Hold Indian Bank; target of Rs 220: ICICI Direct

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ICICI Direct's research report on Indian Bank

Indian Bank reported a healthy operational performance at Rs 1374 crore, on the back of 58% YoY growth in other income (treasury gain & PSLC sale). NII came in flat YoY at Rs 1785 crore due to a fall in yields & CASA ratio. Accordingly, margins contracted 10 bps QoQ to 2.85%. Lower-than-expected provision of ~Rs 795 crore & healthy operating profit led to 75% YoY PAT growth to Rs 365 crore. Growth in advances remained steady at 12.3% YoY to Rs 1.77 lakh crore, led by growth in retail & agri. However, corporate book de-grew ~8% QoQ. Deposit accretion stayed healthy at ~15% YoY. High traction was seen in term deposit while CASA traction remained muted. Accordingly, CASA ratio declined 108 bps QoQ to 33.4%.

Outlook

Accordingly, we lower our target multiple from 1.0x to 0.8x on FY21E ABV & thereby downgrade our target to Rs 220 (earlier Rs 300). Consequently, we change our recommendation to HOLD from BUY.

For all recommendations report, click here

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