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SPA Securities
Andhra Bank (Buy)
CMP: ₹74.35
Target: ₹135
Andhra Bank reported net interest income (NII) growth of 44.3 per cent y-o-y to ₹1,370 crore, which was in line with our estimate of ₹1,380 crore on back of higher recoveries and credit growth of 20.4 per cent (SPAe 15.1 per cent). During the quarter, bank recovered/upgraded loan worth ₹850 crore compared to average run rate of ₹600 crore in the last three quarters. During the quarter, CASA ratio grew both yearly as well as sequentially by 254/146 bps respectively to 27.35 per cent, its highest level since FY11. Net interest margin improved by about 72 bps y-o-y to 3.20 per cent on the back of higher spread. We expect Andhra Bank to continue with is strong performance led by above industry credit growth, higher NIM and stable asset quality. The bank is confident of improving its asset quality as issues faced by power and infrastructure sector are being sorted out.
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