Buy Indian Bank; target of Rs 750: Motilal Oswal

Motilal Oswal's research report on Indian Bank

Indian Bank (INBK) reported 1QFY26 PAT of INR29.7b (up 23.7% YoY/flat QoQ, 5% beat), driven by lower provisions. NII was up 2.9% YoY/flat QoQ at INR63.6b (inline). NIM dipped 14bp QoQ to 3.23%. Net advances grew 12% YoY/2.3% QoQ, while deposits grew 9.3% YoY/1.0% QoQ. Consequently, the C/D ratio increased 100bp QoQ to 78.5%. CASA ratio moderated to 37.2%, with domestic CASA ratio at 39%. Fresh slippages improved to INR13.7b vs. INR14.3b in 4QFY25. GNPA/NNPA ratios continued to improve by 8bp/1bp QoQ to 3.01%/0.18%. PCR stood at 94.3%. We increase our earnings estimates by 6%/4% for FY26/FY27 and anticipate the bank to deliver FY27E RoA/RoE of 1.29%/16.9%. Reiterate BUY with a TP of INR750 (premised on 1.2x FY27E BV).

Outlook

We increase our earnings estimates by 6%/4% for FY26/FY27 and anticipate the bank to deliver FY27E RoA/RoE of 1.29%/16.9%. Reiterate BUY with a TP of INR750 (premised on 1.2x FY27E BV).