Buy Corporation Bank; target of Rs 440: SMC Global

SMC Global is bullish on Corporation Bank and has recommended buy rating on the stock with a target of Rs 440 in its June 27, 2012 research report.

“Corporation Bank, as on 31.03.2012, total Business of the Bank stood at 236611 crore. Deposits grew 16.6% to 136142 crore and Advances book grew 16% to 100469 crore while average advances grew 28% to 82325 crore at end of FY12. The bank is targeting a 20 per cent growth in advances this fiscal compared with 17 per cent in 2011-12. Capital Adequacy ratio stood at 14.11% with tier I of 8.33% at end of March 12 against 13% with Tier I of 8.69% at end of March 11. Gross NPA stood at 1.26% and Net NPA stood at 0.87% at the end of FY 2011-12. In absolute terms the Gross NPAs stood at 1,274 crore and Net NPA stood at 869 crore. The NPA provision coverage ratio stood at 65.30 % as at 31.03.2012 with reference to Gross NPA as at 31.03.2012 and 89.06% with reference to Gross NPA as at 30.09.2010.”

“The Outstanding restructured assets at end of March 12 stood at 4.65% ( 4670 crore) at end of FY12. •ROA stood at 1.21% in FY12 against 1.06% a year ago. On the other hand, ROE also improved to 20.70% in FY12 against 18.20% a year ago. The Bank has added 139 branches and 29 ATM's in the year taking total count to 1500 branches and 1274 ATM's at end of FY12. The bank would look to strengthen its presence in Gujarat, Rajasthan and Uttar Pradesh. A good number of its branches are now concentrated in the South. The bank is looking to open such exclusive centres to augment credit flow to the SME (small and medium enterprise) segment. The bank has plans to open eight more such centres in the next two months. •For 2012-13, the bank's SME segment target is 18,300 crore, which is 14 per cent of the projected net bank credit of 1,27,000 crore.”

“Corporation Bank (CorpBank) was incorporated in the year 1906 at Udipi. The bank has four segments: Treasury, Wholesale Banking, Retail Banking and Other Banking Business. The Bank's total service outlets crossed 6000 mark during the year ending 31st March 2012 to reach 6,164 service outlets, comprising of 1,500 branches, 1,274 ATMs and 3,390 Branchless Banking Units across the country. Out of these 139 branches, 24 ATMs and 890 Branchless banking Units were opened during the year. The Bank is also having its representative offices at Hongkong and Dubai. The Government of India (GoI) holds 58.52% stake in Corporation Bank (as per the shareholding pattern as on 31 March 2012). We recommend a buy in the stock of Corporation Bank from a short-term perspective.”

“The stock is trading at its good support level with good fundamental records and is expected to move up from this level. The stock closed at 408.65 on 26th June 2012. It made a 52 week low 335.50 and 52 week high of `534.00. Buy around 412 with a closing below stop loss of 395 levels for the target of 440-460,” says SMC Global research report.

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