Comments
LKP Securities
Indian Bank (Buy)
Target: ₹170
CMP: ₹122.8
Indian Bank with its healthy liability franchise, low cost of funds and compelling valuations has now begun to witness synergies post its merger with Allahabad Bank. The Bank offers a wide range of services including foreign currency banking and specialised overseas branches in Chennai, Bangalore and Mumbai exclusively handing foreign exchange transactions.
The bank has different lending verticals; retail, agriculture, MSME and corporate. The RAM (Retail, Agriculture, and MSME) contributes 58 per cent of its loan book while the rest is corporate book. We believe, the Bank shall emerge stronger by the end of FY22 since Q1-FY22 earnings have shown early signs of recovery. The credit quality recovery in Q1-FY22 was meaningful as absolute GNPA inched down (2 per cent sequentially) driven by healthy up-gradation (14x of Q4-FY21). A healthy capital position (CET-1 of 11.6 per cent), post capital infusion, will keep the momentum going. Factoring about 9 per cent advance growth, stable NIMs and lower credit cost; the bank may post 17 per cent PAT growth in FY22.
Compelling valuations (0.5xFY23 Adj. BVPS) makes the stock rewarding factoring FY22/23 ROE of 1 per cent/16 per cent. Hence, Indian Bank is one of our preferred pick among PSU banks.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.