Andhra Bank
By ET Bureau |
CMP: Rs 59.05
TARGET PRICE: Rs 81
Kotak Securities has initiated coverage on Andhra Bank with an ���accumulate��� recommendation, saying the bank has one of the lowest NPAs (non-performing assets) in the industry and hence is better placed vis-��-vis its peers. The fact that the bank has been focusing on high yielding segments like agriculture, infrastructure , SMEs and retail has helped it deliver higher margins as compared to other public sector banks, says Kotak. ���The bank���s gross NPA came down from 5.04% in FY04 to 1.07% in FY08 and net NPA declined from 0.93% to 0.17% during the same period,��� the Kotak Securities note to clients said.
The brokerage expects the bank to post an earnings growth of 1.1% CAGR (compound annual growth rate) for FY08-10 E (estimated) as a result of moderate loan growth and lower noninterest income. However, says the note, the non-interest income would contribute less in the banks total income due to subdued equity market as well as increase in bond yields with corresponding fall in bond prices. At the price target of Rs 81, the note adds, the stock trades at 1.06 times its FY10(estimated) adjusted book value.
TARGET PRICE: Rs 81
Kotak Securities has initiated coverage on Andhra Bank with an ���accumulate��� recommendation, saying the bank has one of the lowest NPAs (non-performing assets) in the industry and hence is better placed vis-��-vis its peers. The fact that the bank has been focusing on high yielding segments like agriculture, infrastructure , SMEs and retail has helped it deliver higher margins as compared to other public sector banks, says Kotak. ���The bank���s gross NPA came down from 5.04% in FY04 to 1.07% in FY08 and net NPA declined from 0.93% to 0.17% during the same period,��� the Kotak Securities note to clients said.
The brokerage expects the bank to post an earnings growth of 1.1% CAGR (compound annual growth rate) for FY08-10 E (estimated) as a result of moderate loan growth and lower noninterest income. However, says the note, the non-interest income would contribute less in the banks total income due to subdued equity market as well as increase in bond yields with corresponding fall in bond prices. At the price target of Rs 81, the note adds, the stock trades at 1.06 times its FY10(estimated) adjusted book value.
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