Indian Bank reports 28.4% Net Income decline in 2016 while 4.7% Revenue growth

11-05-2016 • About Indian Bank ($INDIANB) • By InTwits

Indian Bank reported FY2016 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 1.8%. At the same time it's in pair with industry average of 1.5%
CAPEX is quite volatile: ₹7,828m in FY2016, ₹2,436m in FY2015, ₹1,713m in FY2014, ₹1,948m in FY2013, ₹1,571m in FY2012
The company has potentially unprofitable business model: ROIC is 3.6%
It operates with high leverage: Net Debt/EBITDA is 5.8x while industry average is

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

Revenue and profitability

Indian Bank's Revenue increased on 4.7%. Revenue decline was accelerating on average at -5.5 pp per annum in FY2012-FY2016.

Net Income margin decreased slightly on 1.9 pp from 6.1% to 4.2% in FY2016. Net Income margin followed a declining trend at -2.2 pp per annum in FY2012-FY2016.

Investments (CAPEX, working capital and M&A)

In FY2016 Indian Bank had CAPEX/Revenue of 4.3%. Indian Bank's CAPEX/Revenue increased on 3.1 pp from 1.3% in FY2013 to 4.3% in FY2016. Average CAPEX/Revenue for the last three years was 2.3%.

Return on investment

The company operates at low ROIC (3.6%) and ROE (4.8%). ROIC decreased slightly on 0.86 pp from 4.5% to 3.6% in FY2016. ROE decreased on 2.6 pp from 7.3% to 4.8% in FY2016. ROE followed a declining trend at -3.2 pp per annum in FY2012-FY2016.

Leverage (Debt)

Debt dropped on 21.9% while cash surged on 10.5%.

Indian Bank has no short term refinancing risk: cash is higher than short term debt (284.4%).

Financial and operational results

Indian Bank ($INDIANB) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	134,756	151,956	166,299	172,271	180,351	4.7%
Net Income	17,658	16,094	11,893	10,488	7,513	-28.4%
Balance Sheet
Cash	63,189	70,642	77,577	83,011	91,745	10.5%
Short Term Debt	8,167	44,557	51,544	59,730	32,264	-46.0%
Long Term Debt	75,435	28,626	49,639	26,461	35,093	32.6%
Cash flow
Capex	1,571	1,948	1,713	2,436	7,828	221.4%
Ratios
Revenue growth	27.7%	12.8%	9.4%	3.6%	4.7%

Net Income Margin	13.1%	10.6%	7.2%	6.1%	4.2%	-1.9%
CAPEX, % of revenue	1.2%	1.3%	1.0%	1.4%	4.3%	2.9%

ROIC	10.0%			4.5%	3.6%	-0.9%
ROE	17.4%	14.2%	9.2%	7.3%	4.8%	-2.6%

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	FY2012	FY2013	FY2014	FY2015	FY2016
Kotak Mahindra Bank ($KOTAKBANK)	-	22.9%	7.1%	26.1%	29.2%
Dcb Bank ($DCBBANK)	-	26.2%	22.5%	25.3%	20.8%
Syndicate Bank ($SYNDIBANK)	32.2%	11.9%	7.9%	20.2%	-
Yes Bank ($YESBANK)	-	33.7%	21.6%	17.7%	18.9%
Axis Bank ($AXISBANK)	-	24.5%	13.1%	15.6%	14.9%
Median (28 companies)	30.3%	16.7%	11.2%	10.8%	5.4%
Indian Bank ($INDIANB)	-	12.8%	9.4%	3.6%	4.7%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Bank Of India ($BANKINDIA)	2.0%	1.1%	1.5%	3.6%	-
State Bank Of Mysore ($MYSOREBANK)	1.6%	1.3%	-	3.5%	1.4%
Jammu & Kashmir Bank ($J&KBANK)	1.4%	1.3%	2.2%	3.3%	-
Lakshmi Vilas Bank ($LAKSHVILAS)	2.1%	1.4%	1.6%	2.4%	2.4%
Dcb Bank ($DCBBANK)	9.0%	7.0%	1.6%	1.9%	2.2%
Median (28 companies)	1.3%	1.2%	1.3%	1.3%	1.4%
Indian Bank ($INDIANB)	1.2%	1.3%	1.0%	1.4%	4.3%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Karnataka Bank ($KTKBANK)	6.8%	10.2%	7.7%	10.4%	-
Axis Bank ($AXISBANK)	9.6%	8.9%	9.1%	8.8%	7.6%
Yes Bank ($YESBANK)	9.8%	8.4%	8.4%	8.7%	9.0%
Kotak Mahindra Bank ($KOTAKBANK)	6.8%	6.5%	7.1%	8.5%	7.3%
Lakshmi Vilas Bank ($LAKSHVILAS)	6.5%	7.5%	0.7%	6.1%	5.8%
Median (28 companies)	7.2%	6.3%	3.3%	4.2%	4.7%
Indian Bank ($INDIANB)	10.0%	-	-	4.5%	3.6%

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.