Buy Indian Bank, target price Rs 225: Emkay Global

Emkay Global has buy call on Indian Bank with a target price of Rs 225. The current market price of Indian Bank is Rs 139.25. Time period given by analyst is one year when Indian Bank price can reach defined target. Indian Bank, incorporated in the year 1907, is a banking company (having a market cap of Rs 17349.00 Crore).

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 11608.53 Crore, up 8.24 % from last quarter Total Income of Rs 10724.53 Crore and up .45 % from last year same quarter Total Income of Rs 11556.09 Crore. The bank reported net profit after tax of Rs 1259.82 Crore in latest quarter.

Investment Rationale
The brokerage believes Indian Bank has benefited the most from the merger in terms of liability profile (CASA), and it has largely completed the integration process given its proactive management. With strong capital buffers in place and overall NPAs expected to trend down given the transfer to NARCL/resolutions, the bank is gearing up for growth (10-12% yoy). Factoring in better growth/margins and lower LLP/tax incidence, we raise FY22/FY23E EPS by 106%/45%. The brokerage expects the bank’s RoE to improve to 12%/13% by FY23/24E from a low of 4% in FY20 post-merger. Accordingly, the brokerage are upgrading the stock to Buy from Hold with a revised TP of Rs225 (0.7x Jun’23E ABV).

Promoter/FII Holdings
Promoters held 79.9 per cent stake in the company as of June 30, 2021, while FIIs held 3 per cent, DIIs 10.2 per cent and public & others 6.9 per cent.