Buy Corporation Bank; target of Rs 439: Firstcall Research

Firstcall Research is bullish on Corporation Bank and has recommended buy rating on the stock with a target of Rs 439 in its November 16, 2012 research report.

“Started about 107 years ago in 1906, with an initial capital of just Rs.5000/-, Corporation Bank has recorded Rs. 2,36,611 Crore mark in business and even far more, with over 6427 service outlets across the nation, served by committed and dedicated 13,000 plus Corp Bankers. It has many reasons to cheer; predominant of them is, being able to participate in nation building by empowering the rural and urban population alike. Nationalised in 1980, Corporation Bank was the forerunner when it came to evolving and adapting to the financial sector reforms. In 1997, it became the Second Public Sector Bank in the country to enter capital market, the IPO of which was over- subscribed by 13 times.”

“The Bank has many "firsts" to its credit - Cash Management Services, Gold Banking, m-Commerce, "Online" approvals for Educational loans, 100% CBS Compliance and more recently, its pioneering efforts to take the technology to the rural masses in remotest villages through low-cost branchless banking - Business Correspondent model. All of which symbolize Bank's answered commitment to its customers to provide convenience banking. The Bank has developed applications for I-Pad and Android tablets, which provide latest information, updates, interest rates and other relevant information for the users. The Bank has enabled Internet Banking through this application for personal banking. The Bank’s network has spread across 6427 functional Units spread across 26 States and 3 Union territories. The Bank has 2 representative offices at Dubai & Hong Kong. The bank owns 1601 Branches, 1281 ATMs & 3545 Branchless Banking Units as at 30.09.2012.”

“The company’s net profit jumps to Rs. 4057.11 million as against Rs. 4011.11 million in the corresponding quarter ending of previous year, an increase of 1.15%. Revenue for the quarter rose 21.15% to Rs. 37444.80 million from Rs. 30907.42 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 27.39 a share during the quarter, registering 1.15% an increase over previous year period. Net Interest Income is Rs. 11292.14 millions as against Rs. 11423.28 millions in the corresponding period of the previous year.”

“At the current market price of Rs 396, the stock P/E ratio is at 3.46 x FY13E and 3.20 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 108.18 and Rs.116.86 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 27% and 7% over 2011 to 2014E respectively. On the basis of Debt-Equity Ratio, the stock trades at 29.59 x for FY13E and 28.95 x for FY14E. Price to Book Value of the stock is expected to be at 0.56 x and 0.48 x for FY13E and FY14E respectively. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 439 for medium to long term investment,” says Firstcall Research report.  

Public holding more than 90% in Indian cos

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