Buy Central Bank of India, target price Rs 37: LKP Securities

LKP Securities has buy call on Central Bank of India with a target price of Rs 37. The current market price of Central Bank of India is Rs 28.9.

Central Bank of India, incorporated in the year 1911, is a banking company (having a market cap of Rs 24436.84 Crore).

Central Bank of India key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 7093.08 Crore, up 11.05 % from last quarter Total Income of Rs 6387.24 Crore and up 8.66 % from last year same quarter Total Income of Rs 6527.94 Crore. The bank has reported net profit after tax of Rs 341.41 Crore in latest quarter.

Investment Rationale
The brokerage is of the view that on the business front, the bank has been reporting stable credit growth (18.1% YoY and 6.3% sequential jump seen in previous quarter) across segments. The bank’s recoveries are in line with the guidance and the brokerage expects the credit cost to be below 1.5% for FY23E.

Further, LKP believes the asset quality hurdles are behind and the bankshall witness gradual improvement in profitability with FY23E ROA/ROE of 0.5%/6.6%. On the back of inexpensive valuation (0.8x PBVPS), the brokerage recommends buy on the public sector bank.

Promoter/FII Holdings
Promoters held 93.08 per cent stake in the company as of 30-Jun-2022, while FIIs owned 0.09 per cent, DIIs 2.8 per cent.