Buy Syndicate Bank; target of Rs 136: Firstcall Research

Firstcall Research is bullish on Syndicate Bank and has recommended buy rating on the stock with a target of Rs 136 in its October 23, 2012 research report.

“Syndicate Bank is 100% Centralised Banking Solution enabled, it is well equipped to meet the challenges of the 21st century in the areas of information technology, knowledge and competition with solid customer base comprising customers of two or three generations. The bank was established in year 1925 in Udupi, in coastal Karnataka by Sri Upendra Ananth Pai, Sri Vaman Kudva, and Dr. T M A Pai, with the objective to extend financial assistance to the local weavers who were crippled by a crisis in the handloom industry through mobilising small savings from the community. The progress of Syndicate Bank has been synonymous with the phase of progressive banking in India. Being firmly rooted in rural India and understanding the grass root realities, the Bank's perception had vision of future India.”
“The Syndicate Bank continues to show strong performance in terms of growth of Net Interest Income, Fee Income and Operating Revenue. The Bank’s Operating Profit and Net Profit have also shown healthy growth due to Sizeable reduction in high cost deposits/CDs and improving yield on credit by focusing on retail credit/MSME and mic –Corporate finance and better Credit monitoring. The net profit of the Bank jumps to Rs. 42761.60 million against Rs.37712.20 million in the corresponding quarter ending of previous year, an increase of 13.39%. Revenue for the quarter rose 43.48% to Rs. 4633.70 million from Rs. 3229.40 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 7.70 a share during the quarter, registering 36.65% an increase over previous year period. Net Interest Income is Rs. 45463.30 millions as against Rs. 40156.40 millions in the corresponding period of the previous year.”
“At the current market price of Rs.122.00, the stock P/E ratio is at 5.31 x FY13E and 4.85x FY14E respectively.  Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 23.00 and Rs.25.17 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 23% and 13% over 2011 to 2014E respectively. On the basis of Debt-Equity Ratio, the stock trades at 20.57 x for FY13E and 20.38 x for FY14E. Price to Book Value of the stock is expected to be at 0.78 x and 0.67 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. 136 for medium to long term investment,” says Firstcall Research resport. Institutional holding more than 40% 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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