Mid cap Bank stock gets a BUY call with an upside of 36%; Do you own it?

Indian Bank is a mid-sized bank that was started in 1907. It is involved in the business of offering deposits, loans and other associated services. There are various segments in the Bank and some of them include the Treasury, Corporate/Wholesale Banking, Retail Banking and Other Banking Operations. Corporate loans account for about 44% of the total loan book which is followed by agriculture (20%), MSME (18%) and retail (18%). 

Indian Bank started its trading session today at Rs 272.05 and is currently trading at Rs 275.15. The stock is about 1 percent up as compared to the previous closing price of Rs 272.80. Having a purview of six months, the stock has been able to deliver returns of around 36 percent to its stakeholders. 

Evaluating the financials of the company, the net interest income (NII) has moved from Rs 4,701.60 crores in Q2 to Rs 5,501.49 crores in Q3. Apart from the parameter discussed above, the net profit figures of the company have moved from Rs 1,244.71 crores in Q2 to 1,407.54 crores in Q3. 

Due to the continuous improvement in the operations, the profit margins have increased from 7.71 percent in FY20-21 to 10.28 percent in FY21-22. The net NPA ratio of the company too has shown a favorable movement from 1.5 percent in Q2 to 1 percent in Q3. 

Emkay Global Financial Services has given a ‘buy’ call on Indian Bank with a target price of Rs 375. The current market price of the stock is Rs 275.15 showing an upside of around 36 percent. 

The rationale behind such a recommendation is that the brokerage expects the bank to report healthy margin trajectories, improving the fees and normalization of credit costs. Additionally, Indian Bank is one of the few PSBs to remain well capitalized which poses no risk of equity dilution for investors unlike its peers. 

As per the quarter ending December 2022, promoters of the company hold a constant 79.86 percent shareholdings. FIIs, on the other hand, increased their stakes from 2.56 percent in Q2 to 3.56 percent in Q3. 

Written by Amit Madnani

Disclaimer

The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.