Buy Vijaya Bank; target of Rs 62: Magnum

Magnum is bullish on Vijaya Bank and has recommended buy rating on the stock with a target of Rs 62 in its August 21, 2012 research report.

“Vijaya Bank reported a good set of numbers for Q1FY2013. Management has guided for FY12‐13 a loan growth of about 16‐17%. At CMP of Rs 52.00, the stock is trading at PE of 4.09 xs of FY13E EPS and at an adjusted P/BV of 0.67x FY13E BV. We have valued the Bank at P/BV of 0.8x FY13E & maintain our BUY rating on the stock with a revised target price of Rs 62.00 (earlier target price of Rs 66.00) with an upside potential of 19% from current levels.”
“Interest Income for the quarter ended 30.06.2012 is at Rs 2,197.3 crore as against Rs 1,785.0 crore for the corresponding quarter of last year, registering a growth of 23.1%. Non Interest Income (Other Income) for the quarter ended 30.06.2012 is at Rs 122.6 crore as against Rs 168.4 crore for the corresponding quarter of last year, registering a de‐growth of 27.2%. Total Income for the quarter ended 30.06.2012 is at Rs 2,319.9 crore as against Rs 1,953.4 crore for the corresponding quarter of last year, registering a growth of 18.8%. Net Profit for the quarter ended June 2012 is Rs 111.4 crore as against Rs 72.2 crore for the same quarter last year, registering a growth of 54.2% largely due to decline in provisions & contingencies and the tax paid be the Bank is also less in the first quarter of FY13.”

“Vijaya Bank reported a good set of numbers for Q1FY2013. Management is confident to reach a business level of Rs. 165,000 crore by the year end FY13 consisting of Deposits of Rs 98,000 crore and Advances of Rs 67,000 crore. Management has guided for FY12‐13 a loan growth of about 16‐17%. Bank will be concentrating more on retail credit and CASA for improving the bottom line and core Earnings ratio. With the systems on track, Bank is confident that in the forthcoming quarter they will be targeting more recoveries in NPA /written off accounts. At CMP of Rs 52.00, the stock is trading at PE of 4.09x of FY13E EPS and at an adjusted P/BV of 0.67x FY13E BV. We have valued the Bank at P/BV of 0.8x FY13E & maintain our BUY rating on the stock with a revised target price of Rs 62.00 (earlier target price of Rs 66.00) with an upside potential of 19% from current levels,” Magnun research report.

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