Indian Overseas Bank revenue growth accelerated to 9.2% in FY2015 vs. 7.7% a year earliner

08-05-2015 • About Indian Overseas Bank ($IOB) • By InTwits

Indian Overseas Bank reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Indian Overseas Bank doesn't have a profitable business model yet: FY2015 ROIC is 0.3%
Indian Overseas Bank has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.9%.
The company has potentially unprofitable business model: ROIC is at 0.3%
It operates with high leverage: Net Debt/EBITDA is 0.2x while industry average is

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Indian Overseas Bank ($IOB) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	133,255	195,677	226,480	243,977	266,367	9.2%
Net Income	10,725	10,501	5,672	6,017	-4,543	-175.5%
Balance Sheet
Cash	100,109	101,989	98,378	117,351	126,378	7.7%
Short Term Debt	7,066	7,054	5,948	120,556	63,581	-47.3%
Long Term Debt	199,576	236,139	233,229	134,290	130,353	-2.9%
Cash flow
Capex	1,109	2,190	2,332	2,216	1,659	-25.1%
Ratios
Revenue growth	-70.8%	46.8%	15.7%	7.7%	9.2%
Net Income Margin	8.0%	5.4%	2.5%	2.5%	-1.7%	-4.2%
CAPEX, % of revenue	0.8%	1.1%	1.0%	0.9%	0.6%	-0.3%
ROIC	6.1%				0.3%	0.3%
ROE	12.7%	9.9%	4.5%	4.1%	-2.9%	-6.9%

Revenue and profitability

The company's Revenue increased on 9.2% in FY2015.

Net Income marign decreased on 4.2 pp from 2.5% to -1.7% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 0.62%. The company showed almost no change in CAPEX/Revenue from FY2012 to FY2015. For the last three years the average CAPEX/Revenue was 0.85%.

Return on investment

The company operates at low but positive ROIC (0.26%) and negative ROE (-2.86%). ROE decreased on 6.9 pp from 4.1% to -2.9% in FY2015.

Leverage (Debt)

Debt dropped on 23.9% in FY2015 while cash increased on 7.7% in FY2015.

Appendix 1: Peers in Banks

Below we provide Indian Overseas Bank benchmarking against other companies in Banks industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Dcb Bank ($DCBBANK)		26.7%	26.2%	22.5%	25.3%
Yes Bank ($YESBANK)		53.0%	33.7%	21.6%	17.7%
Bank Of India ($BANKINDIA)	-66.6%	30.3%	12.4%	18.1%
Karur Vysya Bank ($KARURVYSYA)		45.9%	29.7%	16.5%	11.0%
Union Bank Of India ($UNIONBANK)	-70.8%	26.9%	19.5%	15.7%
Median (28 companies)	-55.8%	28.5%	16.1%	10.9%	10.8%
Indian Overseas Bank ($IOB)		46.8%	15.7%	7.7%	9.2%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Kotak Mahindra Bank ($KOTAKBANK)	1.3%	1.4%	1.4%	2.6%	1.4%
Karur Vysya Bank ($KARURVYSYA)	4.2%	2.0%	2.9%	2.5%	1.7%
Dhanlaxmi Bank ($DHANBANK)	6.8%	3.0%	1.7%	2.2%
Jammu & Kashmir Bank ($J&KBANK)	5.6%	1.4%	1.3%	2.2%
Lakshmi Vilas Bank ($LAKSHVILAS)	4.4%	2.1%	1.4%	1.6%	2.4%
Median (27 companies)	1.3%	1.2%	1.2%	1.3%	1.4%
Indian Overseas Bank ($IOB)	0.8%	1.1%	1.0%	0.9%	0.6%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Axis Bank ($AXISBANK)	10.2%	9.6%	8.9%	9.1%	8.8%
Yes Bank ($YESBANK)	11.8%	9.8%	8.4%	8.4%	8.7%
Karnataka Bank ($KTKBANK)	5.5%	6.8%	10.2%	7.7%
Kotak Mahindra Bank ($KOTAKBANK)	7.8%	6.8%	6.5%	7.1%	8.5%
Oriental Bank Of Commerce ($ORIENTBANK)	12.4%	7.6%	7.4%	6.7%
Median (28 companies)	7.5%	7.2%	6.1%	3.3%	5.7%
Indian Overseas Bank ($IOB)	6.1%				0.3%

Indian Overseas Bank stock price chart

Indian Overseas Bank financials

mln.	FY2010	FY2011	FY2012

Revenue	455,908	133,255	195,677
EBITDA	0.000	0.000	0.000
Net income	7,070	10,725	10,501
CAPEX	1,530	1,109	2,190
Debt	119,907	206,643	243,192
Cash	76,664	100,109	101,989

About Indian Overseas Bank

Indian Overseas Bank provides banking products and services in India and internationally. The company operates through Treasury, Corporate/Wholesale Banking, Retail Banking, and Other Banking Operations. Its personal banking products and services comprise saving bank accounts, current accounts, term deposit, retail loans, home loans and mortgages, depository services, gold investment products, debit and credit cards, insurance and mutual funds, pension payment and savings schemes, and real time gross settlement services. The company also offers corporate banking services, such as term loans and working capital loans for micro, small, and medium enterprises; loans for professional and self employed individuals, and information technology (IT) and ITes BPO sectors; and non-resident Indian banking services, and Internet and mobile banking services. In addition, it provides agricultural term loans and agri business consultancy services; and direct taxes and indirect taxes e-payment, and sales tax collection services. As of March 31, 2014, the company had 3,265 branches in India, including 985 rural branches, 904 semi urban branches, 728 urban branches, and 648 metropolitan branches, as well as 2,533 automated teller machines; 2 branches in Hong Kong and Sri Lanka; and 1 each in Singapore, South Korea, and Bangkok. Indian Overseas Bank was founded in 1937 and is based in Chennai, India.