Buy Indian Bank, target price Rs 220: Emkay Global

Emkay Global has buy call on Indian Bank with a target price of Rs 220. The current market price of Indian Bank is Rs 139.2.

Time period given by analyst is one year when Indian Bank price can reach defined target.

Indian Bank, incorporated in the year 1907, is a banking company (having a market cap of Rs 17392.59 Crore).


Indian Bank 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-2021.


Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 11513.70 Crore, down -.82 % from last quarter Total Income of Rs 11608.53 Crore and down -2.40 % from last year same quarter Total Income of Rs 11796.58 Crore. The bank reported net profit after tax of Rs 1126.11 Crore in latest quarter.


Investment Rationale
Factoring in the impact of rising G-sec yields on treasury and a slightly higher tax rate from FY23E, the brokerage cuts the bank’s FY23-24E earnings by 5-6% and still expect it to deliver healthy RoA/RoE of 0.8%/13% by FY24E. Valuations remain reasonable post the recent marketwide correction. Hence, it retains Buy with a revised TP of Rs220 (0.7x Dec’23E ABV) from earlier Rs235. Key risks: slow growth/higher NPAs in the SME segment due to a fresh Covid wave and delay in macro pick-up.

Promoter/FII Holdings
Promoters held 79.86 per cent stake in the company as of 30-Sep-2021, while FIIs owned 2.41 per cent, DIIs 10.52 per cent.