Indian Overseas Bank revenue started to decline in FY2016: decreased 2.3% vs. 9.2% growth a year earliner

27-05-2016 • About Indian Overseas Bank ($IOB) • By InTwits

Indian Overseas Bank reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

Indian Overseas Bank has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's in pair with industry average of 1.7%
CAPEX is quite volatile: ₹12,513m in FY2016, ₹1,659m in FY2015, ₹2,216m in FY2014, ₹2,332m in FY2013, ₹2,190m in FY2012
The company has unprofitable business model: ROIC is -8.0%
It operates with medium-size leverage: Net Debt/EBITDA is 0.0x 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 Overseas Bank's Revenue decreased on 2.3%. Revenue decline was accelerating on average at -10.5 pp per annum in the last 5 years.

Net Income margin decreased on 9.4 pp from -1.7% to -11.1% in FY2016. Net Income margin stuck to a declining trend at -3.7 pp per annum in FY2012-FY2016.

Investments (CAPEX, working capital and M&A)

The company's CAPEX/Revenue was 4.8% in FY2016. Indian Overseas Bank's CAPEX/Revenue increased on 3.8 pp from 1.0% in FY2013 to 4.8% in FY2016. For the last three years the average CAPEX/Revenue was 2.1%. During FY2012-FY2016 CAPEX as a % of Revenue bottomed in FY2015 at 0.62%.

Return on investment

The company operates at negative ROIC (-8.0%) and ROE (-18.5%). ROIC decreased on 8.3 pp from 0.26% to -8.0% in FY2016. ROE dropped on 15.7 pp from -2.9% to -18.5% in FY2016. ROE declined at -6.4 pp per annum in the last 5 years.

Leverage (Debt)

Debt jumped on 43.2% while cash surged on 11.0%.

Indian Overseas Bank has short term refinancing risk: cash is only 95.7% of short term debt.

Management team

The company's CFO is Y C Jain. Y C Jain has 5 years tenure at the company.

Financial and operational results

Indian Overseas Bank ($IOB) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	195,677	226,480	243,977	266,367	260,176	-2.3%
Net Income	10,501	5,672	6,017	-4,543	-28,973
Balance Sheet
Cash	101,989	98,378	117,351	126,378	140,335	11.0%
Short Term Debt	7,054	5,948	120,556	63,581	146,610	130.6%
Long Term Debt	236,139	233,229	134,290	130,353	131,028	0.5%
Cash flow
Capex	2,190	2,332	2,216	1,659	12,513	654.0%
Ratios
Revenue growth	46.8%	15.7%	7.7%	9.2%	-2.3%

Net Income Margin	5.4%	2.5%	2.5%	-1.7%	-11.1%	-9.4%
CAPEX, % of revenue	1.1%	1.0%	0.9%	0.6%	4.8%	4.2%

ROIC				0.3%	-8.0%	-8.3%
ROE	9.9%	4.5%	4.1%	-2.9%	-18.5%	-15.7%

Peers in Banks

Below you can find Indian Overseas 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%
Yes Bank ($YESBANK)	-	33.7%	21.6%	17.7%	18.9%
Axis Bank ($AXISBANK)	-	24.5%	13.1%	15.6%	14.9%
Lakshmi Vilas Bank ($LAKSHVILAS)	-	16.7%	11.7%	14.2%	14.6%
Median (27 companies)	45.9%	16.7%	11.2%	10.8%	2.7%
Indian Overseas Bank ($IOB)	-	15.7%	7.7%	9.2%	-2.3%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Union Bank Of India ($UNIONBANK)	1.2%	1.3%	1.2%	1.0%	4.4%
Indian Bank ($INDIANB)	1.2%	1.3%	1.0%	1.4%	4.3%
Axis Bank ($AXISBANK)	1.4%	1.4%	1.6%	1.2%	2.9%
Lakshmi Vilas Bank ($LAKSHVILAS)	2.1%	1.4%	1.6%	2.4%	2.4%
Idbi Bank ($IDBIBANK)	0.6%	0.4%	0.7%	0.8%	2.3%
Median (27 companies)	1.3%	1.2%	1.3%	1.3%	1.3%
Indian Overseas Bank ($IOB)	1.1%	1.0%	0.9%	0.6%	4.8%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Karur Vysya Bank ($KARURVYSYA)	14.5%	11.0%	5.3%	5.7%	12.4%
Karnataka Bank ($KTKBANK)	6.8%	10.2%	7.7%	10.4%	10.1%
Yes Bank ($YESBANK)	9.8%	8.4%	8.4%	8.7%	9.0%
Axis Bank ($AXISBANK)	9.6%	8.9%	9.1%	8.8%	7.6%
Kotak Mahindra Bank ($KOTAKBANK)	6.8%	6.5%	7.1%	8.5%	7.3%
Median (27 companies)	7.6%	6.3%	3.3%	4.5%	4.0%
Indian Overseas Bank ($IOB)	-	-	-	0.3%	-8.0%

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.