IDBI Bank has target of Rs 125: J Shah

Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Jigar Shah See what other Experts & Brokerages are saying about IDBI Bank See messages about IDBI Bank IDBI Bank BSE | NSE 13/02/12 Are Mutual Funds betting on IDBI Bank?

Jigar Shah , Sr VP & Head of Research, KIM ENG Securities India is of the view that IDBI Bank has target of Rs 125.

Shah told CNBC-TV18, "IDBI Bank profit before provisions was very good. Definitely, they meet our expectations. We see a core increase in the net interest margin. The company's other income and treasury were also handsomely up, which kind of offsetted the pressure due to provisioning. We think that provisioning was also not so concerning. Going forward, there is a possibility to reverse that. Certainly such a provisioning will not repeat."

He further added, "The concerns are only these large NPAs like the Ratnagiri Power Project and something from Ispat. Other than that, they have not increased the NPAs during the quarter. It is only that provisioning is being done in the case of RGPPL and Ispat. I think in the other assets there is no such concern. Our target price is Rs 125 based on a price-to-adjusted book value of 1.1 and our earnings per share forecast is Rs 13.8 for the year, about a 20% increase. It is also re-capitalisation, which is going to be a very positive trigger for the company. So, overall we think that the stock is undervalued."