Buy Indian Bank, target price Rs 670: Motilal Oswal Financial Services

Motilal Oswal Financial Services has a buy call on Indian Bank with a target price of Rs 670. The current market price of Indian Bank is Rs 521.15. Indian Bank, incorporated in 1907, has a market cap of Rs 70163.35 crore.

Indian Bank's 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-2024.



Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 18167.54 crore, up 1.09% from last quarter Total Income of Rs 17971.22 crore and up 11.35% from last year same quarter Total Income of Rs 16315.35 crore. The bank has reported net profit after tax of Rs 2909.73 crore in the latest quarter.

Investment Rationale
Indian Bank reported healthy earnings in 3QFY25, led by lower provisions and controlled opex. Global NIMs too expanded 6bp QoQ. However, business growth was modest, which led to a slight increase in the CD ratio. However, the CASA ratio saw a slight moderation. The management expects margins at ~3.4-3.5% and the growth trend to remain steady. The bank will continue to focus on profitable growth. Asset quality ratios have improved, with a best-in-class coverage ratio and lower slippages, which provide comfort on incremental credit costs. The SMA issues have also been resolved, and no further slippages into SMA are expected. We fine tune our earnings estimates and expect the bank to deliver RoA/ RoE of 1.2%/17.3%. Motilal Oswal Financial Services reiterates a BUY with a target price of Rs 670 (1.2x Sep?26E ABV).

Promoter/FII Holdings
Promoters held 73.84 per cent stake in the company as of 31-Dec-2024, while FIIs owned 4.77 per cent, DIIs 17.61 per cent.