From Rs 43 to Rs 343 in 3 years: Analysts see more steam left in this PSU banking stock
Shares of this state-owned lender have delivered over 100 per cent return since July last year
- Aug 3, 2023,
- Updated Aug 3, 2023 1:44 PM IST
A stock from the public sector banking space has been creating enormous wealth for equity investors ever since the lows of the Covid-19 pandemic. Shares of the lender have delivered nearly 8 times return since March 24, 2020, and over 100 per cent return since July last year. Analysts believe the ongoing momentum will continue for the next 1 year. This is Indian Bank.
Of late, YES Securities revised upward the target price of the bank to Rs 450 from the earlier Rs 410, indicating an upside of nearly 31 per cent compared to the market price of Rs 343.75 on August 2. Shares of the bank were hovering at around Rs 43 on March 24, 2020, and at Rs 150 on July 1, 2022.
The state-owned Indian Bank on July 27 reported nearly 41 per cent year-on-year (YoY) growth in net profit at Rs 1,709 crore for the quarter ended June 30, 2023. The lender reported a profit of Rs 1,213 crore in the same period last year. On the other hand, its net interest income (NII) increased 26 per cent YoY to Rs 5,703 crore in Q1FY23 from Rs 4,534 crore in Q1FY22. And, its provisions and contingencies declined around 22 per cent YoY to Rs 1,740.64 crore during the quarter under review.
“The loan growth guidance for FY24 stands at 10-12 per cent and the deposits growth guidance for FY24 stands at 8-10 per cent YoY. The bank has good liquidity and does not intend to push for deposits growth at this point by paying higher rates,” YES Securities (India) said. Meanwhile, the bank has guided for a total recovery of Rs 8,000 crore in FY24. The recovery during the quarter amounted to Rs 2,008 crore, with most of it coming from the non-written-off book.
Anand Rathi Share and Stock Brokers is also positive on Indian Bank, with a target price of Rs 386. “A strong operating performance combined with moderating provisions led to Indian Bank’s greater profitability; its return on assets (ROA) coming at 0.95 per cent, up 13 basis points QoQ. Asset quality and PCR (Provision Coverage Ratio) improved,” the brokerage said in a report, adding that going ahead, they expect modest slippages as most of the stress has been recognised. With stress from the legacy book recognised, the focus has now shifted to profitability. “We expect the bank to deliver a sustainable 1 per cent RoA from FY25,” the report stated.
A stock from the public sector banking space has been creating enormous wealth for equity investors ever since the lows of the Covid-19 pandemic. Shares of the lender have delivered nearly 8 times return since March 24, 2020, and over 100 per cent return since July last year. Analysts believe the ongoing momentum will continue for the next 1 year. This is Indian Bank.
Of late, YES Securities revised upward the target price of the bank to Rs 450 from the earlier Rs 410, indicating an upside of nearly 31 per cent compared to the market price of Rs 343.75 on August 2. Shares of the bank were hovering at around Rs 43 on March 24, 2020, and at Rs 150 on July 1, 2022.
The state-owned Indian Bank on July 27 reported nearly 41 per cent year-on-year (YoY) growth in net profit at Rs 1,709 crore for the quarter ended June 30, 2023. The lender reported a profit of Rs 1,213 crore in the same period last year. On the other hand, its net interest income (NII) increased 26 per cent YoY to Rs 5,703 crore in Q1FY23 from Rs 4,534 crore in Q1FY22. And, its provisions and contingencies declined around 22 per cent YoY to Rs 1,740.64 crore during the quarter under review.
“The loan growth guidance for FY24 stands at 10-12 per cent and the deposits growth guidance for FY24 stands at 8-10 per cent YoY. The bank has good liquidity and does not intend to push for deposits growth at this point by paying higher rates,” YES Securities (India) said. Meanwhile, the bank has guided for a total recovery of Rs 8,000 crore in FY24. The recovery during the quarter amounted to Rs 2,008 crore, with most of it coming from the non-written-off book.
Anand Rathi Share and Stock Brokers is also positive on Indian Bank, with a target price of Rs 386. “A strong operating performance combined with moderating provisions led to Indian Bank’s greater profitability; its return on assets (ROA) coming at 0.95 per cent, up 13 basis points QoQ. Asset quality and PCR (Provision Coverage Ratio) improved,” the brokerage said in a report, adding that going ahead, they expect modest slippages as most of the stress has been recognised. With stress from the legacy book recognised, the focus has now shifted to profitability. “We expect the bank to deliver a sustainable 1 per cent RoA from FY25,” the report stated.