Buy Indian Overseas Bank; target of Rs 94: Magnum

Magnum is bullish on Indian Overseas Bank and has recommended buy rating on the stock with a target of Rs 94 in its May 22, 2012 research report.

“Indian Overseas Bank, net interest income (NII) for FY12 up 11.15% to Rs 6,909 cr from Rs 6,216 cr in FY11. Net Interest Margin (on earning assets) for FY12 was 3.21% as compared to 3.33% in FY11. Non Interest Income for FY12 was Rs 2,332 cr, compared to Rs 2,039 cr in FY11, an increase of 14.37%. Recommend BUY with target price of Rs 94.”

“Net Profit for the quarter ended 31st March 2012 is Rs 528.81 crore as against Rs 434.30 crore for the corresponding quarter of the previous year, recording a growth of 21.76%. Net Interest Income (NII) of the Bank increased from Rs 1,215.28 crore during Q4FY11 to Rs 1,340.58 crore during the Q4FY12, an increase of Rs 125.30 crore. Interest expenses increased to Rs 3570.89 crore for the quarter ended 31.3.2012 from Rs 2316.83 crore for the quarter ended 31.3.2011.”

“Indian Overseas Bank is expected to report robust earnings going forward considering the Asset Quality and slippages. Management is confident for cash recovery in the NPA category and Bank is planning to open 400 branched to reach a 3000 mark. At CMP of Rs 78, the stock is trading at cheap valuation of PE of 4.75x of FY13E EPS and at an adjusted P/BV of 0.59x FY13E BV of Rs 132. We have valued the Bank at P/BV of 0.71x FY13E & maintain our BUY rating on the stock with a target price of Rs 94 with an upside potential of 20% from current levels,” says Magnum research report.  

FIIs holding more than 30% in Indian cos

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