Dolat Capital is bullish on Syndicate Bank and has recommended buy rating on the stock with a target of Rs 122 in its December 28, 2011 research report.
"Syndicate Bank corrected sharply by almost 20% in recent sessions primarily led by concerns over deterioration in asset quality. In line with these concerns, we have also reduced our earnings estimates by 6.5% and 16% for FY12 and FY13 respectively. Accordingly we have also reduced our target price by 18% to Rs 122 at 0.9x ABV FY13. However, we also believe that the current valuations (stock price) is reflecting a collapse of profitablity and return ratios, which we find too pessimistic. Our reverse calculations suggest that the market is building in RoAA and RoAE of 0.3-0.35% and 8.5-9.5% respectively. This appears extremely unlikely to us even in the most pessimistic scenarios. Even in the worst of the times over the last decade, the bank always reported RoAA of more than 0.6%.Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
