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Geojit
Indian Bank (Buy)
CMP: ₹128.8
Target: ₹156
Indian bank is a mid-sized bank in the public sector, with a loan book size of about ₹1,94,000 crore and deposit base of about ₹2,53,000 crore. The bank operates through a network of 2,884 domestic branches largely distributed across the Southern States.
Key takeaways: a) The merger of Indian bank and Allahabad bank to make it the seventh largest public sector bank, with nationwide presence.
b) The net interest income (NII) grew at 7.6 per cent y-o-y due to higher growth in cost of funds compared to that of the interest yield.
c) The total income grew at 20 per cent y-o-y supported by 72 per cent y-o-y growth in other income, with an improved profit in sale on investments.
d) The banks loans/deposits grew at 13 per cent/15 per cent y-o-y in Q2FY20.
e) Asset quality improved with GNPA/NNPA at 7.2 per cent/3.54 per cent compared to 7.33 per cent/3.84 per cent in the last quarter.
f) We reduce our valuation to 0.35x BV of FY21E and retain our BUY rating with a revised downward target price of ₹156.
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