Indian Bank reports 11.8% Net Income decline

14-05-2015 • About Indian Bank ($INDIANB) • By InTwits

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

Indian Bank has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.2%. At the same time it's in pair with industry average of 1.4%.
CAPEX is quite volatile: 30,721 in FY2015, 61,687 in FY2014, 68,128 in FY2013, 104,110 in FY2012, 146,926 in FY2011
The company has potentially unprofitable business model: ROIC is at 4.5%
It operates with high leverage: Net Debt/EBITDA is 6.2x while industry average is

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

Indian Bank ($INDIANB) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	105,497	134,756	151,956	166,299	172,271	3.6%
Net Income	17,454	17,658	16,094	11,893	10,488	-11.8%
Balance Sheet
Cash	68,780	63,189	70,642	77,577	83,011	7.0%
Short Term Debt	7,825	8,167	44,557	51,544	59,730	15.9%
Long Term Debt	40,142	75,435	28,626	49,639	26,461	-46.7%
Cash flow
Capex	1,357	1,571	1,948	1,713	2,436	42.2%
Ratios
Revenue growth	-53.4%	27.7%	12.8%	9.4%	3.6%
Net Income Margin	16.5%	13.1%	10.6%	7.2%	6.1%	-1.1%
CAPEX, % of revenue	1.3%	1.2%	1.3%	1.0%	1.4%	0.4%
ROIC		10.0%			4.5%	4.5%
ROE	19.7%	17.4%	14.2%	9.2%	7.3%	-1.9%

Revenue and profitability

The company's Revenue increased on 3.6% in FY2015.

Net Income marign decreased slightly on 1.1 pp from 7.2% to 6.1% in FY2015.

Capital expenditures (CAPEX) and working capital investments

In FY2015 the company had CAPEX/Revenue of 1.4%. The company showed almost no change in CAPEX/Revenue from FY2012 to FY2015. For the last three years the average CAPEX/Revenue was 1.2%.

Return on investment

The company operates at low ROIC (4.45%) and ROE (7.32%). ROE decreased slightly on 1.9 pp from 9.2% to 7.3% in FY2015.

Leverage (Debt)

Debt dropped on 14.8% in FY2015 while cash increased on 7.0% in FY2015.

Appendix 1: Peers in Banks

Below you can find Indian Bank benchmarking vs. other companies in Banks industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

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 ($UNIONBANK)		26.9%	19.5%	15.7%	11.5%
Median (28 companies)	-46.2%	29.5%	16.2%	10.9%	10.2%
Indian Bank ($INDIANB)		27.7%	12.8%	9.4%	3.6%

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 ($LAKSHVILAS)	4.4%	2.1%	1.4%	1.6%	2.4%
Median (27 companies)	1.2%	1.2%	1.1%	1.3%	1.3%
Indian Bank ($INDIANB)	1.3%	1.2%	1.3%	1.0%	1.4%

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 ($ORIENTBANK)	12.4%	7.6%	7.4%	6.7%	3.7%
Median (28 companies)	7.1%	6.8%	6.1%	3.3%	4.6%
Indian Bank ($INDIANB)		10.0%			4.5%

Indian Bank stock price chart

Indian Bank financials

mln.	FY2010	FY2011	FY2012

Revenue	226,213	105,497	134,756
EBITDA	0.000	0.000	0.000
Net income	15,698	17,454	17,658
CAPEX	1,110	1,357	1,571
Debt	31,476	47,967	83,603
Cash	70,607	68,780	63,189

About Indian Bank

Indian Bank offers corporate/wholesale, retail, treasury, and other banking services primarily in India. The company provides deposit products, including savings and current accounts, fixed deposits, re-investment plans, facility deposits, recurring deposits, term deposits, foreign currency accounts, and savings certificates. It also offers home loans, home improvement loans, vehicle loans, mortgages, reverse mortgages, plot loans, loans/overdrafts, pension loans, educational loans, NRI loans, and agriculture loans; and net banking, mobile banking, phone banking, credit cards, ATM/debit cards, foreign exchange, and depository services. In addition, the company provides wealth management services, including mutual funds, life and general insurance, retirement solutions, demat accounts, and online stock trading platforms. As of March 31, 2013, it operated 2,250 branches comprising 640 rural, 612 semi urban, 568 urban, and 430 metropolitan branches, as well as 28 extension counters, 21 satellite offices, 1 collection counter, 50 rural banking service centers, and 1 forex bureau. The company also operates 2,123 ATMs, which include 511 offsite ATMs and 86 Biometric ATMs; 1407 ultra small branches in villages; and 3 foreign branches in Singapore, and Colombo and Jaffna in Sri Lanka. Indian Bank was founded in 1907 and is headquartered in Chennai, India.