Buy Indian Bank, target price Rs 250: ICICI Direct

ICICI Direct has buy call on Indian Bank with a target price of Rs 250. The current market price of Indian Bank is Rs 203.75. 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 25369.64 Crore).

Indian Bank key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 11897.53 Crore, up 2.96 % from last quarter Total Income of Rs 11556.02 Crore and up 2.49 % from last year same quarter Total Income of Rs 11608.53 Crore. The bank reported net profit after tax of Rs 1311.08 Crore in latest quarter.

Investment Rationale
Indian Bank’s share price has remained unimpressive with ~7% returns in the past three years. However, improvement in credit growth outlook with focus on better yielding RAM segment and gradual uptick in asset quality with adequate capital position gives comfort. Thus, the brokerage expects earnings to grow at 29% CAGR in FY23-24E while RoE is expected to improve from 0.6% in FY22 to ~0.9% in FY24E. In addition, the recent decline in yields is expected to lead to a reversal in treasury losses that could act as a near term catalyst. Thus, the brokerage maintains BUY rating and revises target price to Rs 250 (~0.8x FY24E ABV)

Promoter/FII Holdings
Promoters held 79.86 per cent stake in the company as of 30-Jun-2022, while FIIs owned 2.06 per cent, DIIs 11.66 per cent.