Buy Dena Bank; target Rs 65: ICICIdirect.com
ICICIdirect.com is bullish on Dena Bank and has recommended buy rating on the stock with a price target of Rs 65 in its research report dated July 31, 2013.
August 03, 2013 / 11:16 IST
ICICIdirect.com's report on Dena Bank
Dena Bank's quarterly PAT of Rs 189 crore, down 21 percent YoY (up 51 percent QoQ) was slightly below our estimate of Rs 204 crore. Provisioning expenses were higher-than-expected as the bank set aside Rs 139 crore towards standard assets and restructured assets. However, robust growth in other income (up 15 percent YoY) led by treasury profit of Rs 248 crore supported profitability. Asset quality risks are surfacing at a higher pace with slippages staying elevated at Rs 408 crore and fresh RA amounting to Rs 902 crore. Total RA now accounts for 10 percent of loan book at Rs 6538 crore. Management has guided restructured pipeline of ~Rs 800 crore in Q2FY14. We revise our earning estimates lower as we reduce our business growth and margin assumption and factor in higher asset quality stress. We maintain BUY with a reduced target price of Rs 65 (earlier Rs 103).""We reduce our target multiple from 0.7x to 0.5x FY15E ABV and, hence, our target price to Rs 65, as we assume higher asset impairment, lower advances traction and treasury MTM risks owing to hardening of yields. We maintain our BUY recommendation," says ICICIdirect.com research report.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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