September quarter, its promoter shareholding came down marginally to 37.5% from 37.7% in June and 39% in September 2009; FII shareholding went up 37.2% (36%, 30%); DII share came down to 5.5% (6.5%, 9%).


NII: Rs3.05 billion (estimated range Rs2.9 billion-Rs3.6 billion)
Net profit: Rs2.3 billion (estimated range Rs1.9 billion-Rs3.1 billion)

(NII and net profit were in the middle of the estimated range)

  • Individual loans constitute 75% of its portfolio and the rest is loans to projects. Therefore 13% growth in disbursements to individual loans was slightly disappointing. Project loan growth was very high.
  • The disbursement to sanction ratio slipped to a new low of 67% but the management says that this is because of more under-construction properties in its portfolio where disbursements are in stages.
  • Sanctions were strong in individual loans.
  • Asset quality was stable.
  • NIMs did not decline as much as expected q-o-q. This was mainly because some of the discount loans that were given out were re-priced and yields were stable. LICHF has increased its benchmark lending rate from October - this should help stabilise NIMs further.

In the September quarter, its promoter shareholding stayed steady at 36.5%; FII shareholding went up to 42% from 32% in June and 30% in September 2009; and DII share came down to 9.2% (18%, 19%).

(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security. Some of the opinions expressed in this article are the author's own and may not necessarily represent those of Moneylife).


Food inflation rises marginally to 16.37% for the week ended 2nd Oct

New Delhi: Food inflation rose marginally to 16.37% for the week ended 2nd October, on the back of higher prices of cereals, fruits, select vegetables and milk, reports PTI.

After falling in the previous week, food prices again took a northward trajectory and went up by 0.13 percentage points. Food inflation was 16.24% for the week ended 25th September.

Meanwhile, fuel inflation for the week under review rose to 8.62% from 8.51% in the previous week.

As per the latest figures, food inflation was driven mainly by higher prices of pulses, rice and wheat.

Besides, vegetables became expensive by 19.84% on annual basis, the highest increase in many months.

Official data released here showed that on an annual basis, cereals prices have risen by 5.06%.

Prices of pulses rose by 4.89% on a yearly basis.

Also, wheat and rice became costlier by 6.88% and 2.82%, respectively.

Among other food items, milk prices soared by 21.65% during the week compared to the same period last year, while fruits became dearer by 12.75%.

Onion prices went up by 0.24% year-on-year.

However, potato prices continued to fall and showed a decline of 49.36%.


Friday’s Market Preview: Soft-to-flat opening likely

The Indian market is likely to witness a soft-to-positive opening today on tepid global cues. US markets closed lower following a possible probe into foreclosure practices that spooked the banking sector. The Asian pack was seen taking a pause after the recent gains and concerns about a rise in initial jobless claims in the US. The SGX Nifty was down five points at 6,188 against its previous close of 6,193.

The domestic market opened firm on Thursday touching the day’s high in early trade. However, profit booking set the tone for a gradual slide, which became prominent in the post-noon session. The indices drifted lower amid volatile trading, a day ahead of the release of the monthly inflation numbers and food inflation data. However, the indices closed above the day’s low.

The Sensex settled 190.24 points (0.92%) lower at 20,497. The Nifty ended the session at 6,177, down 56.55 points (0.91%).

The US markets closed lower, led by banking stocks, as the National Association of Attorneys General said it will conduct a probe among all 50 states into whether banks and loan providers used false documents and signatures to justify hundreds of thousands of foreclosures. A rise in initial jobless claims and an increase in trade deficit in August also weighed on the sentiments.

The Dow shed 1.51 points (0.01%) to 11,094. The S&P 500 .SPX fell 4.29 points (0.36%) to 1,174. The Nasdaq fell 5.85 points (0.24%) to 2,435.

Markets in Asia were trading mostly in the red, taking a pause after recent gains seen in the region, and on concerns about the increase in initial jobless claims in the US. The Japanese touched a 15-year high against the dollar, a move that is expected to target exporters.

The Hang Seng was down 0.41%, Jakarta Composite was down 0.47%, KLSE Composite was down 0.45%, Nikkei 225 was down 0.72%, Seoul Composite was down 0.05% and Taiwan Weighted lost 0.05%. On the other hand, the Shanghai Composite gained 0.45% and Straits Times surged 0.52% in early trade.

The Indian economy is expected to grow by 9.2% in 2010-11 following impressive growth in the manufacturing and services sectors, the Centre for Monitoring Indian Economy (CMIE) said on Thursday.

"We maintain that the Indian economy will grow by 9.2% in 2010-11, as we expect impressive growth in the manufacturing and services sectors as well," the CMIE said.

The government will offer 34 areas, including eight in deep-sea, for exploration of oil and gas in the ninth round of auction under the New Exploration Licensing Policy (NELP), oil minister Murli Deora said on Thursday.

NELP-IX will be announced on 15th October and the first roadshow will be held in Mumbai on 18th October. The last date for bidding is 18th March.

In the eight rounds of NELP since 1999, 235 blocks have been awarded till date. This has resulted in enhancement of exploration coverage from 11% to about 58% of Indian sedimentary basin between 2000 and 2010.


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