Federal Bank reports 54.0% Net Income decline and 0.98% Revenue growth

30 Apr 2016 • About Federal Bank ($FEDS) • By InTwits

Federal Bank reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:

Federal 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 3.1%.
CAPEX is quite volatile: 6,913 in 2016, 5,254 in 2015, 3,294 in 2014, 2,867 in 2013, 3,256 in 2012

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

Federal Bank ($FEDS) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	61,136	69,108	76,897	84,473	85,296	1.0%
Net Income	7,537	8,527	8,497	10,578	4,864	-54.0%
Balance Sheet
Cash	24,297	27,489	31,084	33,820	37,770	11.7%
Short Term Debt	332	302	228	25,361	6,547	-74.2%
Long Term Debt	47,422	52,390	57,675	23,930	22,983	-4.0%
Cash flow
Capex	1,035	1,563	1,226	1,211	1,611	33.0%
Ratios
Revenue growth	33.8%	13.0%	11.3%	9.9%	1.0%
Net Income Margin	12.3%	12.3%	11.1%	12.5%	5.7%	-6.8%
CAPEX, % of revenue	1.7%	2.3%	1.6%	1.4%	1.9%	0.5%
ROIC	11.8%	10.1%				0.0%
ROE	14.2%	14.4%	12.9%	14.5%	6.2%	-8.4%

Revenue and profitability

Federal Bank's Revenue increased slightly on 0.98% in FY2016.

Net Income marign decreased on 6.8 pp from 12.5% to 5.7% in FY2016.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 1.9% in FY2016. Federal Bank showed almost no change in CAPEX/Revenue from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 1.6%.

Leverage (Debt)

Debt dropped on 40.1% in FY2016 while cash jumped on 11.7% in FY2016.

Appendix 1: Peers in Banks

Below you can find Federal 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
Kazkommertsbank JSC ($KKB)		6.0%	16.3%	41.4%
Sberbank Of Russia ($SBER)	37.2%	25.1%	23.4%	27.4%
Commercial Intl Bank(Egypt)S.A.E ($CBKD)	37.6%	23.7%	18.9%	26.8%
Yapi Ve Kredi Bankasi As ($YKBD)	14.9%	4.8%	19.7%	25.3%
Mcb Bank Ltd ($MCBS)	3.0%	-1.7%	19.4%	22.4%
Median (42 companies)	9.1%	4.2%	12.1%	4.0%	-0.5%
Federal Bank ($FEDS)		13.0%	11.3%	9.9%	1.0%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Banque Marocaine Du Comm Exterieur ($69IR)	3.7%	9.7%	4.3%	26.8%
Lloyds Banking Group ($LLPC)	8.0%	8.9%	13.1%	13.6%	14.5%
Banco Santander Sa ($BNC)	2.7%	2.6%	8.9%	10.2%
Guaranty Trust Bank ($GRTB)	6.7%	6.1%	6.8%	7.7%
Diamond Bank ($DBPA)	8.2%	7.9%	6.0%	6.7%
Median (40 companies)	2.4%	2.8%	2.2%	2.5%	4.3%
Federal Bank ($FEDS)	1.7%	2.3%	1.6%	1.4%	1.9%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Commercial Intl Bank(Egypt)S.A.E ($CBKD)	21.7%	26.9%	30.1%	30.3%
Guaranty Trust Bank ($GRTB)	19.8%	18.9%	17.8%	16.0%
Mcb Bank Ltd ($MCBS)	15.0%	14.4%	15.8%	14.9%
United Bank Ltd ($UBLS)	11.7%	11.8%	13.8%	12.6%
Zenith Bank ($ZENB)	19.0%	17.6%	15.0%	11.2%
Median (42 companies)	6.0%	5.3%	4.4%	3.4%	2.9%
Federal Bank ($FEDS)	11.8%	10.1%

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.