Buy Indian Bank, target price Rs 375: Emkay Global Financial Services

Emkay Global Financial Services has buy call on Indian Bank with a target price of Rs 375. The current market price of Indian Bank is Rs 271.1.

Indian Bank, incorporated in the year 1907, is a banking company (having a market cap of Rs 33583.32 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-2022.


Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 13761.95 Crore, up 8.24 % from last quarter Total Income of Rs 12714.20 Crore and up 18.17 % from last year same quarter Total Income of Rs 11645.82 Crore. The bank has reported net profit after tax of Rs 1455.46 Crore in latest quarter.

Investment Rationale
The brokerage expects the bank to report 0.8% RoA in FY23E and reach 1% byFY24E/FY25E, led by a healthy margin trajectory, improving fees (incl. PSLC) and normalization of credit cost (1.1-1.2%, from a high of >2%). Additionally, Indian Bank is one of the few PSBs to remain well capitalized, with CET 1 at 13.2% (including 9MFY23 profit), thus posing no risk of equity dilution for investors, unlike peers.

Promoter/FII Holdings
Promoters held 79.86 per cent stake in the company as of 31-Dec-2022, while FIIs owned 3.6 per cent, DIIs 11.92 per cent.