Mehabe score: 4 G Factor: 3 Piotski Score: 2 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 2.
Description
Indian Overseas Bank was founded in 1937 by Chidambaram Chettyar. It was one of the 14 major banks that were nationalized in 1969. #
Main Points
Ratios
Capital Adequacy Ratio – 11.49%#
Net Interest Margin – 2.17%#
Gross NPA – 12.19%
Net NPA – 3.13%#
CASA Ratio – 40.93%Site:IOB
Market Cap:
Rs 39,128 cr
Price:
20.7
Trading pe:
68.4x
Book-value:
8.55/share
Div yield:
0.00 %
Earning yield:
4.89%
Face-value:
10.0/share
52week high:
23.45
52week low:
8.50
Technical Analysis
Stock trades at 20.7, above its 50dma 17.18. It also trades above its 200dma 13.93. The stock remains bullish on techicals
The 52 week high is at 23.45 and the 52week low is at 8.50
Price Chart
P/E Chart
Sales and Margin
Strengths
–
Weakness
– has low interest coverage ratio.
-The company has delivered a poor sales growth of -6.17% over past five years.
– has a low return on equity of -41.88% for last 3 years.
-Contingent liabilities of Rs.86349.47 Cr.
-Earnings include an other income of Rs.4637.85 Cr.
Competition
– The industry trades at a mean P/E of 14.3x. I O B trades at the industry’s max P/E of 68.38x. IOB trades at a P/E of 68.4x
– Industry’s mean G-Factor is 5.0 while the mean Piotski score is 8.0. IOB has a G-Factor of 3 and Piotski scoreof 2.
– Average 1 month return for industry is 12.3%. The max 1- month return was given by I O B: a return of 28.17 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 4057.0 cr compared to Rs 4442.0 cr for period ended Mar 2020, a fall of 8.7%
Operating Profits reported at Rs 3076.0 cr for period ended Mar 2021 vis-vis 2490.0 for period ended Mar 2020 .
Operating Margins expanded 1976.4 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 0.21 compared to Rs 0.13 for previous quarter ended Dec 2020 and Rs 0.09 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 16966.0 cr for period ended Mar 2021 vis-vis sales of Rs 17406.0 cr for the period ended Mar 2020, a fall of 2.6%. The 3 year sales cagr stood at -1.8%.
Operating margins expanded to -4719.0% for period ended Mar 2021 vis-vis -11404.0% for period ended Mar 2020, expansion of 668500.0 bps.
Net Profit reported at Rs 831.0 cr for period ended Mar 2021 vis-vis sales of Rs -8527.0 cr for the period ended Mar 2020, rising 0%.
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities: Rs 0.0 cr for period ended Mar 2021 vis-vis Rs -14023.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -52.0% compared to -42.0% over the last 3 Years. – The stock has given a return of 102% on a 1 Year basis vis-vis a return of 11% over the last 3 Years. – The compounded sales growth on a TTM bassis is -1% vis-vis a compounded sales growth of -4% over the last 3 Years. – The compounded profit growth on a TTM basis is 105% vis-vis a compounded profit growth of % over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 0.07% vis-vis 0.08% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 2.5% vis-vis 2.43% for Dec 2020
Conclusion
– – has low interest coverage ratio.
-The company has delivered a poor sales growth of -6.17% over past five years.
– has a low return on equity of -41.88% for last 3 years.
-Contingent liabilities of Rs.86349.47 Cr.
-Earnings include an other income of Rs.4637.85 Cr.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 17.18 and is trading at 20.7 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
