Buy Syndicate Bank; target Rs 135: Firstcall Research

Firstcall Research is bullish on Syndicate Bank and has recommended buy rating on the stock with a target price of Rs 135 in its March 14, 2013 research report.

"Syndicate Bank is Centralized Banking Solution enabled; is well equipped to meet the challenges of the 21st century in the areas of IT, knowledge and competition. Bank’s Capital Adequacy Ratio has marginally come down to 11.38% as on 31 Dec 12, compared to 11.48% as on 31 Dec 11 and Comfortable with its CRAR. The Base Rate and BPLR of Syndicate Bank stands reduced from 10.50% to 10.25% and from 14.75% to 14.50%, respectively, with effect from February 13, 2013. During the quarter, the Bank has mobilised subordinated debt of t 1000 Crores for Tier II Capital. The Bank has posted a net profit of Rs. 5084.90 million for the quarter ended December 31, 2012 as compared to Rs. 3381.20 million for the quarter ended December 31, 2011. Bank has 1241 ATMs and 500 New ATMs will be opened during the year and about 4000 banking outlets. Total Income has increased from Rs. 42143.50 mn for the quarter ended Dec. 31, 2011 to Rs. 44899.00 mn for the quarter ended Dec 31, 2012. During the fiscal, Bank has opened 42 branches to reach a branch network to 2737 plus 1 overseas branch at London. The Bank continues to show strong performance in terms of growth of Net Interest Income, Fee Income and Operating Revenue. The net profit of the Bank jumps to Rs. 5084.90 million against Rs.3381.20 million in the corresponding quarter ending of previous year, an increase of 50.39%. Revenue for the quarter rose 6.21% to Rs. 42205.90 million from Rs. 39739.40 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 8.45 a share during the quarter, registering 43.23% an increase over previous year period. Net Interest Income is Rs. 44899.00 millions as against Rs. 42153.50 millions in the corresponding period of the previous year. Outlook and Conclusion: At the current market price of Rs.120.85, the stock P/E ratio is at 4.11 x FY13E and 3.59 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 31.96 and Rs.36.64 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 18% and 28% over 2011 to 2014E respectively. On the basis of Debt-Equity Ratio, the stock trades at 19.46 x for FY13E and 18.32 x for FY14E. Price to Book Value of the stock is expected to be at 0.79 x and 0.65 x for FY13E and FY14E respectively. We expect that the Bank continues to show strong performance in terms of growth of Net Interest Income, Fee Income and Operating Revenue due to sizeable reduction in high cost deposits/CDs improving Yield on credit /MSME and Mid – Corporate Finance and better Credit monitoring. The Bank has taken several initiatives by Launching new products and services for increasing its business in the coming Quarters. So, we will keep its growth story in the coming quarters also. We recommend ‘buy’ in this particular scrip with a target price of Rs 135 for medium to long term investment," says Firstcall Research report. Non-Institutions holding more than 90% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

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