Federal Bank reports 78.2% Net Income growth in 2017 and 14.3% Revenue growth

28-04-2017 • About Federal Bank ($FEDERALBNK) • By InTwits

Federal Bank reported FY2017 financial results today. Overall the company's long term financial model is characterised by the following facts:

Federal Bank is a growth stock: FY2017 revenue growth was 14.3%, 5 year revenue CAGR was 10.0% at FY2017 ROIC 6.1%
Federal Bank has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.6%. At the same time it's in pair with industry average of 1.6%
CAPEX is quite volatile: ₹2,440m in FY2017, ₹953m in FY2016, ₹9,475m in FY2015, ₹12,853m in FY2014, ₹10,541m in FY2013
The company has potentially unprofitable business model: ROIC is 6.1%
It operates with high leverage: Net Debt/EBITDA is 8.5x 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

The company's Revenue jumped on 14.3%.

Net Income margin increased on 3.2 pp from 5.6% to 8.8% in FY2017.

Investments (CAPEX, working capital and M&A)

In FY2017 Federal Bank had CAPEX/Revenue of 0.96%. The company showed almost no change in CAPEX/Revenue from FY2014 to FY2017. Average CAPEX/Revenue for the last three years was 1.4%.

Return on investment

The company operates at low ROIC (6.1%) and ROE (10.2%). ROIC increased slightly on 1.4 pp from 4.7% to 6.1% in FY2017. ROE increased on 2.9 pp from 7.3% to 10.2% in FY2017.

Leverage (Debt)

Debt increased on 7.7% while cash surged on 21.2%.

The company has no short term refinancing risk: short term debt is zero.

Financial and operational results

FY ended 31-03-2017

Federal Bank ($FEDERALBNK) key annual financial indicators

mln. INR	2013	2014	2015	2016	2017	2017/2016
P&L
Revenue	69,110	91,178	84,473	86,346	98,670	14.3%
Net Income	8,527	8,497	10,578	4,864	8,669	78.2%
Balance Sheet
Cash	27,489	31,084	33,820	37,770	45,783	21.2%
Short Term Debt	302	228	25,361	6,547	0	-100.0%
Long Term Debt	52,390	57,675	23,930	52,456	63,523	21.1%
Cash flow
Capex	1,563	1,226	1,211	1,611	950	-41.0%
Ratios
Revenue growth	13.0%	31.9%	-7.4%	2.2%	14.3%

Net Income Margin	12.3%	9.3%	12.5%	5.6%	8.8%	3.2%
CAPEX, % of revenue	2.3%	1.3%	1.4%	1.9%	1.0%	-0.9%

ROIC	10.1%			4.7%	6.1%	1.4%
ROE	14.4%	12.9%	14.5%	7.3%	10.2%	2.9%

Peers in Banks

Below we provide Federal 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	FY2013	FY2014	FY2015	FY2016	FY2017
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)	-	13.1%	15.6%	14.9%	12.3%
Lakshmi Vilas Bank ($LAKSHVILAS)	16.7%	11.7%	14.2%	14.6%	-
Median (28 companies)	16.2%	10.6%	10.8%	2.2%	9.7%
Federal Bank ($FEDERALBNK)	-	31.9%	-7.4%	2.2%	14.3%

Top companies by CAPEX/Revenue, %


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Indian Overseas Bank ($IOB)	1.0%	0.9%	0.6%	4.8%	-
Union Bank Of India ($UNIONBANK)	1.3%	1.2%	1.0%	4.4%	-
Indian Bank ($INDIANB)	1.3%	1.0%	1.4%	4.3%	-
Axis Bank ($AXISBANK)	1.4%	1.6%	1.2%	2.9%	1.3%
Lakshmi Vilas Bank ($LAKSHVILAS)	1.4%	1.6%	2.4%	2.4%	-
Median (28 companies)	1.2%	1.2%	1.3%	1.2%	1.1%
Federal Bank ($FEDERALBNK)	2.3%	1.3%	1.4%	1.9%	1.0%

Top companies by ROIC, %


Top 5	FY2013	FY2014	FY2015	FY2016	FY2017
Karur Vysya Bank ($KARURVYSYA)	11.0%	5.3%	5.7%	12.4%	-
Karnataka Bank ($KTKBANK)	10.2%	7.7%	10.4%	10.1%	-
Yes Bank ($YESBANK)	8.4%	8.4%	8.7%	9.0%	-
Axis Bank ($AXISBANK)	8.9%	9.1%	8.8%	7.6%	3.1%
Kotak Mahindra Bank ($KOTAKBANK)	6.5%	7.1%	8.5%	7.3%	-
Median (28 companies)	6.1%	3.3%	4.3%	3.6%	2.3%
Federal Bank ($FEDERALBNK)	10.1%	-	-	4.7%	6.1%

Federal Bank stock price chart

Federal Bank financials

mln.	FY2010	FY2011	FY2012

Revenue	42,058	45,704	61,139
EBITDA	0.000	0.000	0.000
Net income	4,397	5,565	7,537
CAPEX	614.7	609.1	1,035
Debt	20,283	22,546	47,755
Cash	23,189	29,364	24,297

About Federal Bank

The Federal Bank Limited provides various banking and financial services for individuals, NRI and corporate customers, and SME-businesses in India. It offers savings accounts, current accounts, salary accounts, fixed deposits, cash certificates, and recurring deposits; gold, housing, car, property, educational or career, travel, cash, business, and agriculture and agriculture allied loan products; and loans against deposits, as well as overdraft facility against recurring deposits. The company also provides account, and fund and cash transfer services, as well as working capital finance, term finance, trade finance, specialized corporate finance, structured finance, and syndication services. In addition, it offers safe deposit lockers, NRI and value added services, online trading and depository services, e-commerce services, and value added services. Further, the company provides mobile banking, Internet banking, and ATM services; life and general insurance products; and mutual funds; debit, gift, and travel cards, as well as treasury products and services. As of March 31, 2014, it operated through a network of 1,174 branches and 1,359 ATMs. The company was formerly known as Travancore Federal Bank Limited and changed its name to The Federal Bank Limited in March 1947. The Federal Bank Limited was incorporated in 1931 and is headquartered in Aluva, India.