About 1 year ago I had posted a comparison of Yes Bank vs Indusind Bank. Those who haven't read that, I would request them to go through it at the following link:
Yes Bank vs Indusind Bank comparison - 4th March'2014.
I had compared the 12-month figures (Jan to Dec) for the years 2009 onwards for Total Income, Interest Expense and EPS of the 2 mid-size private sector banks and then compared the same with their respective share prices. Now we have data for the year 2014 as well to add to the comparison. Have a look at the chart below:
As we can see, the status is almost similar to what it was a year ago. At the end of December'2014, Yes Bank's Total Income & Net Profit continue to be higher than Indusind Bank's numbers by about 10-11%, while the Interest Cost is higher by about 23% for Yes Bank and EPS is higher by 29%. But Yes Bank's share price continues to trail Indusind Bank's share price even now. With Yes Bank soon to be a part of the Nifty Index, we could see it's share price getting more attention from FIIs.
Eventhough Yes Bank continues to be larger than Indusind Bank on all operational numbers like Total Income, Interest Cost, Net Profit & EPS, while the latter commanding a substantially higher Market Cap, it is also interesting to see how the growth rates have panned out in the last 1 year, compared to previous years. On the Total Income front, Yes Bank had posted comparatively stronger growth rates during each of the 4 years from 2010 to 2013, but Indusind Bank has posted a stronger growth at 20% in the year 2014, compared to the former's growth of just 14%. On the Interest Cost front too, Yes Bank had grown faster in 3 out of the 4 years upto 2013, but again Indusind Bank has grown faster in 2014 at 17% compared to 11% of the former. There are 2 reasons for this: (1) Yes Bank raised substantial capital via issue of shares during the year; (2) Yes Bank's slower business growth (despite extra capital in hand) meant that it needed to borrow less incremental capital.
The slower growth in Interest Cost during most of the last 5 years has helped Indusind Bank post stronger growth rates on the Net Profit & EPS front. In the year 2014, Indusind Bank's Net Profit grew 28% compared to 22% growth posted by Yes Bank. Indusind Bank has posted substantially stronger growth rates for Net Profit in 4 of the last 5 years compared to Yes Bank. Maybe that is also one reason why Indusind Bank commands a higher valuation rating. Look at the P/E Ratios comparison. Indusind Bank has always traded at a substantial premium valuation compared to Yes Bank. Going forward it will be interesting to see how their growth rates pan out & the corresponding changes in their valuations. Currently both banks are well capitalised and can easily raise resources whenever needed. Both banks are getting aggressive in expanding their retail operations. Indusind Bank even has a Celebrity (actor Farhan Akhtar) endorsing it. With the economy picking up pace, the Banking industry will continue to see increased activity. And with the Govt. taking steps to discourage Cash transactions & encourage electronic transactions, all Banks will see a surge in number of transactions. The Banks with strong Technological platform will be the biggest beneficiaries.
No comments:
Post a Comment