LAKSHMI VILAS BANK LTD Q3 FY17 - BUY LAKSHMI VILAS BANK LTD reported strong third quarter results with PAT or Net Profit galloping at 70% growth rate YOY. PAT for the December quarter stood at Rs. 784 Mn compared to Rs. 461 Mn same period previous year. Sequential growth was equally strong at 21% in the current Q3 FY17. Net Interest Income, difference between interest earned and expended was at Rs. 1906 Mn in the current quarter against Rs. 1671 Mn corresponding quarter previous year, expanding 14% YOY. Net Interest Margin indicating core profitability of bank’s operations at 2.72% seems to be stable in a demonetization hit quarter. Gross NPAs as a percentage of Gross Advances edged up 96 basis points YOY at 2.78%, Net NPAs as a percentage of Net Advances was reported at 1.82% in the current Q3 FY17.  One basis point is 0.01%. Provisions & contingencies were curtailed at Rs. 481 Mn declining 23% QOQ and 17% yearly. Double digit growth was visible in treasury reporting Rs. 2695 Mn revenues rising 84% YOY. Both Retail & Corporate stood at Rs. 3766 Mn & Rs. 2308 Mn respectively growing 7% in the current quarter. CASA ratio at 21.42% jumped 484 basis points YOY due to demonetization impact. CASA deposits increased from Rs. 39683 Mn in Q3 FY16 to Rs 59435 Mn in current December quarter, jump of 50% YOY. Other income or non interest revenue accounting 17% of the total income of the bank rose at a whopping 117% YOY at Rs. 1502 Mn in current Q3 FY17 buffeting the Bank’s income in the demonetization hit quarter. Deposits outpaced Advances moving at 16% yearly and 4% QOQ. Advances also exhibited demonetization impact by growing negatively QOQ whereas on yearly basis, rise was 8.50% in the current December quarter. Cost income ratio of bank improved to 49.70% in the current December FY17 against 55.17% corresponding quarter previous year. LVB has performed well with respect to NII & high profitability and is more focused on obtaining a high quality loan book, but robust expansion is the need of the hour to enter the next level of highly competitive Indian Private Sector Banking. LAKSHMI VILAS BANK with the market cap of Rs. 29584 Mn is a long term growth opportunity for retail investors. We recommend BUY for the stock for medium and long term investment with a target price of Rs. 225. Disclaimer                                                                               The information and opinions contained in the research reports have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. The research report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. 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