Buy Dena Bank; target of Rs 102: Magnum

Magnum is bullish on Dena Bank and has recommended buy rating on the stock with a target of Rs 102 in its August 25, 2012 research report.

“DENA BANK has grown its business at a CAGR of 24% in the last five years. Return on Assets stands at 1.07% in Q1FY13; at 1.17% from Q4FY12; and at 0.97% in Q1FY 12. Management is confident of maintaining a NIM of 3% in the rest of the year (FY13). It expects to achieve a Loan growth of 20% and a deposit Growth of 18%. At the CMP Rs 89, the stock is trading at a PE of 3.21 xs of FY13E EPS and at an adjusted P/BV of 0.61x FY13E BV of Rs 145. We have valued the Bank at P/BV of 0.7x FY13E & maintain our BUY rating on the stock with a target price of Rs 102.00 (earlier target of Rs 104) with an upside potential of 14% from current levels.”
“Total Income during Q1FY13 rose by Rs. 626.3 crore to Rs. 2,278.9 crore, registering a YoY growth rate of 37.9%. Other Income increased to Rs. 141.7 crore during Q1FY13 from Rs. 124.4 crore in Q1FY12, a growth of 13.9%. Net interest income rose by 37% to Rs 612 crore from Rs 447 crore during the same period. Core Operating Profit grew by 48.8% to Rs. 457.9 crore during Q1FY13 as compared to Rs. 307.7 crore for Q1FY12, showing an increase of Rs 150.2 crore. Provisions were increased 57.9% on YoY basis to Rs 103.4 crore in Q1FY13 from Rs 65.5 crore in the corresponding period last year. Dena Bank's profit after tax grew by 42% year-on-year basis to Rs 238.6 crore in the April‐June quarter of FY13.”
“DENA BANK has grown its business at a CAGR of 24% in the last five years. The good numbers are a result of an overall performance improvement, including growth in advances, widening of margins and profit from sale of securities. Return on Assets stands at 1.07% in Q1FY13; at 1.17% from Q4FY12; and at 0.97% in Q1FY 12. Management is confident of maintaining a NIM of 3% in the rest of the year (FY13). It expects to achieve a Loan growth of 20% and a deposit Growth of 18%. At the CMP Rs 89, the stock is trading at a PE of 3.21x of FY13E EPS and at an adjusted P/BV of 0.61x FY13E BV of Rs 145. We have valued the Bank at P/BV of 0.7x FY13E & maintain our buy rating on the stock with a target price of Rs 102.00 (earlier target of Rs 104) with an upside potential of 14% from current levels,” says Magnum research report. Shares held by Insurance Companies  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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