A leading Indian public sector bank, renowned for its extensive retail banking services, has announced key changes to its lending rates. The revision in MCLR and TBLR rates, effective February 2025, signals potential increases in EMIs for various loan categories, while analysts maintain optimism about the bank’s future performance with improved asset quality and strong profitability metrics prompting a “Buy” rating.
Share Price Movement
The share price of Indian Bank Limited went down 3.8 percent to Rs. 515.25 per share on Monday, a decline from its previous close of Rs. 535.35 per share. The market capitalisation now stands at approximately Rs. 69,429.26 crore as of February 03, 2025. Over the last year, the company’s share price has given negative returns of 8 percent.
What Happened
Indian Bank’s Asset Liability Management Committee (ALCO) has revised MCLR and TBLR rates effective 03.02.2025. MCLR rates range from 6.55% to 6.65%. TBLR rates range from 8.30% to 9.10%. Other benchmark rates remain unchanged.
Individuals with loans tied to MCLR or TBLR will see an increase in their monthly Equated Monthly Installments (EMIs). This includes borrowers with home loans, personal loans, and vehicle loans that are linked to these rates.
Financial Highlights
The bank’s deposits grew by 7% to Rs. 7.02 lakh crore, while loans (advances) increased by 10% to Rs. 5.59 lakh crore. Net profit saw a strong 35% rise to Rs. 7,962 crore, and Net Interest Income (NII) increased by 10% to Rs. 6,415 crore year-on-year. Return on Assets (ROA) improved by 6 basis points (QoQ) and 27 basis points (YoY), while Return on Equity (ROE) saw a significant jump of 137 basis points (YoY).
Asset quality also improved, with Net Non-Performing Assets (NNPA) reducing from 0.43% in FY24 to 0.21% in FY25. Similarly, Gross Non-Performing Assets (GNPA) declined from 3.95% in FY24 to 3.26% in FY25, reflecting better financial health.
Target By Anand Rathi
Anand Rathi maintains a “Buy” rating on Indian Bank with a target of Rs. 686, citing a 32% upside. Strong profitability is driven by improved operations and moderate provisions. raising RoA by 6 basis points to 1.39%. Asset quality and PCR have improved, future slippages should remain modest, and with legacy stress recognised, the bank is now focused on profitability. A sustainable RoA of 1.2%+ is expected in the medium term.
Competitors
Indian Bank competes with HDFC Bank, ICICI Bank, State Bank of India, Kotak Mahindra Bank, Axis Bank, and Punjab National Bank.
Indian Bank is currently trading at a P/E of 7.01, which is above the industry P/E of 6.96.
Written By Fazal Ul Vahab C H
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