Core operating performance (NII grew 9.0% YoY) was marginally below our expectations on the back of moderate loan growth and NIM contraction. Net profit was also a shade below our expectations further impacted by higher general provision on non-individual loan portfolio added during this quarter. Its spread remained stable at 2.31% during 9MFY16 but near-term outlook on NIM remains weak as full impact of 25bps cut in lending rate during October 15 is yet to play out completely. Individual segment continued to drive overall loan growth while its overall asset quality remained healthy (GNPA: 72 bps). At CMP, stock trades at 2.85x FY17E ABV, post striping the value of subsidiaries and investments (Rs.500). Hence, we upgrade the stock to BUY from ACCUMULATE earlier with unchanged TP of Rs.1380 based on SOTP method (core business: Rs.880; 3.75x FY17 ABV and subsidiaries: Rs.500).
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