Stock Views on CORPORATION BANK, JSW ENERGY

CLSA on JSW ENERGY

CLSA maintains `Sell' rating on JSW Energy. JSW Energy's Q1 net profit at Rs 290 crore is in line with our estimates. The company sold 68% power on short-term basis during the quarter. The project cost of Ratnagiri is also set to increase by Rs 600 crore given the additional expenditure to set up a FGD unit. Barmer project site is facing very high turnover of contractors given the very hostile climatic conditions. Net generation at 1.8m kWh is up 251% y-o-y mainly due to the commissioning of 600 MW at Vijaynagar and 135 MW at Barmer in the last one year. The average realisation fell by 10% to Rs5.09/kWh in Q1 while fuel cost increased by 14% y-o-y to Rs2.34/kWh. CLSA has factored in the delays in commissioning of the Ratnagiri and Barmer projects while they have increased the merchant power assumption to Rs5/kWh. They have also assumed the 300-MW sales to Adani Enterprises from Ratnagiri as merchant in the numbers.

IIFL on CORPORATION BANK

Corporation Bank is all set to establish a pan-India presence. Excess reliance on term deposits and a tepid LDR (loan to deposit rate) had dragged margin performance for the last several quarters. Further, while asset quality remained at comfortable levels, CASA (current account savings account) ratio was in the low 28-29% range. Traditionally, Corporation Bank has outpaced the system loan growth. During FY10, the bank reported a healthy 30% y-o-y growth in loans. Growth was witnessed across all segments — large corporates, SMEs and retail. With a view to ensure hassle-free flow of credit, the bank has set up care centres at all zonal offices. The expansion plans, in addition to strong brand identity and increasing credit demand, will enable the bank to witness sturdy 25% CAGR in loan book over FY10-12E. Traditionally, Corporation Bank has traded at par with its larger peer Bank of Baroda. However, in the recent past, this valuation gap has widened significantly.