Indian Bank shares zoom 18% to hit one-year high; other PSB stocks shine too; here's why

Shares of Indian Bank Ltd continued their upward run for the third straight session in Tuesday's trade. The stock saw a massive push today as it surged 17.53 per cent to hit its 52-week high of Rs 408. On BSE, around 5.48 lakh shares changed hands today, which was way more than the two-week average volume of 85,000 shares. Turnover on the counter stood at Rs 20.61 crore, commanding a market capitalisation (m-cap) of Rs 50,097.87 crore. There were 6,25,861 buy orders against sell orders of 21,461 shares.

Foreign brokerage Investec said the state-run lender recorded an improvement in return on asset (RoA), due to better-than-expected net interest margins (NIM), pre-provision operating profit and stable asset quality.

The bank posted a 40.89 per cent increase in net profit at Rs 1,709 crore in the April-June quarter (Q1 FY24), mainly due to decline in bad loans. The Chennai-based lender had posted a net profit of Rs 1,213 crore in the year-ago period. Total income in Q1 FY24 rose to Rs 14,759 crore as against Rs 11,758 crore.

The lender's interest income also increased to Rs 13,049 crore from Rs 10,153 crore in the corresponding quarter a year ago.

On the asset quality side, the bank witnessed improvement with the gross non-performing assets (NPAs) easing to 5.47 per cent of the gross advances by June 2023 from 8.13 per cent a year ago. The net NPA also declined to 0.70 per cent as against 2.12 per cent in the same period of the previous year.

On the technical setup, the stock was last seen trading higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-, and 200-day simple moving averages (SMAs). The counter's 14-day relative strength index (RSI) came at 84.29. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 7.48 against a price-to-book (P/B) value of 0.90.

The scrip has an average target price of Rs 389, Trendlyne data showed, suggesting a potential upside of 3 per cent. It has a one-year beta of 1.27, indicating high volatility.

Shares of other state-owned lenders also witnessed a sharp rise today as the Nifty PSU Bank sub-index ticked nearly 3 per cent higher, post a stellar show in Q1 FY24. Profit of public sector banks (PSBs) more than doubled to Rs 34,774 crore in the June quarter. During the April-June period of the previous fiscal, all 12 state-owned banks had recorded a total profit of Rs 15,306 crore.

 

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