Buy Indian Bank; target of Rs 360: Motilal Oswal

Motilal Oswal's research report on Indian Bank

Indian Bank (INBK) reported a PAT of INR14.5b (up 47% YoY; 11% miss), supported by 29% YoY growth in NII, while provisions came in higher as the bank created additional standard asset provisioning to strengthen its balance sheet. Margins moderated 15bp QoQ to 3.6%. Loan growth came in healthy at ~15% YoY, while deposit growth stood modest at 4%.  GNPA/NNPA ratio improved 58bp/10bp QoQ to 5.95%/0.9%. This was primarily driven by the increase in recoveries and upgrades, despite elevated slippages of ~INR25b (2.6% annualized), which were influenced by a surge in MSME slippages. However, SMA book stands controlled at 0.54% of loans. We estimate FY25 RoA/RoE at 1.1%/17.1% and reiterate our Buy rating on the stock.

Outlook

We estimate FY25E RoA/RoE at 1.1%/17.1% and reiterate our Buy rating on the stock with a revised TP of INR360 (0.9x Sep’24E ABV).

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