>Punjab National Bank (CITI)

3Q09 Results: High Octane Performance, but…

* Profits up 86%, well ahead of expectations — PNB has recorded a high-growth
quarter; on balance-sheet, profits and a more-aggressive-than-most approach.
Its P&L is strong with varied drivers; the rapid balance-sheet expansion,
however, catches the eye for its aggression, and probably warrants caution.

* P&L: firing on all cylinders — The P&L is robust – strong NII driven by asset
and margin expansion, 40%+ fee income growth, trading gains on the back of
falling rates, and portfolio write-backs. While this provides the cushion for
enhanced loan-loss provisioning and higher employee charges, we do believe
this could well be the peaking of the currently high earnings momentum.

* Balance sheet: Too fast, too risky? — PNB’s loans are up 39% yoy, 9% qoq; an
acceleration over previous growth levels, and about the highest in the system.
While PNB’s overall asset quality performance seems relatively OK, the pace of
growth, a higher than industry level incremental deterioration, its high yield
portfolio, and its aggressive growth into a challenging asset environment,
suggest incremental asset risk could well be higher than peers. It has not yet
shown up meaningfully; but the quarter would put PNB under greater watch.

To see full report: PNB

>NALCO (BNP PARIBAS)

No surprises here; Maintain REDUCE

* Demand weakness leads to inventory pile up
We estimate that aluminium (Al) inventory level at Nalco has increased
about 200%, increasing from seven days to about twenty days as at the
end of 3QFY09. We further estimate that inventory levels will rise to
nearly a month’s production of Al by the end of 4QFY09. We expect
sales offtake will continue to be poor going into 4QFY09. Also as Nalco
is a public sector undertaking (PSU), we believe that it will not curtail its
production immediately, thereby adding to inventory.

* Lower power and input costs to show up from 4QFY09
We believe that Nalco stands to benefit from lower power and raw
material costs beginning 4QFY09 due to a sharp decline in commodity
prices. Electricity generation costs will decline by about 15% as Nalco
has stopped purchasing expensive imported coal. Overall, we believe
that COP for alumina will trend down by about 18% and that for
aluminium by 9% over the next 6 months.

To see full report : NALCO

>IDFC (ICICI Securities)

CAPITAL MARKET PRESSURE VISIBLE

Reason for report: Q3FY09 results review & earnings revision

IDFC’s Q3FY09 net profits declined 15% YoY, driven by sharp fall in non-interest
income (down 61% YoY), primarily on account of slowdown in capital marketrelated
businesses and lower gains booked on equity, even as NII growth
remained strong (up 44% YoY in Q3FY09). Despite sharp moderation in loan
growth to 7% YoY, NII grew a robust 44% YoY, driven by 20bps increase in
spreads to 2.3% for rolling 12 months sequentially. Asset quality remained robust
with nil NNPLs & no incremental slippages – loan-against-shares (LAS) fell to
6.7% QoQ of outstanding (o/s) book. We reduce FY09E & FY10E earnings
estimates 8.6% & 19.1% respectively to reflect lower loan growth and pressure on
capital market-related income. Maintain BUY with target price of Rs90/share.

To see full report: IDFC