Buy Syndicate Bank; target Rs 141: Firstcall Research

Firstcall Research is bullish on Syndicate Bank and has recommended buy rating on the stock with a target price of Rs 141 in its May 06, 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 CAR has marginally come down to 12.59% as on 31 Mar 13, compared to 12.24% as on 31 Mar 12 and Comfortable with its CRAR. Bank will be reaching 3000 Branch network by 31.05.2013 and 3200 mark by 30.09.2013. During the fiscal, Bank has opened 215 branches to reach a branch network to 2934 plus 1 overseas branch at London. The Bank has posted a net profit of Rs. 5923.40 million for the quarter ended March 31, 2013 as compared to Rs. 3094.30 million for the quarter ended March 31, 2012. Total Income has increased from Rs. 44243.30 million for the quarter ended March 31, 2012 to Rs. 47807.50 million for the quarter ended March 31, 2013. Bank has plans to raise Equity Capital in the current fiscal. Syndicate Bank has recommended a Dividend of Rs. 6.70 per share for the year 2012-2013. Bank has implemented the highly secure SSL-EV for its Internet Banking web site. Bank launched 'SyndicateBank VISA International Gold Debit Card' containing the name and photo of the customer. 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. 5923.40 million against Rs.3094.30 million in the corresponding quarter ending of previous year, an increase of 91.43%. Revenue for the quarter rose 6.23% to Rs. 43814.30 million from Rs. 41246.60 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 9.84 a share during the quarter, registering 91.43% an increase over previous year period. Outlook and Conclusion: At the current market price of Rs.128.70, the stock P/E ratio is at 3.24 x FY14E and 2.85 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs. 40.54 and Rs.46.19 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 12% and 28% over 2012 to 2015E respectively. On the basis of Debt-Equity Ratio, the stock trades at 16.14 x for FY14E and 15.07 x for FY15E. Price to Book Value of the stock is expected to be at 0.66 x and 0.54 x for FY14E and FY15E 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 141 for Medium to Long term investment," says Firstcall Research report. Bodies Corporate holding more than 50% 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.

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