Allahabad Bank

ALBK's NII for Q3FY11 has grown-up by 55.7%yoy to Rs10.5bn driven by more than 30% yoy (+4% qoq) growth in advances and 14bps expansion in NIMs to 3.4%. The advances expansion was muscular at 32% yoy and 6% qoq principally driven by SME and corporate advances, which grew by sturdy 9%qoq and +7%qoq respectively. However, we consider that the advances growth on yoy basis is likely to cool off by 6-7% for FY11 due to hostile base effect. The CASA mix declined by 144bps to 33.3% in Q3FY11 as the bank raised term deposits aggressively during the quarter, a growth of 8.8%qoq. ALBK's CAR remained comfortable at 12.8% with tier I CAR of 8.1%. We believe that ALBK's current valuations of 1.6x FY11E ABV and 1.2x FY12E ABV are extremely attractive looking at average 22% RoAs for FY11- 12E.

On technical perspective, stock currently shows some correction from the highs of Rs 272 however we believe it's a temporary one. And we may see some counter actions in the near term. Nevertheless its technical indicators i.e. RSI and MACD also revealed some buying opportunities in near term.

Sterlite Industry

Sterlite Industries (Sterlite) reported slightly better Q3FY11 numbers. Disenchantment on copper and power segment's performance got remunerated by above expectation results in Zinc business. On the back of higher than expected mined metal volumes, Zinc business reported an EBITDA of Rs15.0bn above our expectation of Rs14 bn. Contrary to performance in Zinc business, Copper reported an EBITDA of Rs2.3bn due to lower mined metal production at and below expected refined metal production at domestic operations. Power business reported numbers well below our expectation coupled by Commissioning of Sterlite Energy's (SEL) further got delayed by a quarter to revised schedule of Q4FY11 with an overall delay of a year.

On technical viewpoint, stock has shown some consolidation around Rs 160 (200 dma). In close proximity we believe stock is well poised to move in upward direction. Moreover it's RSI and other technical indicators also suggest some buying opportunities due to its over sold territory. Hence investors are advised to BUY this stock for a price target of Rs 175-190 in one month.

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